Singapore: Singapore Telecommunications Ltd (SingTel), Southeast Asia’s largest telephone company, reported a fall in profit for the first time in two years because of lower earnings from Indonesia and the absence of a one-time gain.
Net income declined 41% to S$989 million (Rs2,670 crore), or 6.20 cents, in the fourth quarter ended 31 March, SingTel said on Wednesday. Profit rose 13%, excluding a deferred tax charge of $152 million and a year-earlier S$618 million gain after SingTel stopped accounting for a unit.
SingTel forecast “double-digit” growth in underlying profit over five years, helped by new acquisitions and increased shareholdings in affiliates such as Indonesia’s PT Telekomunikasi Selular (Telcolsel). Affiliates contributed 43% of fourth-quarter underlying net income at the company, which plans to expand investments to Central and West Asia to counter slowing growth in Singapore and Australia.
“The performance was above expectations and is driven mainly by its overseas units in India, Indonesia and the Philippines,” said Winston Liew, an analyst at OCBC Investment Research in Singapore, who rates the stock “hold”. “Although there is a slowdown in contribution from Telkomsel, it’s due mainly to exceptional circumstances such as a flood.”
Underlying net profit, which excludes one-time items, rose 7.9% to S$3.56 billion.
The pre-tax profit contribution from Telkomsel rose 5.2% to S$258 million in the quarter, easing from 73% growth a year earlier. Net income at affiliates, including India’s Bharti Airtel Ltd rose 18% to S$415 million in the quarter.
The share of fourth-quarter pre-tax profit from Bharti jumped 92% to S$158 million. The Manila-based unit, Globe Telecom Inc., contributed S$73 million, rising 23% from a year earlier.
Net income at the Australian unit, Optus Pty, rose 11% to A$155 million in the quarter.
SingTel on Tuesday said it gained 12 million mobile customers during the fourth quarter, taking the total in seven countries to 124 million as of 31 March. New Delhi-based Bharti accounted for about 43% of the user additions.
“We will develop new revenue streams and increase our shareholdings in existing associates and make new acquisitions where possible,” chief executive officer Chua Sock Koong, appointed in April, said at a briefing.
The company plans to pay a full-year dividend of S$3.3 billion, or 20.5 cents per share. That’s a decline from S$4 billion returned to shareholders last year through dividends and stock cancellations.
Shares of SingTel fell 2.3% to close at S$3.34 in Singapore, compared with a 0.4% decline in the Straits Times Index. The stock climbed 18% in the past 12 months, against a 31% gain by the index.