SingTel – BT

SingTel profit jumps 24% in Q3

Telco benefited from stronger Aussie dollar and rebound in Telkomsel earnings

SINGAPORE Telecommunications makes it a hat-trick with its net profit rising for the third straight quarter on the back of yet another strong overseas performance.

South-east Asia’s largest telco yesterday reported a 24 per cent jump in net income for its fiscal third quarter to $991 million, up from $799 million last year.

Earnings per share for the three months ended Dec 31, 2009, climbed 23.9 per cent to 6.22 cents, while operating revenue rose 20.2 per cent to $4.45 billion.

SingTel, which derives 73 per cent of its Ebitda – earnings before interest, tax, depreciation and amortisation – from overseas, benefited from the appreciation of the Australian dollar and a rebound in Indonesia associate Telkomsel’s earnings during the quarter.

Pre-tax profit contributions from the group’s six regional affiliates – Bharti Airtel, Telkomsel, Globe, AIS, Warid and PBTL – grew 21.3 per cent to $560 million during the quarter.

Star performer Telkomsel grew its contributions by 53.1 per cent to $238 million in Q3 following the ceasefire in the price war between Indonesian telcos.

Bharti Airtel, SingTel’s largest overseas associate, was next in line with its share of profits rising 4.6 per cent year-on-year to $235 million.

At the start of the quarter, Bharti failed in its second attempt to merge with South African telco, MTN Group. However, it pressed ahead with plans for overseas diversification by snapping up a 70 per cent stake in Sri Lankan operator Warid for US$300 million last month.

SingTel was initially mulling a top-up in Bharti as its stake in the Indian telco would have been diluted through the MTN union.

‘We work as strategic partners to our various associates and we would discuss with them whether it made sense for us to go on our own or to work with the associates (for overseas acquisitions),’ SingTel group chief executive Chua Sock Koong told reporters at its result briefing.

‘In some cases (such as the Bharti-MTN deal), it made sense for the associate to be leading the transaction,’ she said. ‘Our focus remains on Asia. We are also looking at some adjacent markets, including Africa and the Middle East.’

Profit contributions from Globe in the Philippines and AIS in Thailand fell 5.7 per cent and 12.2 per cent in the third quarter to $54 million and $52 million respectively.

SingTel’s remaining associates – Pakistani operator Warid and PBTL in Bangladesh – continue to be in the red with losses of $15 million and $4 million.

Profits from SingTel’s Australian unit Optus soared 47.4 per cent to $210 million in Q3 due to the strengthening of the Australian dollar.

The Aussie dollar’s appreciation and Optus’ strong performance in recent quarters again triggered speculation that SingTel could be looking to cash out by selling off a partial stake in the subsidiary.

‘No decision has been made on selling or listing Optus. Optus continues to generate healthy cash flows and it is a significant contributor to SingTel’s overall financial performance,’ Ms Chua stressed.

The group’s Singapore operations registered a 6.5 per cent rise in net profit to $343 million due to tighter cost control measures.

Revenue from its local telecommunications business grew 1.8 per cent to $1.2 billion during the quarter, while sales from its IT and engineering arm edged up marginally by 0.6 per cent to $363 million.

In the previous corresponding period, the company’s IT and engineering revenue included the results of Singapore Computer Systems (SCS) for the four-month period of September to December 2008. Wholly owned SCS was acquired in September 2008.

Excluding SCS’ revenue for September 2008 in the last corresponding quarter, IT and engineering revenue rose 13 per cent year on year.

For the first nine months of this financial year, SingTel’s group net profit grew 13.6 per cent to $2.9 billion on the back of a 9.1 per cent increase in sales to $12.4 billion.

Looking ahead to the full year, SingTel has reaffirmed its guidance of growing its Ebitda in Singapore and Australia at the single-digit level. It also expects pre-tax earnings from Bharti and Telkomsel to rise in local currency terms.

SingTel shares closed eight cents higher at $3.03 yesterday.

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