Optus helps lift SingTel profit
SINGAPORE (Reuters) -- Singapore Telecommunications Ltd, Southeast Asia's largest telecoms firm, says quarterly net profit rose 14 percent, thanks to improving operations at its Optus unit in Australia and growth in regional mobile services.
SingTel, Singapore's most valuable listed company with a market capitalisation of S$32 billion ($18 billion), said Thursday it was considering new Asian investments, would raise its dividend and maintain double-digit earnings growth over the medium term.
Battling heavy competition in its mature home market, where four out of five people own a mobile phone, SingTel has spent S$17 billion in the last four years buying firms in high-growth Asian nations with fewer cellphone users and in the bigger Australian market.
The company, 67-percent owned by the Singapore government, earned S$473 million ($273 million) in the fiscal second quarter ended September 30, slightly below market expectations. That compared with a net profit S$415 million a year earlier.
More than two-thirds of SingTel's revenue and half of its pre-tax earnings are now generated from operations outside Singapore, helping to cushion declining sales at home.
Operating revenues rose 16 percent to S$2.85 billion.
"The outlook for the group's operations outside of Singapore continues to be positive," SingTel said in a results statement.
Between 40 percent and 50 percent of net profit -- before exceptionals and goodwill -- will be used for dividends under a new target, up from a previous ratio of 30 to 45 percent.
It forecast a rise in revenue and earnings before interest, tax, depreciation and amortization in the year to March 2004.
SingTel said its share of pretax profits from associates -- Thailand's Advanced Info Service Plc (AIS), India's Bharti Tele-Ventures Ltd, Globe Telecom in the Philippines and Indonesia's Telkomsel -- rose 78 percent to S$321 million.
Optus continued to improve, posting a second-quarter net profit of A$90 million ($64 million), on an 18 percent jump in revenue to A$1.57 billion. It also delivered strong cashflow before borrowings of A$231 million.
"They have proved what they can do with Optus and the associates and it's a success. So I think the market will not punish them for looking at new acquisitions," said an equity strategist at a U.S. investment bank.
Listed in Australia as well as Singapore, SingTel's net profit more than doubled to S$1.67 billion in the six months ended September, against S$792 million a year earlier.
This was because its June quarter results were boosted by exceptional gains of S$700 million from the sale of SingTel Yellow Pages and Singapore Post Ltd.
But the second-quarter profit was slightly below market forecasts for a S$477.8 million net profit, according to the average forecast of five telecoms analysts polled by Reuters.
SingTel's revenues at home fell 7.1 percent to S$1.0 billion for the quarter, reflecting tough competition and the sluggish economy. Data and Internet revenues shrank 6.2 percent to S$279 million from a year earlier.
For the group as a whole, free cash flow stood at S$763 million, nearly four times that of the year-earlier quarter, reflecting improvements at Optus and higher associate dividends.
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