SingTel keeps outlook, profit worse than expected

Singapore Telecommunications Ltd (SingTel) posted a fourth consecutive fall in quarterly profit on Monday, hurt by weakness in Singapore and India, but it reiterated a forecast for low single-digit annual revenue growth in the city-state and stable dividends from its associate firms.

SingTel, Southeast Asia's largest telecom firm, reported a net profit of S$902 million for the quarter ended December, down 9.6 percent from S$998 million a year ago.

The result lagged the average forecast of S$922 million by four analysts surveyed by Reuters. SingTel has now reported four straight quarters of year-on-year profit decline.

"It has been a while since SingTel results beat market expectations and some of the operational KPIs in the 3Q result suggest rising competitive pressures, hence we think the share price will likely remain weak," said Sachin Gupta, Nomura's Singapore-based Asian telecom analyst.

SingTel's underlying net profit was S$895 million, 7.6 percent below the S$968 million posted a year ago.

In Singapore, revenue rose 3 per cent to S$1.68 billion, but EBITDA fell 7 percent to S$547 million due to higher mobile acquisition and retention costs. SingTel, like most mobile operators, subsidises the cost of handsets such as the iPhone to get customers.

"The strong gain in mobile customers in Singapore during the quarter led to higher acquisition and retention costs, while contributions from the regional mobile associates declined due to their weaker currencies and 3G losses from Bharti India," SingTel said in a statement.

SingTel's earnings have been on a downtrend due to weaker performances by its once fast-growing mobile phone associates, in particular Bharti Airtel Ltd , which last week reported a 22 percent drop in net profit for the three months to December.

Bharti, which ventured into Africa in 2010 by acquiring most of the African operations of Kuwait's Zain , has been struggling to turn around the African businesses. Its weaker-than-expected performance the last quarter was, however, due to fierce competition in the Indian market.

SingTel saw stronger contributions from Telkomsel in Indonesia and AIS