Easing Fair Value to S$3.34

1Q11 results mostly in line. SingTel released its 1Q11 results this morning, with revenue up 11.5% YoY at S$4289.0m; but revenue fell 4.1% QoQ and was also about 3.8% below our estimate, mainly hit by seasonally lower IT and Engineering revenue from NCS and a weaker AUD QoQ. Net profit eased 0.2% YoY to S$943.2m; however, it fell 7.1% QoQ, again due mainly to seasonal factors and lower associate contributions (down 17.8% YoY and 6.9% QoQ); but it was just 1.6% shy of our forecast, as overall EBITDA margin was relatively steady at 29.3%, versus 29.9% in both 1Q10 and 4Q10.

Review of Singapore operations. Mobile revenue grew 13.7% YoY and 3.6% QoQ, driven by increased overseas travel and tourist arrivals; monthly blended APRU also increased further to S$53, up from S$51 in 4Q10, thanks to strong demand for smartphones and higher mobile data usage. While NCS contribution was down 29% QoQ (+6.1% YoY), SingTelalludes to revenue recovery given several major contracts that NCS has won recently. More details were also given for its mio TV segment, which saw a 15% QoQ jump in subscribers to 220k, fuelled by the World Cup and BPL offers; estimated ARPU came in ~S$63.6 but this may have been boosted by one-off World Cup pricing. Overall operational EBITDA margin came in at 38.2%; but it is keeping its 35% guidance for FY11 due to an expected hike in content cost from BPL and NBN initiatives.

Review of Optus and associates. Overall operating revenue grew 2.6% YoY (+1.0% QoQ), driven largely by its mobile business, which rose 6.7% YoY (+1.9% QoQ); it now contributes around 63% versus 60.7% a year ago. Overall EBITDA margin inched up to 24.5% from 23.0% in 1Q10 but still lower than 27.3% in 4Q10 due to seasonality. For the rest of FY11, SingTel has also kept its guidance unchanged.

Associates’ contribution fell 17.8% YoY and 6.9% QoQ; SingTel has kept its guidance largely unchanged except that it now expects Telkomsel’s operating revenue to grow at single-digit (versus high single-digit previously).

Easing fair value to S$3.34. In view of the likely lower associate contribution, we pare our FY11F earnings by 10.3% (FY11F by 6.5%). Although our valuations for its Singapore and Australia businesses are largely unchanged, the softer outlook for both Telkomsel and Bharti will reduce our SOTP fair value from S$3.40 to S$3.34. But as the total return is still over 10%, we maintain our BUY rating.

Easing Fair Value to S$3.34

1Q11 results mostly in line. SingTel released its 1Q11 results this morning, with revenue up 11.5% YoY at S$4289.0m; but revenue fell 4.1% QoQ and was also about 3.8% below our estimate, mainly hit by seasonally lower IT and Engineering revenue from NCS and a weaker AUD QoQ. Net profit eased 0.2% YoY to S$943.2m; however, it fell 7.1% QoQ, again due mainly to seasonal factors and lower associate contributions (down 17.8% YoY and 6.9% QoQ); but it was just 1.6% shy of our forecast, as overall EBITDA margin was relatively steady at 29.3%, versus 29.9% in both 1Q10 and 4Q10.

Review of Singapore operations. Mobile revenue grew 13.7% YoY and 3.6% QoQ, driven by increased overseas travel and tourist arrivals; monthly blended APRU also increased further to S$53, up from S$51 in 4Q10, thanks to strong demand for smartphones and higher mobile data usage. While NCS contribution was down 29% QoQ (+6.1% YoY), SingTelalludes to revenue recovery given several major contracts that NCS has won recently. More details were also given for its mio TV segment, which saw a 15% QoQ jump in subscribers to 220k, fuelled by the World Cup and BPL offers; estimated ARPU came in ~S$63.6 but this may have been boosted by one-off World Cup pricing. Overall operational EBITDA margin came in at 38.2%; but it is keeping its 35% guidance for FY11 due to an expected hike in content cost from BPL and NBN initiatives.

Review of Optus and associates. Overall operating revenue grew 2.6% YoY (+1.0% QoQ), driven largely by its mobile business, which rose 6.7% YoY (+1.9% QoQ); it now contributes around 63% versus 60.7% a year ago. Overall EBITDA margin inched up to 24.5% from 23.0% in 1Q10 but still lower than 27.3% in 4Q10 due to seasonality. For the rest of FY11, SingTel has also kept its guidance unchanged.

Associates’ contribution fell 17.8% YoY and 6.9% QoQ; SingTel has kept its guidance largely unchanged except that it now expects Telkomsel’s operating revenue to grow at single-digit (versus high single-digit previously).

Easing fair value to S$3.34. In view of the likely lower associate contribution, we pare our FY11F earnings by 10.3% (FY11F by 6.5%). Although our valuations for its Singapore and Australia businesses are largely unchanged, the softer outlook for both Telkomsel and Bharti will reduce our SOTP fair value from S$3.40 to S$3.34. But as the total return is still over 10%, we maintain our BUY rating.

Boost for SingTel’s mobile subscriber base

Its regional mobile subscribers up 34% y-o-y in Q2

A SUBSCRIBER boom at overseas associates Bharti and Telkomsel helped lift Singapore Telecommunications’ regional mobile subscriber base to 351 million in the second quarter, up 34 per cent from a year ago.

For the three months ended June 30, the company’s largest overseas associate Bharti added 74.6 million customers from the same period in 2009 to bring its mobile base to 177 million.

This was helped by the addition of 36.4 million customers in Africa after Bharti had successfully acquired MTN’s mobile operations across 15 African markets during the quarter.

SingTel’s Indonesian associate Telkomsel also turned in a strong quarter with its subscriber tally climbing 16 per cent from last year to 88.3 million.

Telkomsel added 6.4 million mobile customers in Q2, a marked improvement from a mere 307,000 in the preceding quarter.

Thailand’s AIS also saw a year-on-year improvement with its mobile base growing 8 per cent to 30 million in the second quarter.

Bangladesh’s PBTL on the other hand, added 33,000 more subscribers from 2009 to bring its tally to nearly two million.

However, customer numbers waned across SingTel’s remaining overseas associates Globe and Warid.

In the Philippines, Globe saw its mobile base shrink 2 per cent year-on-year to 24.6 million in Q2. Warid’s subscriber tally fell 5 per cent to 16.9 million.

SingTel’s Australian subsidiary Optus added 190,000 mobile users in Q2 to lift its base to 8.7 million.

On the home front, SingTel added 122,000 more cellular subscribers from last year as customers continue to lap up newfangled smartphones from handset makers such as Apple, Samsung and HTC.

The firm continues to lead the local mobile market with 3.11 million subscribers in the second quarter.

Boost for SingTel’s mobile subscriber base

Its regional mobile subscribers up 34% y-o-y in Q2

A SUBSCRIBER boom at overseas associates Bharti and Telkomsel helped lift Singapore Telecommunications’ regional mobile subscriber base to 351 million in the second quarter, up 34 per cent from a year ago.

For the three months ended June 30, the company’s largest overseas associate Bharti added 74.6 million customers from the same period in 2009 to bring its mobile base to 177 million.

This was helped by the addition of 36.4 million customers in Africa after Bharti had successfully acquired MTN’s mobile operations across 15 African markets during the quarter.

SingTel’s Indonesian associate Telkomsel also turned in a strong quarter with its subscriber tally climbing 16 per cent from last year to 88.3 million.

Telkomsel added 6.4 million mobile customers in Q2, a marked improvement from a mere 307,000 in the preceding quarter.

Thailand’s AIS also saw a year-on-year improvement with its mobile base growing 8 per cent to 30 million in the second quarter.

Bangladesh’s PBTL on the other hand, added 33,000 more subscribers from 2009 to bring its tally to nearly two million.

However, customer numbers waned across SingTel’s remaining overseas associates Globe and Warid.

In the Philippines, Globe saw its mobile base shrink 2 per cent year-on-year to 24.6 million in Q2. Warid’s subscriber tally fell 5 per cent to 16.9 million.

SingTel’s Australian subsidiary Optus added 190,000 mobile users in Q2 to lift its base to 8.7 million.

On the home front, SingTel added 122,000 more cellular subscribers from last year as customers continue to lap up newfangled smartphones from handset makers such as Apple, Samsung and HTC.

The firm continues to lead the local mobile market with 3.11 million subscribers in the second quarter.

Bharti outlook better as price war recedes

(NEW DELHI) The focus for Bharti Airtel will be to maintain profit margins as a vicious price war recedes, after India’s top telecoms firm reported that quarterly profits fell by a third.

Facing tough competition in a crowded home market, Bharti, an associate of Singapore Telecommunications, is betting on opportunities in Africa, where the mobile penetration level at 32 per cent is less than India’s 54 per cent and there are fewer competitors.

Bharti’s results included its new African operations, which were on its balance sheet for only 23 days in the quarter ended June. Bharti acquired the business from Kuwaiti telecoms group Zain for US$9 billion in June and became the world’s fifth-biggest mobile operator.

After call prices in India tumbled to as low as 0.4 US cents a minute – with most of the price declines taking place in the second half of 2009 – there were no big price cuts in April-June.

Bharti’s earnings before interest, taxes, depreciation and amortisation margin was 36.9 per cent in April-June, compared with 41.3 per cent a year ago.

Bharti said that net profit fell to 16.82 billion rupees (S$490 million) under international accounting standards for its first quarter ended June, from 24.75 billion rupees a year ago.

Derivatives and exchange fluctuations led to a loss of 2.16 billion rupees as the US dollar strengthened. Bharti had a forex gain of 2.79 billion rupees a year ago. Total revenue rose to 122.31 billion rupees from 104.14 billion rupees. — Reuters