SingTel Profit Drops 8.3% on Optus Restructure, Globe
Stock Chart for Singapore Telecommunications Ltd (ST)
Singapore Telecommunications Ltd., Southeast Asia’s biggest phone company, said third-quarter profit fell 8.3 percent on charges from its Australian and Philippine businesses and currency moves.
Net income dropped to S$827 million ($669 million) in the three months ended December, Singapore-based SingTel said in a statement today. That missed the S$907 million average of four analyst estimates compiled by Bloomberg and follows accelerated depreciation charges at its Globe business in the Philippines and costs from restructuring its Optus unit in Australia.
SingTel is revamping Optus and accelerating the roll out of a faster Australian mobile network as mounting competition crimps growth at its biggest unit by sales. Growth in Singapore is slowing as the nation’s currency appreciated against the Indonesian rupiah and the Thai baht last year and undermined the value of earnings from regional affiliates.
“In Australia the competition is an issue and in Singapore it’s a mixed bag,” said Ramakrishna Maruvada, an analyst at Daiwa Securities Group Inc. in Singapore. “There’s no change in the underlying trends here.”
SingTel shares fell 1.9 percent to S$3.53 as of 3:30 p.m. in the city state, the biggest decline since Dec. 24. The benchmark Straits Times Index slipped 0.2 percent. The stock has gained 14 percent over the past year, compared with a 10 percent increase in the benchmark.
The company affirmed a November forecast that full-year sales would fall by a “low-single digit level” because of declines at Optus. Earnings before interest, tax, depreciation and amortization will be “stable,” the company said.
“The performance of the group demonstrates the resilience of our core operations,” Chief Executive Officer Chua Sock Koong said in a statement.
Third-quarter Ebitda at Optus, Australia’s second-largest phone company, rose 2.6 percent to A$576 million ($596 million). Revenue fell 5.7 percent. The unit is expanding fourth- generation services as Telstra Corp. lures customers with a larger and faster 4G network.
“The Australian industry has entered a phase of negative mobile revenue growth,” Kevin Russell, Optus’s chief operating officer, told a media call today. “This market requires a different emphasis.”
Ebitda from Singapore, where the former government agency has about 47 percent of the mobile-phone market, rose 1.4 percent to S$531 million. The division accounted for about half of SingTel’s operating income last year.
The company took one-time charges worth S$67 million for changes at Optus and an upgrade to Globe’s network.
The earnings contribution from regional associates rose 1.2 percent to S$455 million in the quarter as strong results from its Indonesian and Thai affiliates limited the impact of weaker results in India, the company said.
The pretax earnings contribution from Indian affiliate Bharti Airtel Ltd. slumped 46 percent to S$70 million. Bharti on Feb. 1 reported earnings that missed analyst estimates after a weaker rupee boosted finance and network equipment costs.
SingTel owns all of its Singapore and Australian phone businesses in addition to minority stakes in six other mobile operators with 473 million customers in more than 20 countries in Asia and Africa.
The company last month agreed to sell its entire 30 percent stake in Warid Telecom (Private) Ltd. to Warid Telecom Pakistan LLC for $150 million. The Singaporean company will also have a right to receive a 7.5 percent share of net proceeds from any future sale, public offering or merger.
The company on Jan. 25 submitted interest for telecommunications licenses in Myanmar with local partners.
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