SingTel Fourth-Quarter Profit Falls, Plans Special Dividend

May 12, 2011, 7:08 AM EDT By Robert Fenner

(Updates with closing share price in fifth paragraph.)

May 12 (Bloomberg) -- Singapore Telecommunications Ltd., Southeast Asia’s biggest phone company, said fourth-quarter profit fell 2.3 percent on lower contributions from partners in India and Indonesia and slowing growth at home.

Net income dropped to S$991.7 million ($803 million), or 6.2 Singapore cents a share, in the three months ended March from S$1.02 billion, or 6.4 cents, a year earlier, SingTel said in a statement today. That compares with the S$988 million average of five analyst estimates compiled by Bloomberg.

Shareholders will get a special dividend of 10 Singapore cents a share, in addition to the final payout of 9 cents, as the company returns a record S$4.1 billion to investors this year. Lower profit at India’s Bharti Airtel Ltd., part-owned by SingTel, and gains in the Singapore dollar cut the value of overseas sales and limited the benefit of market share gains at its Optus unit in Australia.

“The special dividend is surprisingly making a return after a few years and very much appreciated, said Theo Maas, who helps manage about $5.4 billion at Arnhem Investment Management in Sydney, including SingTel stock. ‘‘The balance sheet is still heavily undergeared so would expect more capital management going forward.’’

SingTel shares rose 0.6 percent to S$3.16 at the close of trading in Singapore. They have gained 3.6 percent this year compared with a 1.9 percent decline in the benchmark Straits Times Index.

Raising Dividend

Last year, the company, 54.4 percent owned by Temasek Holdings Pte, said it’s boosting dividend payout ratio to 55 percent to 70 percent of underlying profit from the previous 45 percent to 60 percent. The company defines underlying profit as net income before exceptional items and exchange differences on capital reduction of certain overseas subsidiaries.

The dividend payout ‘‘doesn’t inhibit” any plans for acquisitions, Chief Executive Officer Chua Sock Koong told reporters at a press conference.

Full-year profit fell 2.1 percent to S$3.83 billion.

Earnings before interest, taxes, depreciation and amortization in Singapore fell 5 percent S$551 million in the fourth quarter on content costs for its mio Internet protocol television service, the company said in the statement.

SingTel, which added 51,000 postpaid mobile phone customers in the quarter, is seeking to get more spending out of its clients by bundling services like mio. Revenue in Singapore rose 1 percent in the quarter, compared with the 13 percent pace of the year earlier.

‘Disappointing Guidance’

In the 12 months ending March 2012, SingTel expects its Singapore sales to rise at a “low single digit” pace with earnings “to be stable.” Profit and revenue at Optus are forecast to rise at “low single digit” levels.

“Guidance is a bit disappointing but SingTel is famously conservative on its outlook,” said Arnhem’s Maas.

Optus, the second-largest phone company in Australia behind Telstra Corp., is winning customers amid service disruptions at third-ranked Vodafone Hutchison Australia.

Income at Sydney-based Optus rose 10 percent to A$672 million ($714 million) after adding 151,000 postpaid customers in its mobile phone unit.

“The gains continue to come at the expense of Vodafone which struggled to recover from network woes that emerged last year,” Nicole McCormick, an analyst at telecommunications consultant Ovum, said in e-mailed comments today.

Bharti’s Profit

SingTel, which owns stakes in operators across more than 10 countries, yesterday said it has 402.5 million mobile phone customers, a 37 percent increase on the year earlier.

The earnings contribution from its regional carriers fell 12 percent to S$479 million in the fourth quarter, compounded by gains in the Singapore dollar. In constant currency terms, the profit would have been little changed.

The Indian rupee was worth an average of 2.6 percent less against the Singapore dollar in the quarter from a year earlier while the Thai baht fell 3.9 percent in value, SingTel said.

Bharti Airtel Ltd., India’s largest mobile-phone operator, last week posted a worse-than-estimated 31 percent drop in fourth-quarter profit after higher network costs and advertising expenses eroded margins. Bharti’s contribution to SingTel profit fell 29 percent to S$173 million.

PT Telekomunikasi Selular, or Telkomsel, posted a 7.2 percent decline in contributed earnings to S$190 million.

Earnings from Advanced Info Service Pcl, Thailand’s biggest mobile-phone company, rose 38 percent to S$73 million and Globe Telecom Inc., SingTel’s Philippine unit, posted an 3.3 percent fall in profit to S$59 million, according to the statement.

--With assistance from Andrea Tan in Singapore. Editor: Vipin Nair

To contact the reporter on this story: Robert Fenner in Melbourne at rfenner@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

View the original article here