Singapore Telecommunications Ltd., Southeast Asia’s biggest phone company, reported an unexpected drop in profit, citing lower contributions from partners in India and Indonesia.
Net income fell 6.7 percent to S$892 million ($692 million) in the three months ended Sept. 30, compared with S$956 million a year earlier, SingTel, as the company is known, said today in a stock exchange statement. That missed the S$969 million average of four analyst estimates compiled by Bloomberg. Second- quarter revenue rose 8.1 percent to S$4.44 billion.
India’s Bharti Airtel Ltd. and Indonesia’s PT Telekomunikasi Selular led a drop in earnings from regional affiliates, overshadowing profits from Australian unit Optus. SingTel is counting on the popularity of smartphones such as Apple Inc.’s iPhone to revive profit growth by boosting demand for wireless data and applications as markets saturate worldwide.
“Contributions from the regional associates reflect the competition in the markets that they operate in such as India and Indonesia,” said Carey Wong, an analyst at OCBC Investment Research Pte in Singapore. “Singapore and Australia are matured markets but you can still expect single-digit growth.”
SingTel declined 2.1 percent to S$3.25 at the close of trading in Singapore yesterday. The company reported earnings before the start of trading today. Of the 23 analysts tracked by Bloomberg in the past 12 months, nine had buy ratings, one recommended that investors sell the stock, and the remainder rated the stock “hold.”
Boosting Investments
SingTel is boosting investments to access new technologies as surging smartphone sales drives up demand for wireless data services. The company in September started a S$200 million fund to invest in startups.
“It is important to make these investments and we have made inroad,” Chief Executive Officer Chua Sock Koong said in a statement. “The strategic initiatives are however expected to incur costs before delivering longer term scale benefits.”
SingTel said yesterday it added 54,000 mobile-phone customers in Singapore in the three months ended September because of stronger demand for smartphones. Optus added 189,000 new users in the quarter, SingTel said.
Pre-tax profit contributions from regional associates fell 6.2 percent to S$536 million, the company said today. SingTel owns 32 percent of Bharti and 35 percent of Telkomsel, as the Indonesian company is known.
Operating revenue in Singapore increased 9.9 percent to S$1.59 billion in the quarter, the company said. .
At Optus, Australia’s largest phone operator after Telstra Corp., net income increased 15 percent to A$175 million ($176 million) in the quarter. Operating revenue rose 4.7 percent to A$2.3 billion.