SingTel's strong 2Q revenue offsets 1Q losses

Robust growth in Singapore and Australia helped propel the telecommunications company’s revenue for 2Q by 8% toS$4.44b despite incurring losses earlier this year due to the acquisition of an African mobile services provider.

In a statement, SingTel said revenue from Singapore grew 10% to S$1.59 billion and from Australia rose 5% to A$2.32 billion. The Australia business grew EBITDA strongly at 9%. Implementation of key strategic initiatives to grow its ICT and new multimedia services, however, resulted in the Singapore business recording lower EBITDA.

The Group’s earnings were impacted by the inclusion of the first full quarter of losses from the newly-acquired Africa operations by Bharti (Bharti Africa) and the related acquisition financing cost. Coupled with higher depreciation and net finance cost, the Group’s net profit fell 7 per cent to S$892 million. Excluding the impact of Bharti Africa, net profit would have declined 3 per cent.

Chua Sock Koong, SingTel Group CEO, said: “The Group continues to generate strong revenue growth and cash flows from Singapore and Australia. We are committed to achieving an optimal capital structure and have raised our dividend payout to 55 to 70 per cent of underlying net profit while maintaining financial flexibility for our growth initiatives.

“We have been investing in these initiatives to transform ourselves into a multimedia and ICT solutions provider. It is important to make these investments and we have made inroads. These strategic initiatives are however expected to incur costs before delivering longer term scale benefits.

"Similarly, our associates are also transforming themselves and investing in growth as evidenced by Bharti’s foray into Africa,” Chua said.

EBITDA for the Group was stable at S$1.76 billion. Net finance expense increased 27 per cent to S$88 million due to higher interest cost at Optus and foreign exchange loss from the revaluation of monetary assets and liabilities. Depreciation expenses also rose as a result of a larger asset base following investments in submarine cable, mobile and mio TV.

Singapore

Revenue from the Singapore business grew 10 per cent driven by strong growth in IT & Engineering and Mobile. EBITDA fell 6 per cent to S$524 million, impacted by key strategic initiatives to drive higher smartphone adoption and data usage, as well as to build scale in multimedia services, in particular mio TV.

Mobile revenue continued to record double-digit growth, increasing 11 per cent to S$437 million driven by strong growth in postpaid customers and higher ARPU reflecting the higher rate plans from data pull through and increased roaming traffic.

In the quarter, SingTel registered its highest postpaid mobile net additions in two years. It added 39,000 new postpaid customers, spurred by launches of Apple iPhone 4 and Samsung Galaxy S. SingTel continued to lead the mobile market with an overall share of 44.1 per cent as at 30 September 2010.

Allen Lew, CEO Singapore said: “Our Mobile and IT & Engineering operations continue to register robust revenue growth, enabling us to grow overall service revenue at a faster pace than our competitors.”

Australia

Building on momentum gathered over the past two years, Optus’ EBITDA grew 9 per cent year-on-year to A$556 million, driven by strong mobile growth and prudent cost management. Operating revenue grew 5 per cent to A$2.32 billion while free cash flow was A$354 million in the quarter, up 30 per cent.

For the half year, Optus’ operating revenue was up 4 per cent to A$4.58 billion, supported by solid mobile service revenue growth of 10 per cent. Operational EBITDA grew 10 per cent to A$1.11 billion, with EBITDA margin at 24.2 per cent, up 1.2 percentage points from a year ago.

Paul O’Sullivan, Optus Chief Executive said, “In spite of an increasingly competitive mobile market in Australia, Optus delivered its eighth consecutive quarter of double- digit mobile service revenue growth. Through a combination of industry leading offerings, a continued focus on improving customer experience and enhanced network performance, Optus grew its mobile customer base by 189,000 in the quarter with wireless broadband customers now exceeding 1 million.”

Regional

The Group’s mobile customer base grew 35 per cent or 94.4 million from a year ago to reach 368 million as at 30 September 2010. This included 40.1 million customers from Bharti’s operations in Africa.