SingTel – BT

SingTel Q3 profit drops on weaker contributions

Group’s profit of $902m falls short of analysts’ average estimated net profit

SINGAPORE Telecommunications (SingTel) saw a 9.6 per cent drop in third-quarter net profit from $998 million to $902 million on weaker contributions from its associates, with Bharti’s 3G losses making themselves felt.

The group’s quarterly performance fell short of the $922 million average estimated net profit by four analysts that Reuters surveyed.

Earnings per share for the three-month and nine-month period ended Dec 31, 2011 stood at 5.66 cents and 16.95 cents respectively, down from 6.28 cents and 17.79 cents a year ago.

Group revenue for the same period grew 2.7 per cent to $4.83 billion, boosted by a better performance from local operations and Optus.

SingTel’s share of its associates’ ordinary pre-tax earnings shrank 8.3 per cent to $475 million. Bharti accounted significantly for the shrinkage, with its contribution falling 30.3 per cent to $128 million.

The Indian operator incurred higher costs from its 3G rollout, while its venture in Africa took a hit from acquisition financing costs.

SingTel’s group CEO Chua Sock Koong pointed out, however, that Bharti’s African operations had made ‘impressive’ progress, with a 16 per cent increase in operating revenue to US$1.06 billion because of higher customer base and increased average minutes of use.

‘Execution in Africa has been tracking well,’ Ms Chua said.

Where Bharti’s Indian operations are concerned, the magnitude of the fallout from the Indian Supreme Court’s move to yank back 122 telco licences awarded in 2008 remains difficult to determine.

‘It is still too early to say how it will affect Bharti . . . The terms of the new licences are not out yet,’ Hui Weng Cheong, SingTel’s CEO International, said.

Indonesia’s Telkomsel and Thailand’s AIS saw improved earnings, with contributions that were 5.6 per cent and 23.4 per cent higher, at $226 million and $84 million, respectively.

The group’s losses from its investments in Warid and Pacific Bangladesh Telecom Ltd (PBTL), however, widened to losses of $15 million and $11 million, respectively.

Back in Singapore, the group’s local operations posted a 4.3 per cent dip in net profit for the quarter, at $333 million, driven in part by higher subscriber acquisition costs. This was compounded by structural separation costs that the telco booked.

Local operating revenue for the quarter grew 2.5 per cent to $1.68 billion on the back of higher handset sales fuelled by the iPhone 4S. SingTel’s mobile customer base also enjoyed a 9.9 per cent lift, growing by 61,000 to 3.55 million.

Its fibre rollout revenue saw a drop, coming in 38.8 per cent lower at $44 million, as it passed the peak of its OpenNet rollout. As of end-2011, OpenNet had more than 80 per cent coverage of homes here. Meanwhile, SingTel’s fibre customer base grew to 55,000, up 18,000 year on year.

mio TV’s revenue for the quarter saw a 32 per cent growth in revenue to $28 million, as its customer base grew by 18,000 during the quarter to 353,000.

The telco said yesterday that it will throw its hat into the ring for the 2013-2016 package of broadcasting rights for the Barclays Premier League (BPL) when bidding starts in March. As of last August, pay-TV operators were obliged to make available their competitors’ exclusive content if their subscribers request it. This reduced some of the impetus for signing exclusive content.

Before the new guidelines kicked in, SingTel won the exclusive broadcast rights for the previous BPL cycle, for what was rumoured to cost at least $300 million.

Allen Lew, SingTel’s CEO, said that this time, any bidding will ‘take into consideration the new regime’.

‘It would be premature for me to discuss this but we are well-prepared . . . we are starting the process,’ Mr Lew said.

On the Australian front, Optus saw its quarterly net profit grow 4.4 per cent to A$177 million (S$238.7 million), boosted by increased service revenue and lower subscriber costs.

For the nine months ended Dec 31, 2011, net profit for the group fell 4.7 per cent to $2.7 billion, even as group revenue grew 4.6 per cent to $14.05 billion.

Its counter closed six cents higher at $3.13 in trading yesterday.

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