SingTel – BT
SingTel Q1 profit down 2.9% at $916m
Associate Bharti Airtel continues to weigh down its bottom line
Singapore Telecommunications’ first- quarter net profit dipped 2.9 per cent to $916 million, from $943 million last year as Indian associate Bharti Airtel continued to weigh down its bottom line.
Earnings per share for the three months ended June 30 slid to 5.75 cents, from 5.92 cents in 2010 while operating revenue rose 7.4 per cent to $4.6 billion during the period.
South-east Asia’s largest telco, which derives 77 per cent of its Ebitda – earnings before interest, tax, depreciation and amortisation – from overseas, was hit by a 10 per cent decline in pre-tax earnings contributions from its regional associates.
Its largest overseas foray, Bharti, was again the main culprit. Pre-tax contributions from the Indian operator dived 27 per cent to $154 million in the first-quarter due to a combination of higher domestic taxes as well as sustained losses in South Africa.
Bharti completed the acquisition of the African assets of Kuwaiti conglomerate Zain Group in the first quarter of last year.
Since then, SingTel’s quarterly profits have been repeatedly dampened by the financing costs associated with the mammoth US$10.7 billion buyout, However, there are fresh signs that the situation is on the mend.
‘Its (Bharti’s) transformation and restructuring plans (in South Africa) are going well,’ SingTel group chief executive officer Chua Sock Koong told reporters at a media conference yesterday.
According to SingTel’s international CEO Hui Weng Cheong, Bharti has been steadily growing its revenue and Ebitda in South Africa on the back of higher customer numbers and usage levels.
In India, the ‘downside’ in the first quarter was largely due to fair-value losses, higher taxes and the amortisation of Bharti’s 3G license fees, he explained.
Besides Bharti, contributions from Telkomsel also fell in the first quarter.
The share of pre-tax profits from SingTel’s Indonesian associate slid 4.8 per cent to $210 million due to weakening of the rupiah against the Singapore dollar.
Pakistani operator Warid and PBTL in Bangladesh continued to be in the red, with respective pre-tax losses of $12 million and $6 million.
Their decline was mitigated by improvements at SingTel’s associates in the Philippines and Thailand.
Pre-tax profit contributions from Globe and AIS climbed 10.3 per cent and 13 per cent to $49 million and $77 million respectively in Q1.
Optus, which accounts for 30 per cent of SingTel’s Ebitda, grew its first quarter net profit by 2.2 per cent to $213 million despite facing cutthroat competition.
In Australia, mobile operators have resorted to slashing tariffs to gain ground, Ms Chua said.
The appreciation of the Australian dollar also helped to cushion the impact of the price war on Optus’ first-quarter performance, she added.
Net profit from SingTel’s Singapore operations fell 11.7 per cent on year to $328 million as a result of higher pay-television content and service costs.
During the quarter, the group added a record 57,000 postpaid mobile subscribers to take its cellular customer base to 3.42 million.
It also grew its mio-TV tally by 21,000 users to 313,000 ahead the Barclays Premier League kickoff this weekend. Pay-TV contributed $23 million to the topline of its Singapore operations in Q1, the firm said.
On the home front, SingTel is expecting revenue boon from the disposal of its Internet assets over coming years.
Last month, the operator hived off some $1.89 billion in passive broadband infrastructure that is being used for the government- backed Next-Gen NBN (National Broadband Network). These assets, which include manholes, ducts and exchange buildings, are now held under a newly-minted Netlink Trust, which counts SingTel as the sole unit holder for now.
However, local authorities have ordered the firm to pare down its stake to less than 25 per cent by April 2014.
SingTel is looking at various options to meet this requirement. These include a possible initial public offering for Netlink Trust. It could also sell its stake to partners, Ms Chua said.
SingTel shares closed three cents lower at $2.92 yesterday.