SingTel – DBS

Remarkable pay TV subscriber growth

At a Glance

• Underlying profit of S$952m inline with ours and consensus expectations of S$937-S$970m.
• Interim dividend of 6.2 cents inline with expectations
• Revised guidance for Singapore EBITDA to register lowsingle digit growth (from stable earlier), inline with our expectations.
• We would be buyers below S$2.85. Maintain HOLD.

Comment on Results
Singapore profit inline and market share gains. Singapore net profit of S$318m ( +11% yoy, -5% qoq) was inline. SingTel increased its mobile market share to 46.2% from 45.9% in 1Q10. Pay TV subscriber base increased by 25K (versus StarHub’s 5K) from strong take up of bundled mio Home plans. This implies SingTel’s pay TV market share increased to 18.9% from 15.8% in 1Q10.

Australia profit slightly higher due to lower interest expense. Net profit of A$152m (+21% yoy, +9% qoq) was helped by A$15m sequential reduction in interest expense due to lower interest rates. Optus continued to add mobile subscribers, where higher revenue growth, despite lower margins, resulted in higher EBITDA (7% yoy, 3% qoq). Strong A$ (up 7% sequentially) continues to lend support

Associate results inline. Post-tax contribution of S$472m (+19% yoy, -5% qoq) was helped by strong performance of Telkomsel. It was lower sequentially as 1Q10 included forex gains of s$23m at Bharti.

Recommendation

Bharti weakness should be offset to some extent by strong Telkomsel and strong AUD and IDR. Maintain HOLD with unchanged target price of S$3.15

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