SingTel – DBS

Beneficiary of large iPhone subscriber base

At a Glance

• Underlying profit of S$990m inline with ours, slightly above consensus expectations of S$970m.
• Singapore business and Optus delivered strong performances in the mobile business.
• We believe that iPhone customers acquired over the last one and a half year would continue to benefit SingTel
• Maintain BUY and TP for sustained mobile momentum, growth at Telkomsel, stronger regional currencies and potential re-listing of Optus as the catalyst.

Comment on Results 

Singapore profit slightly higher than expectations. Singapore net profit of S$343m (+ 7% yoy, +8% qoq) was slightly higher than our expectation of S$320m, due to (i) strong performance in the mobile segment with revenue up 9% yoy and +6% qoq (ii) Fibre roll out revenue of S$55m, up 77% qoq was also impressive. Singapore EBITDA stood at S$580m (+ 3% yoy, +4% qoq). Mobile market share was stable qoq at 46.2%. Pay TV subscriber base increased by 29K (versus 25K in 2Q10) from strong take up of bundled mio Home plans to reach 155K. 

Australia profit slightly higher. Net profit of A$165m (+16% yoy, +8% qoq) was helped by strong mobile performance where revenue stood at A$1459 (+10% yoy, +6% qoq) while mobile EBITDA margins were stable qoq at 25%. Optus EBITDA stood at A$529m (+4% yoy, +4% qoq). Optus continued to add mobile subscribers while strong A$ (up 6% qoq) continues to lend support. 

Associate results slightly below. Post-tax contribution of S$460m (+23% yoy, -3% qoq) was slightly below our expectations of S$470m as Telkomsel’s profit contribution at S$171m (+55% yoy, -7% qoq) was impacted by accelerated depreciation charges resulting from the shortening of useful life of certain network assets. Further strengthening of IDR should offset the negatives in our view.

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