Singapore Telecommunications Ltd. (ST), Southeast Asia’s biggest phone company, posted first-quarter profit that beat analyst estimates after cutting costs at its Optus unit in Australia and higher earnings from associates.
Net income rose to S$1.01 billion ($797 million) in the three months to June compared with S$945.3 million a year earlier, SingTel, as the Singapore-based company is known, said in a statement today. Profit was projected at S$928.7 million, according to the average of three analysts’ estimates compiled by Bloomberg. Sales dropped 5.3 percent to S$4.29 billion.
SingTel plans to spend S$2 billion on acquisitions as growth in wireless earnings slows in Singapore and other countries. The company’s expansion into faster-growing Southeast Asian markets, including a stake in Thailand’s Advance Info Service Pcl (ADVANC), is limiting the impact of slowing growth at Indian associate Bharti Airtel Ltd. (BHARTI) after a price war.
“Our regional mobile associates have continued to perform well,” Chief Executive Officer Chua Sock Koong said today. “We are also pleased to see some pricing discipline returning to the Indian mobile market.”
Group revenue will decline by a “mid-single digit level” and earnings before interest, tax, depreciation and amortization will fall at a “low single digit level,” the company said today. SingTel previously forecast little changed sales.
SingTel shares fell 0.8 percent to S$3.79 at 9:23 a.m. in Singapore. The stock has climbed 15 percent this year, compared with a 2.4 percent advance in the benchmark Straits Times Index.
First-quarter Ebitda at Optus, Australia’s second-largest phone company, rose 4.9 percent to A$572 million ($520 million).
While revenue at Optus declined 5.3 percent, the company cut operating expenses 9 percent on lower selling and administrative costs. The unit in May agreed to pay A$649 million for an allocation of airwaves to build up its wireless network to attract more customers from Telstra Corp. (TLS) and other competitors.
Telstra, Australia’s largest phone company, last week posted a 12 percent gain in full-year profit as a surge in new users for its fourth-generation network boosted its share of the mobile phone market to almost 50 percent.
SingTel yesterday said it will retain the Optus Satellite unit after completing a review of the business.
Revenue from its mobile business in Singapore rose 7 percent to S$506 million, helped by higher data contribution and a cut in handset subsidies, the company said.
The profit contribution from regional associates climbed 14 percent to S$552 million in the quarter on higher results from Indonesia, Thailand and India, the company said.
The pretax earnings contribution from Bharti gained 20 percent to S$113 million on growth in data.
SingTel owns all of its Singapore and Australian phone businesses in addition to minority stakes in other mobile operators giving it 477 million customers across 25 countries in Asia, Africa and Australia.
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