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SingTel posts 5.5% rise in Q3 net profit

Singapore's largest listed company, SingTel, has rung in a 5.5 per cent increase in third quarter earnings -- boosted by stronger contributions from its regional affiliates.

SINGAPORE: Singapore's largest listed company, SingTel, has rung in a 5.5 per cent increase in third quarter earnings -- boosted by stronger contributions from its regional affiliates.

The numbers are in line with market expectations.

But due to the current weakness in other regional currencies, SingTel said it expects to see single-digit declines in revenue and profit for the full year.

SingTel's net profit for the three months ended in December came in at S$872 million.

While it saw stronger earnings in its home base, its regional associates also helped to boost the bottom line, in particular, India's Bharti Airtel.

Pre-tax earnings from regional mobile associates rose 11 per cent to S$506 million.

But SingTel said the results would have been better, if not for a drop in regional currencies -- the Australian dollar, Indonesian rupiah and Indian rupee -- against the Singapore dollar.

The drop in regional currencies led to a 7.3 per cent decrease in operating revenue for the quarter to S$4.26 billion.

Chua Sock Koong, group CEO for SingTel, said: "Australia is a large part of our business, and you've seen the Australian dollar weaken.

“If you look at our top-line growth for the quarter, it would have been a 2 per cent decline, instead of the 7 per cent because of the weaker Australian dollar."

Capital expenditure for Singapore and Australia in the current financial year was also revised down to approximately S$2.2 billion instead of S$2.5 billion, due to currency changes and delayed spending on certain projects.

Amid the currency headwinds and a cautious business climate, SingTel said it expects single-digit declines in revenue and profits for the fiscal year ending March.

But it is positive about the mobile communications segment.

Ms Chua said: "We see significant growth in mobile internet, and if you look at what we've done with the pricing of mobile data, I think we're beginning to enjoy the benefits of the investments we've made in mobile networks.

“The investments we've made in our LTE networks have allowed us to deliver a very good customer experience, as they'll be able to work on emails, send large files, entertainment, and watch videos on their tablets and smartphones."

Going forward, industry observers are expecting telcos to focus on driving data consumption as a source of growth, and said SingTel can tap on its regional links to do so.

Foong King-Yew, research vice president, Communications Service Provider at Gartner, said: "They really need to leverage the established relationship they already have in their regional associates, and create synergies and access to a wider market.

“As smartphone adoption rises, mobile data consumption will rise along with it. SingTel would have to introduce relevant or attractive content and services either on their own or through partnerships with a third party, to encourage uptake of mobile data usage."

As of December 31, 2013, SingTel's combined mobile customer base has passed the 500 million mark. 

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