Home >Companies >SingTel posts smallest profit in 6 quarters on currency moves

Sydney: Singapore Telecommunications Ltd (SingTel), Southeast Asia’s biggest phone company, posted its smallest profit in six quarters as the country’s currency cut the value of income from its overseas affiliates.

Net income attributable to shareholders fell to S$834.6 million ($668 million) in the three months ended June from S$1.01 billion a year earlier, the company said in a regulatory statement on Thursday. Net profit after tax fell 17% after one-time gains in the year earlier, it said.

The result illustrates chief executive officer Chua Sock Koong’s challenge in diversifying SingTel’s earnings beyond its home country and Australia, where its second-ranked operator Optus faces intensifying competition from Telstra Corp. Singapore’s economy barely grew during the quarter while Australian unemployment last month rose to a 12-year high.

“The core Singapore business itself is a pretty slow-moving, slow-changing business," Chris Lane, an analyst at Sanford C. Bernstein and Co. in Hong Kong, said by phone before Thursday’s results. “There’s a lot of promise in India but in the short term it’s not enough to move the needle."

Shares of SingTel fell 0.3% to S$3.90 as of 9:19am in the city state. The stock has gained 6.6% so far this year compared with the 4.6% advance in the benchmark Straits Times index.

Currency impact

The currency effects meant that SingTel’s profit fell 2% even after excluding one-time items, the company said in a presentation. Underlying earnings would have risen 5% without the currency impact, it said.

The company had a one-time gain of about S$150 million a year earlier from the dilution of its stake in an affiliate company, and paid an exceptional A$24 million to fire Australian workers in the most recent period.

Earnings from mobile phone companies in emerging markets would have risen 20% if currency effects had been stripped out, compared to the 7.6% growth the company reported, according to the presentation.

SingTel owns about a third of Bharti Airtel Ltd, 35% of Indonesia’s PT Telekomunikasi Selular, 47% of Manila-based Globe Telecom Inc., and 23% of Advanced Info Service Pcl, Thailand’s largest phone operator. It also has stakes in undersea cable companies and Singapore’s postal service and owns all of Optus. Bloomberg

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