Singapore: Singapore Telecommunications (SingTel), Southeast Asia’s biggest telecoms firm, posted a 2.3% fall in quarterly profit due to a steep fall in contribution from its Indian unit Bharti Airtel and currency losses.
SingTel also announced a special dividend, citing lack of suitable acquisition opportunities, and said it was setting up a business trust to transfer some of its infrastructure assets.
Bharti posted a bigger-than-expected 31.5% fall in its quarterly net profit and said its loss-making operation in Africa, which it bought last year from Kuwait’s Zain for $9 billion, is expected to dent near-term earnings. SingTel said it was also hurt by weakness in regional currencies against the Singapore dollar.
“Its regional operations are not doing that great, but now at the same time you have this impact from currency as well,” Credit Suisse analyst Sean Quek said.
“I think in the near term they probably just have to return more cash to the shareholders. They have said they will keep looking for other opportunities but I think in the short term it is going to be difficult.”
The company announced a final ordinary dividend of 9 Singapore cents and a special dividend of 10 Singapore cents, bringing the total dividend to a record 25.8 cents per share, or a yield of 8%.
“Since we have not made significant acquisitions in the last few years, in an attempt to get into the optimum capital structure, we proposed this special dividend,” SingTel’s CEO Chua Sock Koong said at a media briefing on the results.
“And IT does not inhibit our ability to make acquisitions going forward,” she added.
SingTel also said it is committed to transferring some of its infrastructure to a company that will hold assets linked to Singapore’s nationwide broadband network.
“SingTel is currently in the process of setting up a business trust for transfer of the assets,” CFO Jeann Low said, adding that it will reduce its stake in the trust to less than 25% by April 2014, subject to relevant approvals.
Drag from Bharti
Contributions from Bharti, India’s top mobile phone carrier in which SingTel has around a 32% stake, fell by 29% in Singapore dollar terms to S$173 million.
SingTel CEO Chua said in November the Indian unit will take at least another two quarters to restructure the African operation.
“For the financial year ending 31 March 2012, operating revenue (in Singapore) is expected to grow at a low single digit level, driven by higher mobile and Mio TV revenue,” the company said in a statement.
“Over the mid to longer term, the African economies are anticipated to drive market-friendly economic reforms to deliver future growth.”
Singapore state investor Temasek Holdings controls 55% of SingTel, which competes with StarHub and MobileOne in mobile phone services, high-speed Internet and pay-TV in the city-state.
The largest capitalized company on the Singapore exchange reported an attributable net profit of S$991.7 million ($802 million)for January-March, down from S$1.02 billion a year ago, and in line with the average forecast of S$991 million from four analysts polled by Reuters.
Revenue for the company, which has a market value of $40 billion, rose 3.8% to S$4.6 billion.
With a domestic market of just 5 million people and virtually everyone in Singapore owning mobile phones, SingTel has bought stakes in mobile operators in high-growth Asian countries such as India, Indonesia and in Australia to boost earnings.
But with business in some of these markets maturing, SingTel might have to seek new growth engines and the introduction of high-speed broadband Internet in Singapore and Australia could provide the boost it needed.
SingTel said revenue for Australia was also expected to grow in the low single-digit level for the year ending March 2012. Earnings before interest, tax, depreciation and amortization (EBITDA) is expected to be stable for Singapore operation and growing at low single-digit levels for Australia, it said.
PT Telekomunikasi Indonesia (Telkomsel), which has become the biggest contributor outside Singapore and Australia, has seen its margins falling due to tougher competition in the world’s fourth most populous nation.
SingTel shares rose by nearly 1% on Thursday after the results, outperforming the half percent decline in the broader Singapore market .