Bloomberg – Singapore
The Jakarta Post, Singtel (Singapore Telecommunications Ltd.), Southeast Asia’s largest telephone company, posted its lowest profit in 3½ years.
The suffering, Tuesday, came after falling phone bills and a drop in the rupiah drove down earning at the company’s Indonesian affiliate.
Net income dropped 16 percent to S$799 million (US$533 million), or 5.01 Singapore cents per share, in the three months ended Dec. 31, from S$952 million, or 5.96 cents, a year earlier, the company said.
That compares with the S$807 million median estimate in a Bloomberg News survey of seven analysts. Sales slipped 3.2 percent to S$3.7 billion. The company, with operations in seven markets outside Singapore, saw overseas profits fall 25 percent, after earnings from Indonesian unit PT Telekomunkiasi Selular (Telkomsel) halved. SingTel now faces mounting competition in Australia, the company’s biggest market, after Vodafone Group Plc and Hutchison Whampoa Ltd., said this week they’ll merger their operations in the country.
“Competition is rising in Indonesia and it’s going to be tough for the overall market but being the dominant player, Telkomsel will ride it out better then others,” said Theo Maas, who helps manage $5 billion at Fortis Investment Partners in Sydney, including SingTel stock.
In Australia, SingTel is “going to see increased pressure with Vodafone. These are difficult times, currencies haven’t halped at all and not likely to.”
SingTel rose 2.1 percent to close at S$2.48 in Singapore. The stock fell 36 percent in 2008, the first decline in six years.
Net income from Asian affiliates dropped 24 percent to S$374 million, its third straight quarterly decline. Contributions from Telkomsel, Indonesia’s largest wireless operator, tumbled 51 percent to S$110 million as lower calling rates and the rupiah’s 13 decline against the Singapore dollar last year eroded profitability.
“we’ve seen the economic slowdown impacting our business,” Chief Executive Officer Chua Sock Koong told reporters in Singapore. “If the economic slowdown is even more severe, then we would look at other areas, including a pay cut.”
SingTel Optus Pty’s third-quarter net income was unchanged at A$143 million ($96 million), while earnings in Singapore-dollar terms fell 23 percent. Sales rose 10 percent to A$2.2 billion.
The Asian operator faces increased rivalry in Australia as Vodafone and Hong Kong billionaire Li Ka-shing’s Hutchison partner to challenge Optus and market leader Telstra Corp.
“Vodafone and Hutch’s merger will certainly provide a challenge to Optus,” said Nathan Burley, a Melbourne-base analyst at ovum. “Optus will likely raise their sales but at what expense to margins.”
Pretax earning from regional units will probably be lower in the year ending March 31, the first decline in eight years, SingTel said.
Bharti Airtel Ltd., India’s largest mobile-phone operator, on Jan. 22 reported third-quarter profit increased 26 percent, slowing for the sixth straight quarter.
SingTel’s depreciation and amortization in Singapore climbed 14 percent to S$561 million in the quarter. Sales rose 21 percent after it acquired Singapore Computer Systems Ltd.
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