Bharti boosts SingTel's profit

SINGAPORE: Singapore Telecommunications (SingTel), South-East Asia’s largest phone company, said Tuesday that its first quarter profit rose 10% on record earnings boosted by India’s Bharti and strong sales in the city-state. Net income rose to S$927 million ($610 million) in the quarter ending June 30 from S$840 million ($552 million) in the corresponding period a year ago. Operating revenue was S$3.57 billion ($2.34 billion), up 10.5%.

SingTel’s new chief executive Chua Sock Koong said hopes of higher revenue were backed by a region-wide surge in mobile phone and broadband subscriptions, and strong performance in Singapore which was regarded as a saturated market. “Strong economic growth in the region has helped boost corporate demand for our broadband services and international telephony,” the CEO told reporters at a briefing.

Singapore’s economy grew at a faster-than-expected annualised rate of 14.4% in the second quarter thanks to a boom in the construction and financial industries. Singtel now expects sales growth of over 5% in fiscal year ending March 2008, higher than earlier guidance of low single-digit growth, said Chua, who replaced Lee Hsien Yang, the younger brother of Prime Minister Lee Hsien Loong, on April 1.

Bharti’s contribution to net income amounted to S$158 million ($103 million) compared to S$80 million (over $52 million) a year earlier. The Optus subsidiary in Australia saw revenue increase by 3.5%. SingTel’s main investment attractions were its exposure to the defensive cash flows of mature Singaporean and Australian markets and strong organic subscriber growth in the emerging markets, said Sydney-based Peter Wilmshurst, senior vice-president of Templeton Global Equity Group.

“In the telecoms arena, the growth opportunities are largely in broadband and emerging market mobile operations. Some of the best ways to get exposure to this are through developed market telecom companies such as Telenor and SingTel,” he said.

Facing a home market of just 4.5 million people, where mobile penetration has reached 100 percent, SingTel, has spent S$18 billion in recent years buying operators in high-growth Asian nations, and in the bigger Australian market. In the last fiscal year about 75% of sales were derived from operations outside Singapore.

The company owns major stakes in five operators: Thailand’s Advanced Info Service, India’s Bharti Group, Globe Telecom in the Philippines, Indonesia’s PT Telkomsel and Pacific Bangladesh Telecom Ltd. It recently bought a 30% stake in Pakistan’s No.3 mobile phone operator Warid Telecom. SingTel shares rose 3.7% in April-June, and have gained about 6% so far this year, underperforming a 13% rise in the benchmark Straits Times Index.