Author: tfwee
SingTel – AmFraser
Three regional pillars performed well
• 1HFY10 net profit came in at S$1.9bil as we expected. Overall, a good performance with net up 10% YoY for the interim as well as for the quarter. All three pillars – Singapore operations, Optus in Australia and its group of associates – did not disappoint.
• Net profit at Optus grew a healthy 17% YoY in local currency terms, while Singapore operations grew 9%. Total associate contributions surged 20% to S$1.25bil pretax, which is half of group earnings.
• Mobile was a strong driver for the group, helped by distribution of iPhone and increased take-up of wireless broadband. Even in saturated Singapore, SingTel added 20,000 net subscribers/month, while Optus did better at over-70,000. At the same time, ARPUs in 2Q10 maintained at 1Q10 levels.
• In the corporate segment, ICT and managed services is a key driver with continued contract wins for Optus and Singapore operations.
• The key driver for associates this year is Telkomsel Indonesia which contributed 25% more YoY to SingTel. Telkomsel is on a recovery path from a price competition in FY09. But a weaker 2QFY10 for Bharti has led to consensus downgrades which tweaks our SingTel FY10 forecasts lower.
• But our FY11F and FY12F are marginally raised, mainly on back of a stronger A$ which will aid in translation of Optus’s contribution. We have applied a revised rate of 1.25 from 2H 2010 onwards, compared to 1.17 previously applied.
• Management continues to guide for single-digit growth for topline as well as for EBITDA growth. We forecast FY10 net to grow 16% YoY to S$4bil, thereafter at 6% growth in FY11 and 4% in FY12 on constant currency rates.
• We are maintaining our HOLD rating with fair value at S$3.05.
• SingTel also declared an interim dividend of 6.2 cents Singapore; for 1HFY09, 5.6 cents was declared.
SingTel – BT
SingTel Q2 profit up 10.1% at $956m
Revenue up 5.4%; higher interim dividend of 6.2 cents
Singapore Telecommunications adds further proof that economic recovery is at hand as its quarterly profits rise for the second time in a row on the back of a strong performance in Singapore, Australia and Indonesia.
South-east Asia’s largest telco yesterday posted a 10.1 per cent rise in fiscal second-quarter net profit to $956 million, up from $868 million a year earlier.
Earnings per share for the three months ended Sept 30 rose 10.1 per cent to 6.00 cents, while operating revenue increased 5.4 per cent to $4.1 billion.
SingTel, which derives 72 per cent of its Ebitda – earnings before interest, tax, depreciation and amortisation – from overseas, benefited from a rebound in associate earnings in the quarter, particularly Indonesian telco Telkomsel.
Although the Australian dollar and Indonesian rupiah both strengthened against the Sing dollar sequentially, pre-tax earnings from its six regional affiliates still grew 32 per cent to $571 million.
Telkomsel’s share of pre-tax profits stood at $252 million in Q2, up 45.9 per cent from last year.
Indonesia’s largest wireless operator added 19.3 million mobile customers during the quarter and extended its market share lead by 5.4 percentage points to 51 per cent.
Contributions from SingTel’s largest regional associate Bharti Airtel climbed 26.4 per cent to $236 million in Q2.
Earlier this month, SingTel announced plans to raise its stake in the Indian operator from 30.43 per cent to 31.95 per cent through the purchase of an additional 730,000 shares.
The deal, which could cost as much as US$641 million (S$898 million), comes on the heels of Bharti’s second failed merger attempt with South Africa’s MTN Group. Bharti is reportedly on the lookout for other acquisition targets in the republic and SingTel could lend its blessings to any new deal that might emerge.
‘We continue to look at new areas where there is a high potential for growth. Africa is an extension of what we believe to a synergistic market to India,’ said SingTel’s head of international operations Lim Chuah Poh.
Within Asia, the group will focus on telecommunications markets that are not ‘fully-liberalised’. ‘Markets like Vietnam continue to present a potential opportunity,’ he told reporters at the company’s results briefing yesterday.
SingTel’s four remaining associates – Thailand’s AIS, Globe in the Philippines, Pakistan’s Warid Telecom and PBTL in Bangladesh – turned in a less impressive Q2 scorecard.
Earnings contributions from AIS and Global fell 16.7 per cent and 12.3 per cent respectively to $53 million, while Warid and PBTL weighed SingTel down with losses of $19 million and $3 million respectively.
The group’s Singapore operations registered a 9 per cent fall in Q2 net profit to $321 million.
There was a 62.7 per cent spike in revenue from SingTel’s local IT and engineering business due to higher contributions from its last acquisition Singapore Computer Systems (SCS).
Revenue from the firm’s Singapore telco business, however, fell 1.2 per cent as a result of lower handset sales.
Australian subsidiary Optus saw a 21.4 per cent jump in second-quarter net profit to $184 million, buoyed by strong mobile and wireless broadband subscriber growth.
For the first half of its financial year, SingTel’s group net profit rose 8.9 per cent to $1.9 billion while revenue edged up 3.7 per cent to $7.95 billion.
SingTel has declared a higher interim dividend of 6.2 cents per share on account of its positive first-half performance, 11 per cent more than what it has been paying shareholders in the last two years. This translates to a payout ratio of 52 per cent.
‘The ratio is in line with our dividend payout policy (of paying between 45 per cent to 60 per cent). It should be sustainable,’ said SingTel group CEO Chua Sock Khoong.
Looking ahead to the full year, she expects SingTel’s operating revenue and Ebitda in its two core markets – Singapore and Australia – to grow within the single-digit range, and pre-tax earnings from Bharti and Telkomsel to be higher in local currency terms.
SingTel shares closed four cents higher yesterday at $2.98.
SingTel, StarHub – BT
SingTel tells StarHub: thanks, but no thanks
Offer on set-top boxes has come 3 years too late, it says to its rival
StarHub’s idea for getting around the inconvenience of multiple set-top boxes appears to have been shot down hours before it tabled a formal proposal to arch rival Singapore Telecom.
Having invested millions in its own Internet television network for pay-TV, SingTel’s prerogative is to recoup this investment, SingTel Singapore CEO Allen Lew said yesterday morning, hours before StarHub finally submitted an official offer to carry SingTel’s pay TV content.
‘Three years ago when we entered the pay-TV market, we had the option of either building a new network or using the incumbent’s (StarHub’s) network,’ he said.
‘At that time, there was no proposal from them and no ability to use their network. The offer is kind of three years too late. Having built the network, I have to recover the investment.’
Mr Lew was responding to comments by StarHub’s outgoing chief Terry Clontz that network sharing could be a way around the need for two pay-TV set-top boxes.
The issue came up after SingTel outbid StarHub to score the sought-after broadcast rights for the next three seasons of the English Premier League (EPL).
Besides winning the coveted league, SingTel also convinced ESPN Star Sports to migrate from cable to its mio TV platform.
Viewers flooded newspapers and online forums with complaints of having to contend with multiple set tops to view entertainment and sports content from next year.
Local authorities are already looking into the possibility of standardisation, but StarHub believes its idea could be an interim solution.
Under the green camp’s mooted approach, StarHub and SingTel’s content could be carried via each other’s networks but consumers would still pay the respective companies for their subscriptions.
This means StarHub customers could watch SingTel content such as EPL matches using their existing cable TV set-top box.
Similarly, SingTel’s mio TV subscribers could access StarHub channels such as Discovery and AXN under the arrangement.
One drawback of this scenario is that unlike SingTel’s mio TV set-top, StarHub’s cable TV box is not NBN (national broadband network)-compatible, SingTel’s Mr Lew said.
This means that it cannot receive television programmes delivered via the upcoming nationwide fibre optic network.
Consumers will have to upgrade their StarHub set-top boxes when the NBN becomes progressively operational from the first quarter of 2010, he said.
In any event, SingTel did not receive official word from StarHub until yesterday, Mr Lew said.
‘I find it very strange that our competitor would make a commercial proposal through the press,’ he said. ‘If someone is serious about doing something, they approach the other party first,’ Mr Lew told reporters at SingTel’s second-quarter results briefing.
Singapore’s largest telco yesterday posted a second straight quarterly bottomline improvement, with net profit rising 10.1 per cent to $956 million on a strong showing across Singapore, Australia and Indonesia.
Earnings per share for the three months ended Sept 30 jumped 10.1 per cent to six cents, while revenue increased 5.4 per cent to $4.1 billion.
Net profit from Singapore operations fell 9 per cent to $321 million while that from Australian unit Optus soared 21.4 per cent to $184 million.
Pre-tax earnings from SingTel’s six regional affiliates grew 32 per cent to $571 million.
SPH – BT
SPH shares fall after mall bid
SHARES of media group Singapore Press Holdings (SPH) fell as much as 4.9 per cent yesterday before closing 3.9 per cent down on analysts’ fears over its strong bid for a mall.
But most analysts were upbeat on the fundamentals of the mall.
On Tuesday, a joint venture comprising SPH (60 per cent), NTUC FairPrice (20 per cent) and NTUC Income (20 per cent) emerged as the top bidder for a mall now being developed by HDB in Clementi.
The consortium’s top bid of some $542 million was about 42 per cent higher than the second highest bid of $382 million.
SPH shares closed 15 cents down at $3.74 yesterday.
‘Based on our preliminary calculations, we think SPH may have been unnecessarily aggressive in its bid for Clementi Mall,’ said Citigroup analysts Rigan Wong and Horng Han Low in a note.
DBS Group Research cut its target price for SPH to $4.00 from $4.22, and downgraded the stock to a ‘hold’ from a ‘buy’.
CIMB Research, on the other hand, is maintaining its ‘neutral’ call on SPH and also keeping its target price intact at $4.38.
Also, most analysts were positive about the fundamentals of the mall.
‘Notwithstanding the price, we believe the mall is well located within the town centre, connected to a bus interchange/MRT station and has a good catchment area with 91,000 residents and 65,000 students in the vicinity,’ said DBS Research analyst Andy Sim.
JPMorgan similarly acknowledged the ‘premium location’ of this suburban mall, but qualified that the price offered by the SPH consortium was far too aggressive.