May 10 (Bloomberg) -- Singapore Telecommunications Ltd., Southeast Asia’s biggest phone company, may buy non-phone businesses in China, India or the U.S. as it shifts focus from slower-growing core markets in Singapore and Australia.
SingTel, as the company is known, may raise its stakes in associates in Asia and Africa and make other “strategic investments,” the carrier said in a statement today, while reporting a 30 percent jump in fourth-quarter profit. Net income climbed to S$1.29 billion ($1 billion) in the three months ended March 31, beating the S$966 million average of seven analysts’ estimates, helped by a one-time tax credit.
The Singapore-based carrier plans to boost investments in emerging markets and add businesses at its digital services division as the Optus unit in Australia faces “continued intense competition” and growth slows at home. The company would benefit from acquiring operations such as mobile advertising, according to Carey Wong, an analyst at OCBC Investment Research Pte. in Singapore.
“Being a pure carrier doesn’t cut it at this stage,” Wong said before the earnings announcement. SingTel needs to “come up with something new that can monetize the changing trends we’re seeing among consumers.”
SingTel rose 1.6 percent to S$3.21 as of 2:05 p.m. in Singapore, poised for its highest close since Dec. 12, while the benchmark Straits Times Index fell 0.2 percent. The stock had gained 2.3 percent this year up to yesterday’s close, trailing a 9.6 percent climb by the index.
The carrier, which in March announced an agreement to acquire Redwood City, California-based mobile advertising company Amobee Inc. for $321 million, said it planned to add assets at its Digital Life division.
“When we look at acquiring the technology know how in the start up space, we could be looking at quite a few different places,” Chief Executive Officer Chua Sock Koong told a media conference in Singapore today. It could be startups in Silicon Valley, California or in countries such as India and China, she said.
Group revenue at the Singapore and Australia operations are forecast to grow at “low single-digit” rates this year while earnings before interest, tax, depreciation and amortization may be stable, SingTel said. Dividends from associates in Asia and Africa “are expected to grow,” it said.
SingTel owns all of its domestic business and Optus, Australia’s second-largest phone company, and has minority stakes in associated carriers in more than 10 countries in Asia and Africa.
‘Consistent With Expectations’
Sales at SingTel rose 3 percent from a year earlier to S$4.78 billion in the three months ended March 31. Profit was boosted in the fourth-quarter by a S$270 million tax credit, it said.
Excluding the one-time items, the result was “consistent with expectations”, William Bratton, an analyst at Deutsche Bank AG in Hong Kong, said by phone.
The company and its associates added about 12 million mobile subscribers in the quarter, SingTel said in a release yesterday. The additions boosted total customers to 445 million at the end of March, 11 percent more than a year earlier.
Full-year net income rose 4.3 percent to S$3.99 billion. Excluding the tax benefit, items and exchange differences including at associates, profit declined 3.3 percent to S$3.68 billion.
Full-year profit before tax at its domestic business, which has a 46 percent share of Singapore’s mobile-phone market, fell 2 percent to S$1.67 billion.
Pretax income at Optus, SingTel’s largest division by sales, increased 4.2 percent to S$1.47 billion. Sales fell 1.1 percent in Australian dollar terms, which became a 2.7 percent improvement when translated into Singapore dollars.
Pretax earnings from SingTel’s joint ventures and associates dropped 8.5 percent to S$1.43 billion.
SingTel owns about a third of India’s Bharti Airtel Ltd. and Indonesia’s PT Telekomunikasi Selular and almost half of Manila-based Globe Telecom Inc.
It has stakes in Pakistan’s Warid Telecom Pvt. and Pacific Bangladesh Telecom Ltd., and holds 23 percent of Advanced Info Service Pcl, Thailand’s largest mobile-phone operator.
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