Asian mobile growth spurs SingTel Q1 profit

Jennifer Tan

SINGAPORE: Singapore Telecommunications Ltd., Asia's fifth-largest phone firm, posted a smaller-than-expected 9.5 percent rise in quarterly profit on Thursday as strong regional mobile growth offset a margin squeeze at its Australian unit.

SingTel has spent S$17 billion in the last four years buying firms in Australia and high-growth Asian nations as it battles fierce competition at home, where nine out of 10 people already own a mobile phone.

It derives about 75 percent of revenues and two-thirds of pretax earnings from operations outside Singapore. Its Optus unit in Australia is now SingTel's top revenue earner, but subscriber growth is expected to slow as its market matures.

"Bharti and Telkomsel continue to contribute strongly to the group's earnings growth," chief executive Lee Hsien Yang said in a statement.

SingTel, majority owned by the government, made an underlying profit before goodwill and exceptionals of S$762 million ($460 million) in its fiscal first quarter to June, compared with S$696 million in the year-earlier quarter.

This was below an average underlying profit forecast of S$778 million, according to a Reuters poll of eight analysts whose estimates ranged from S$743 million to S$797 million.

Attributable net profit was S$796 million, up 14 percent, thanks to a one-off gain of S$34 million from a stock transaction related to its stake in Indian mobile firm Bharti.

SingTel's Optus division has a one-third share of Australia's mobile phone market, where more than eight in 10 people own a handset and competition is heating up.

Optus Mobile, which boosted sales by 5 percent in the first quarter, contributed 56 percent of overall revenue growth, with the fixed-line divisions contributing 44 percent.

But SingTel's profits were boosted by robust contributions from fast-growing Asian markets, where cellphone users are fewer.

The company owns major stakes in five operators: 21.5 percent of Thailand's Advanced Info Service Plc., 30.8 percent of India's Bharti Group, 44.6 percent of Globe Telecom Inc. in the Philippines, 35 percent of Indonesia's PT Telkomsel and 45 percent of Pacific Bangladesh Telecom Ltd., purchased in June.

The associates contributed S$273 million in the quarter to the group's bottom line, an increase of 23 percent.