Asian mobile user growth to push up Singtel bottomline

Singapore, Aug 2 | Updated: Aug 3 2005, 05:30am hrs
Singapore Telecommunications Ltd, Asias fifth-largest phone company, is set for a 12% rise in quarterly net profit, as strong Asian mobile expansion offsets slower growth and a margin squeeze at its Australian unit. Robust contributions from SingTels investments in the fast-growing markets of India, Bangladesh, Indonesia, and to a lesser extent, Thailand and the Philippines, would underpin its growth in the future, analysts said. "The regional associate investments are poised to become SingTels largest profit contributor as early as FY07 (fiscal year to March 2007)," said CLSA Asia Pacific analyst Neel Sinha. He expects the regional associates to boost their earnings contribution to 44% in the next five years from their current 31% share.

But intensifying competition and slowing mobile subscriber growth in Australias saturated market -- SingTels biggest earnings centre -- would weigh on profits, analysts said. Majority government-owned SingTel said in May that Optus revenue growth would ease in the current fiscal year, but the unit aimed to exceed the overall market growth of 4-5%.

On Thursday, SingTel is expected to report an average underlying profit -- which strips out goodwill and exceptionals -- of S$778.2 million ($468.8 million) for the fiscal first quarter ended June 30, compared with S$696 million in the year-earlier quarter, a Reuters poll of 8 analysts showed.

The estimates ranged from S$743 million to S$797 million. Facing a mature home market, where over nine in 10 people own a cellphone, SingTel has spent S$17 billion ($10 billion) in recent years buying operators in high-growth Asian nations with fewer cellphone users, and in the bigger Australian market. It now derives about 75% of revenues and two-thirds of pre-tax earnings from operations outside Singapore. SingTel owns major stakes in five operators -- 21.5% of Thailands Advanced Info Service Plc. 30.8% in Indias Bharti Group, 44.6% of Globe Telecom Inc. in the Philippines, 35% in Indonesias PT Telkomsel and 45% of Pacific Bangladesh Telecom Ltd., purchased as recently as June.