SingTel – GS

4Q10/FY10 Result Preview

Result Date:

• Thursday, 13 May, approximately 8.30am (AEST).

GSJBW Estimates:

FY10 NPAT: S$3,838m (consensus S$3,915m).

FY10 Group EBITDA (excluding Associates): S$4,899m (consensus S$4,785m).

FY10 Associates contribution: S$2,435m (consensus S$2,497m).

Final dividend (ordinary): S7.0¢.

Trading Comment:

• Given all of SingTel’s key Associates have reported their results, the focus will be on the performance of SingTel’s Singapore and Australian businesses.

• While SGT’s valuation is reasonable, we see a number of headwinds:

(1) NBN in Singapore; (2) uncertainty in India (Bharti acquisition of Zain, risk of 3G overbidding, price war); and (3) increased competitive pressures in Australia.

Look Out For:

Singapore: Given its strong performance to date (9M10 EBITDA +8.3%), we expect SingTel will beat its FY10 guidance of “low single digit” EBITDA growth. However, despite the strong recovery in the Singapore economy (1Q10 GDP +13.1%, 4Q09 +4.0%, 3Q09 +0.6%, 2Q09 -3.1% and 1Q09 -9.4%), we expect to see some weakness in the result. Namely: (1) mobile growth to slow with increased competitive pressures from StarHub and MobileOne; (2) continued weakness in fixed line ahead of NBN; and (3) increased mio TV costs.

Australia: We expect Optus to report a good result with strong operational momentum at Optus Mobile likely to translate into robust earnings growth. Key things we will focus on are whether: (1) mobile subscriber growth has slowed given VHA’s strong March quarter; and (2) there has been any recovery in corporate telecom spending.

Capital management: SingTel’s capital management has been disappointing in recent times. It remains uncertain whether SingTel will pursue capital management given it: (1) continues to look for M&A opportunities; and (2) will continue to invest its Singapore business ahead of NBN.

Briefing Details:

Q&A conference call: 1.00pm – 2.00pm (AEST).

Dial-in: 1800 053 683, conference code 975619#.

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