SingTel Q3 Underlying Net Profit Up 21.7% Y/Y on Regional Subscriber Gains

For the quarter ending December 2007, the group's revenue grew by 11% year-on-year (y/y) to S$3.83 billion (US$2.7 billion), driven by an 11% revenue growth in its Singapore business and the appreciation of the Australian dollar. The regional mobile associates continued to record good earnings growth. Excluding exceptional items, the associates’ pre-tax earnings were up 30% to S$656 million, driven mainly by Bharti in India, Indonesia's Telkomsel, and Globe Telecom in the Philippines. The group's net profit for the quarter dropped 4.2% to S$952 million from the same period of the previous year, when it booked US$144 million in exceptional gains on property disposal. Excluding the impact of exceptional items, underlying net profit grew by 22% to S$931 million. The company affirmed its medium-term target of growing underlying net profit at a double-digit rate.

The group’s combined mobile subscriber base in the region has reached 171.54 million as of 31 December 2007. Its mobile subscriber base in the eight markets—Australia, Bangladesh, India, Indonesia, Pakistan, the Philippines, Singapore and Thailand—in which it is a player went up by 53% from 112.28 million a year earlier, although the latest figure was partly boosted by the addition of Warid Telecom’s 13.21 million subscribers in Pakistan in the quarter. Bharti, the largest regional mobile associate in terms of subscriber numbers, broke its previous net additions records by adding 6.29 million mobile subscribers in the quarter. As of 31 December 2007, it had enlarged its total subscriber base to 55.16 million. Telkomsel, the second-largest mobile associate by subscribers, added 3.43 million subscribers in the quarter to bring its total mobile subscriber base to 47.89 million. Advanced Info Services (AIS) in Thailand, Pacific Bangladesh Telecom (PBTL) in Bangladesh, Globe Telecom and Warid Telecom posted subscriber growth of between 4.4% and 11.3% during the quarter.

Outlook and Implications

• Overseas Expansion: SingTel continues to reap gains from overseas investments, with its associate firms in India and Indonesia remaining as the high achievers of its fiscal first-quarter results. The group's Chief Executive Chua Sock Koong said during a press briefing that the recent market turmoil has created "more realistic values for assets", and said the company would continue to explore for new acquisition opportunities, primarily in Asia. She added the company would be prepared to work with its current associates to exploit quantitative and qualitative growth opportunities in their respective markets, as well as working with new local partners when entering new markets. Lim Chuan Poh, SingTel's chief executive of international operations, said that while the company has been focused on mobile players in the past, it is willing to venture out to different fields, such as international data businesses, in order to strengthen its overall business. SingTel has been reported to be interested in becoming a strategic investor in Vietnam's second-largest mobile operator, MobiFone, as the company prepares for a partial privatisation. With the likes of Vodafone, France Telecom and Telenor all eyeing to invest in MobiFone, SingTel is set to face a strong competition in the bidding. The group has also been linked with the bidding for a majority stake in Ghana. However, SingTel has stated that it did not make a bid for a Ghana Telecom last year after participating in the initial exploratory process because of high valuation and market conditions. However, the company did not rule out entering that market in the future.
• National Broadband Project: SingTel is also considering its options on how it will participate in Singapore's high-speed national broadband project, according to Dow Jones. The broadband project, announced by the Singapore government in February 2006, aims to connect more than half of businesses and homes to a national broadband network capable of speeds of around 1,000 megabits per second by 2012. The government has divided the network into three tiers. The passive infrastructure operator, or NetCo, will build the ducts and wirelines. Wholesale operators, or OpCos, will direct and sell bandwidth traffic to retail operators, who will sell services to customers. SingTel's standalone bid for the broadband project is one of 12 bids pre-qualified by the Infocomm Development Authority (IDA). It also leads one consortium bid and is part of another separate consortium bid. Chua said that SingTel's extensive broadband infrastructure puts it in a strong position for the NetCo bid, but added that the company will have to see if it has a good business case before placing a bid (see Singapore: 12 December 2007: IDA Seeking Proposals for Next-Generation National Broadband Network).