Optus reversal lifts SingTel profit

Singapore Telecommunications Ltd (SingTel), South-East Asia’s largest phone company, posted a 72% jump in quarterly profit yesterday, thanks to a turnaround in Australia and strong earnings in emerging markets. 

Battling competition in its mature home market, SingTel has spent S$17bil in four years to buy into the bigger Australian market and fast-growing economies like Indonesia and India, where mobile phone use is relatively low. 

Operations outside Singapore, including Optus in Australia, generated two-thirds of group revenue and half of pre-tax earnings, helping state-controlled SingTel to make a net profit of S$313mil for the fourth quarter ended March 31 compared with S$182mil in the previous corresponding quarter, when its results were hurt by one-time investment loss of S$103mil. 

For the full 2002/03 financial year, SingTel made a net profit of S$1.4bil, down 14% on the previous year’s S$1.63bil. 

SingTel, which went into debt after its purchase of Optus in 2001, said its borrowings had been reduced by S$299mil to S$9.56bil as of the end of March this year. That excludes an estimated S$665mil it will get from its just completed flotation of unit Singapore Post. 

Rating agency Standard & Poor's (S&P) had cut SingTel’s debt rating outlook to negative from stable last year on concerns over its weaker financial position after it bought Optus, and there were fears the firm’s double A minus rating might be downgraded. 

“We believe that we have met the credit ratio targets as S&P requires at March 2003,” SingTel chief executive Lee Hsien Yang said at a results briefing. 

Optus produced a net cash surplus of A$281mil, becoming cash-flow positive for the first time in its history. 

With the help of a tax credit, Optus posted an annual net profit of A$336mil, compared with a loss of A$402mil the prior year. Excluding the credit, net profit was A$28mil. 

SingTel's group operating revenue rose 14% in the fourth quarter to S$2.73bil. But revenue in its home market fell 11% in the face of stern competition. Excluding Optus, SingTel would have made a net loss of S$99mil in the fourth quarter against a profit of S$254mil previously due to a charge against a submarine cable unit and other assets. 

SingTel also has stakes in Thailand’s Advanced Info Service Plc, Bharti Tele-Ventures Ltd of India, Globe Telecom of the Philippines and Indonesia's Telkomsel. – Reuters  

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