SingTel – BT
Fat dividend caps robust SingTel quarter
Strong performance across the group boosts fourth quarter earnings by 12.4%
Singapore Telecommunications is rewarding shareholders with its highest dividend payout in two years after posting a better-than-expected 12.4 per cent increase in fourth-quarter net profit to $1.02 billion.
Southeast Asia’s largest telecom operator yesterday said a combination of favourable currency movements and stronger contributions from regional associates helped reverse the steep 17 per cent bottom- line decline it suffered in the same period last year.
SingTel’s fourth-quarter net income of $1.02 billion was higher than the $987 million average forecast of five analysts polled by Reuters.
The improvement was driven by strong performance across the group, SingTel group CEO Chua Sock Khoong told reporters at the telco’s results briefing yesterday.
Earnings per share for the three months ended March 31 was 6.38 cents, up 12.3 per cent from 5.68 cents in 2009. Revenue for the period climbed 25.4 per cent to $4.5 billion.
For its improved scorecard, SingTel is proposing a final dividend of 8 cents per share.
This brings its full-year payout to around $2.26 billion, or 14.2 cents per share. This is its biggest distribution since 2007 when it returned more cash to shareholders through a special payout.
For the last two years, the operator has been paying 12.5 cents per share. It paid 11 cents per share in 2007, excluding a 9.5 cent special payout.
SingTel, which derives 73 per cent of its Ebitda (earnings before interest, taxes, depreciation and amortisation) from overseas, saw pre-tax contributions from its six regional associates grow 11.7 per cent in the fourth quarter to $546 million.
The truce in Indonesia’s telco sector made Telkomsel the star performer in the fourth quarter, with its contributions rising 25.8 per cent to $205 million.
Share of profit from Indian operator Bharti, SingTel’s largest overseas investment, grew 8.6 per cent to $245 million, while contributions from Thailand’s AIS rose 4.6 per cent to $53 million.
Globe’s contribution fell 22.5 per cent in Q4 due to the double whammy of heightened competition and thinner margins as a result of more attractive mobile bundles.
SingTel’s remaining associates – Pakistani operator Warid and PBTL in Bangladesh – continue to be in the red with pre-tax losses of $14 million and $3 million respectively.
According to Lim Chuan Poh, CEO of SingTel International, the group is currently ‘exploring’ opportunities for consolidation in the Pakistani telco sector.
‘For Bangladesh, the potential exists for us to now be able to do something together with Bharti,’ he added.
This is because Bharti bought a 70 per cent stake in Warid Telecom, Bangladesh’s fourth-largest mobile operator, earlier this year and it could potentially derive cost efficiencies by working with SingTel’s local outfit PBTL.
‘Tower sharing and site sharing and all that will be the first path,’ SingTel group CFO Jeann Low added.
Optus, which accounts for 34 per cent of SingTel’s Ebitda, saw its net profit soar 43.6 per cent to $279 million in the fourth quarter due to the strengthening of the Australian dollar and a recent mobile subscriber boom.
Net profit for SingTel’s Singapore operations fell 16.8 per cent to $341 million in Q4 due to a higher mix of lower-margin IT and engineering revenue, as well as the costs of cellular network upgrades and pay-TV content acquisition.
For the full year, SingTel’s net income rose 13.3 per cent to $3.9 billion on the back of a 13 per cent revenue improvement to $16.9 billion.
Looking ahead to this financial year, SingTel warned that earnings from Singapore could fall as a result of incurring higher costs for supporting its mio TV rollout.
More and more Singaporeans are signing up for SingTel’s pay-television service after it scored the broadcast rights for the Barclays Premier League last year and this pushed its customer tally past the 200,000 mark last month.
Contributions from Bharti could also be lower due to the financing costs of its US$10 billion acquisition of the 15 South African mobile assets belonging to the Zain Group.
SingTel shares closed three cents lower at $2.97 yesterday.