SingTel – BT

SingTel’s Q4 net profit slides 17% to $903m

The company is proposing a final dividend of 6.9 cents a share

SINGAPORE Telecom’s fourth quarter profit may have suffered its steepest drop in recent years after a poor showing by regional associates, but the operator is in no hurry to do more shopping to help turn the tide.

‘Our growth strategy is not predicated on doing more M&As (mergers and acquisitions),’ said SingTel CEO Chua Sock Khoong.

Her comments follow recent overseas reports linking SingTel to a possible tie-up with cash-strapped Warid Telecom in Bangladesh. SingTel declined to comment on the reports.

It already owns a stake in another Bangladeshi operator called PBTL (Pacific Bangladesh Telecom Ltd), but the latter operates a CDMA (code division multiple access) cellular network instead of the more mainstream GSM networks used by most mobile subscribers there. SingTel also owns 30 per cent of Warid Telecom in Pakistan.

Aside from injecting more cash into PBTL and Warid, SingTel drew a blank on the foreign acquisitions front in the past 12 months. But this could change in the coming year should the global credit crunch throw up more candidates in dire need of an external cash injection.

‘SingTel continues to look for new investments in Asia and emerging adjacent markets and will be financially-disciplined in its evaluation of these opportunities,’ Ms Chua said.

The company, which derives 70 per cent of its Ebitda (earnings before interest, taxes, depreciation and amortisation) from overseas, yesterday reported a 17.3 per cent drop in Q4 net income to $903 million, from $1.09 billion a year earlier.

Q4 basic earnings per share tumbled 17.3 per cent to 5.68 cents, while operating revenue slid 5.1 per cent to $3.57 billion.

According to Ms Chua, the bottomline decline was caused by adverse currency movements during the quarter, coupled with lower contributions from SingTel’s two biggest regional associates – Thailand’s AIS and Indonesia’s Telkomsel.

Its wholly owned Australian unit Optus, which accounts for 29 per cent of group Ebitda, saw net profit rise 17 per cent for the three months ended March 31 to A$193 million (S$215 million). But the weaker Australian dollar dragged earnings down 7.8 per cent in Sing-dollar terms.

The strength of the Sing dollar also reduced pre-tax profit from SingTel’s six regional associates 22.4 per cent to $489 million in Q4.

AIS and Telkomsel led the plunge, their earnings diving 34 per cent and 41 per cent to $50 million and $163 million respectively.

Pre-tax profit from Globe in the Philippines fell 4 per cent to $78 million, while PBTL and Warid suffered losses of $3 million and $25 million respectively.

The sole bright spot among SingTel’s affiliated companies in Q4 was India’s Bharti, which saw pre-tax profit rise 1.4 per cent to $225 million in Q4.

‘We take a longer-term view of our investments. Not all of them are profitable from Day One,’ Lim Chuan Poh, CEO of SingTel International, told reporters at the firm’s results briefing.

SingTel’s Singapore home ground, however, proved resilient against the economic storm, with local Ebitda rising 20 per cent to $578 million in Q4.

Local earnings were lifted by higher revenue from the three key business units – data and Internet; mobile; and IT & engineering.

For its full 2009 financial year, SingTel’s net income fell 12.9 per cent to $3.45 billion despite a marginal 0.6 per cent increase in revenue to $14.9 billion.

It ended the year with free cash flow of $3.25 billion, down from $3.58 billion in 2008 due to higher capital outlays.

The company is proposing a final dividend of 6.9 cents a share, taking its full-year payout to 12.5 cents, unchanged from 2008. This is in line with its stated payout ratio of 45-60 per cent of underlying earnings, a range that also applies to SingTel’s current financial year, Ms Chua said.

Looking ahead, she expects earnings from its Singapore operations to remain stable while Optus’ Ebitda is projected to grow at a ‘single-digit level’.

Higher profits are also expected of Bharti and Telkomsel in local currency terms this year.

SingTel shares closed 0.7 per cent higher at $2.74 yesterday.

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