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November 11, 2010, 4:31 AM EST
By Chan Sue Ling
(Updates with closing share price in fifth paragraph.)
Nov. 11 (Bloomberg) -- Singapore Telecommunications Ltd., Southeast Asia’s biggest phone company, reported an unexpected drop in profit after competition reduced earnings at partners in India and Indonesia.
Net income fell 6.7 percent from a year earlier to S$892 million ($692 million) in the quarter ended in September, SingTel, as the company is known, said in a statement today. That missed the S$969 million average of four analyst estimates compiled by Bloomberg.
Bharti Airtel Ltd. in India and PT Telekomunikasi Selular in Indonesia led a drop in earnings from regional affiliates, overshadowing gains from Australian unit Optus. SingTel Chief Executive Officer Chua Sock Koong is counting on the popularity of smartphones such as Apple Inc.’s iPhone to revive profit growth by boosting demand for wireless data and applications as markets saturate worldwide.
“Contributions from the regional associates reflect the competition in the markets that they operate in such as India and Indonesia,” said Carey Wong, an analyst at OCBC Investment Research Pte in Singapore. “Singapore and Australia are matured markets but you can still expect single-digit growth.”
Higher Dividend
SingTel rose 1.9 percent to S$3.31 at the close of trading in Singapore today. Of the 23 analysts tracked by Bloomberg in the past 12 months, nine had buy ratings, one recommended that investors sell the stock, and the remainder rated “hold.”
SingTel, whose largest shareholder is Singapore state investment company Temasek Holdings Pte, boosted its dividend payout ratio to 55 percent to 70 percent of underlying profit from the previous 45 percent to 60 percent.
The company defines underlying profit as net income before exceptional items and exchange differences on capital reduction of certain overseas subsidiaries. SingTel will pay an interim dividend of 6.8 Singapore cents a share, 10 percent more than last year, the statement said.
Pretax profit contributions from regional associates fell 6.2 percent to S$536 million, the company said. Regional mobile companies accounted for 43 percent of earnings before interest, tax depreciation and amortization, or EBITDA.
Optus contributed to 31 percent of EBITDA while the Singapore business provided 24 percent, the statement said.
Bharti Earnings
SingTel owns 32 percent of Bharti, India’s biggest wireless provider, and 35 percent of Telkomsel, as the Indonesian company is known. New Delhi-based Bharti reported a worse-than-expected 27 percent drop in earnings yesterday.
SingTel is boosting investments to access new technologies as surging smartphone sales drives up demand for wireless data services. The company in September started a S$200 million fund to invest in startups.
“It’s important to make these investments and we have made inroad,” Chua said in a statement. “The strategic initiatives are however expected to incur costs before delivering longer term scale benefits.”
The group’s mobile customer base grew 35 percent from a year ago to 368 million as of the end of September.
At Optus, Australia’s largest phone operator after Telstra Corp., net income increased 15 percent to A$175 million ($176 million) in the quarter. Operating revenue rose 4.7 percent to A$2.3 billion. Net income at the Singapore business declined 12 percent to S$295 million.
--Editors: Anand Krishnamoorthy, Young-Sam Cho.
To contact the reporter on this story: Chan Sue Ling in Singapore slchan@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
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(Updates with closing share price in fifth paragraph.)
Nov. 11 (Bloomberg) -- Singapore Telecommunications Ltd., Southeast Asia’s biggest phone company, reported an unexpected drop in profit after competition reduced earnings at partners in India and Indonesia.
Net income fell 6.7 percent from a year earlier to S$892 million ($692 million) in the quarter ended in September, SingTel, as the company is known, said in a statement today. That missed the S$969 million average of four analyst estimates compiled by Bloomberg.
Bharti Airtel Ltd. in India and PT Telekomunikasi Selular in Indonesia led a drop in earnings from regional affiliates, overshadowing gains from Australian unit Optus. SingTel Chief Executive Officer Chua Sock Koong is counting on the popularity of smartphones such as Apple Inc.’s iPhone to revive profit growth by boosting demand for wireless data and applications as markets saturate worldwide.
“Contributions from the regional associates reflect the competition in the markets that they operate in such as India and Indonesia,” said Carey Wong, an analyst at OCBC Investment Research Pte in Singapore. “Singapore and Australia are matured markets but you can still expect single-digit growth.”
Higher Dividend
SingTel rose 1.9 percent to S$3.31 at the close of trading in Singapore today. Of the 23 analysts tracked by Bloomberg in the past 12 months, nine had buy ratings, one recommended that investors sell the stock, and the remainder rated “hold.”
SingTel, whose largest shareholder is Singapore state investment company Temasek Holdings Pte, boosted its dividend payout ratio to 55 percent to 70 percent of underlying profit from the previous 45 percent to 60 percent.
The company defines underlying profit as net income before exceptional items and exchange differences on capital reduction of certain overseas subsidiaries. SingTel will pay an interim dividend of 6.8 Singapore cents a share, 10 percent more than last year, the statement said.
Pretax profit contributions from regional associates fell 6.2 percent to S$536 million, the company said. Regional mobile companies accounted for 43 percent of earnings before interest, tax depreciation and amortization, or EBITDA.
Optus contributed to 31 percent of EBITDA while the Singapore business provided 24 percent, the statement said.
Bharti Earnings
SingTel owns 32 percent of Bharti, India’s biggest wireless provider, and 35 percent of Telkomsel, as the Indonesian company is known. New Delhi-based Bharti reported a worse-than-expected 27 percent drop in earnings yesterday.
SingTel is boosting investments to access new technologies as surging smartphone sales drives up demand for wireless data services. The company in September started a S$200 million fund to invest in startups.
“It’s important to make these investments and we have made inroad,” Chua said in a statement. “The strategic initiatives are however expected to incur costs before delivering longer term scale benefits.”
The group’s mobile customer base grew 35 percent from a year ago to 368 million as of the end of September.
At Optus, Australia’s largest phone operator after Telstra Corp., net income increased 15 percent to A$175 million ($176 million) in the quarter. Operating revenue rose 4.7 percent to A$2.3 billion. Net income at the Singapore business declined 12 percent to S$295 million.
--Editors: Anand Krishnamoorthy, Young-Sam Cho.
To contact the reporter on this story: Chan Sue Ling in Singapore slchan@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
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