Wednesday November 12, 07:46 AM
SingTel Q2 net falls 12 pct on FX, iPhone launch |
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By Jennifer Tan
SINGAPORE (Reuters) - SingTel, Southeast Asia's largest phone firm, said quarterly profit fell 12 percent and saw lower full-year contributions from its regional associates due to a stronger domestic currency.
State-controlled Singapore Telecommunications -- the city-state's largest listed firm -- said on Wednesday profits were hit by subsidies for its iPhone launch and a stronger Singapore dollar versus regional currencies.
It expected lower full-year pretax earnings contributions from its mobile associates, and said group operating revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) would also be hurt by the fall in the Australian dollar.
DMG & Partners analyst Terence Wong said SingTel's earnings had been hit by lower contributions from Indonesia's Telkomsel and losses from Pakistan's Warid Telecom.
"We expect further profit declines over the next few quarters -- the outlook is not good," Wong said.
Fiscal second-quarter attributable net profit was S$868 million ($577 million) versus S$988 million last year, down 12 percent.
SingTel made underlying net profit before goodwill and exceptionals of S$801 million in the July-September quarter, also down 12 percent compared with S$914 million in the year-ago period.
This was broadly in line with an average underlying net profit forecast of S$810.5 million from four analysts polled by Reuters.
FINANCIAL CRISIS BITES
"The current global financial crisis is unprecedented and the negative impact on businesses will be inevitable," Chief Executive Chua Sock Koong said in a statement.
Facing a domestic market of just 4.6 million people where virtually everyone has a mobile phone, SingTel has spent S$18 billion in recent years buying stakes in mobile operators in high-growth Asian countries like India and in the bigger Australian market.
The company derives about three quarters of its sales and two-thirds of pretax earnings from operations outside Singapore.
Last week, SingTel warned the stronger Singapore dollar would reduce earnings contributions from its overseas operations, while its Indonesian associate Telkomsel has forecast slower operating revenue growth and a margin decline.
It also said higher subscriber acquisition costs from its iPhone launch shaved EBITDA by S$27 million and A$44 million for Singapore and Australia, respectively.
Neel Sinha, analyst with CLSA Asia-Pacific Markets, said the weakening of regional currencies against the Singapore dollar over the last few months was the most significant factor squeezing earnings in the current quarter.
He estimates that 60 percent of SingTel's group profit is derived from three of the weakest regional currencies – the Australian dollar, the Indonesian rupiah and the Indian rupee.
Optus, Australia's second-largest operator, reported a 1.8 percent rise in net profit to A$125 million ($82 million).
The unit, which holds a third of the Australian market, is SingTel's single-biggest revenue generator. It faces cut-throat price competition, slowing subscriber growth and regulatory changes in a saturated Australian market.
SingTel also owns big stakes in six emerging market mobile operators, including Globe Telecom in the Philippines and Thailand's Advanced Info Service. Most have shown phenomenal growth in wireless subscribers in recent years.
Pre-tax earnings from the associates fell 26 percent to S$461 million in the quarter, driven mainly by volatile regional currencies and a weaker performance from Telkomsel due to price competition.
Meanwhile, group operating revenue rose 5.3 percent to S$3.89 billion.
For the year ending March 2009, SingTel is forecast to earn a net profit of S$3.65 billion, down 7.84 percent from the previous year, a poll of 16 analysts by Reuters Estimates showed.
SingTel shares fell 10.2 percent in July-September, outperforming a near 20 percent plunge in the benchmark Straits Times Index over the same period.
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