Data drives SingTel profit to $1.28bn

SingTel boss Lee Hsien Yang said revenue contribution from overseas had risen to just under 29 percent in the last financial year

In this story: Data growth surges Concern over SingTel expansion RELATED STORIES, SITES

By Staff and wire reports

SINGAPORE -- SingTel reported a net profit rise of 26.4 percent to $1.28 billion in line with market expectations, boosted by strong growth in its data business.

SingTel, which is in the midst of buying Australia's Cable & Wireless Optus, also said it expected lower earnings in the current year due to a fall in contributions from existing international investments.

Michael Millar, analyst at SG Securities, said SingTel's results are very much in line with expectations.

"The start-up losses (from overseas investments) were expected. There were no surprises," he said.

Data growth surges

SingTel said it saw robust growth in data, cellular, and information technology and engineering services.

Revenue from IDD services, still the group's largest business segment, contributed to 24 percent of turnover, down from 34 percent the previous year.

The data and private network division, which contributed 22 percent of group revenue against 16 percent the previous year, is expected to replace IDD as the group's largest contributor in the current year.

Revenue for mobile communications grew four percent to $488 million, or 18 percent of group revenue.

SingTel Mobile had 1.5 million customers at the end of March, an increase of 45 percent over the previous year.

Its overall financial position remained strong with cash and short term investments rising 12 percent to $3.64 billion.

It said its proposed acquisition of Optus, Australia's number-two telecom operator, continued to make good progress having secured certain relief from the Australia Securities and Investments Commission and the Australian Stock Exchange as well as a bridging loan facility of $1.57 billion.

"The effect of the proposed acquisition of Optus on the group is largely dependent upon the final level of ownership in Optus that SingTel achieves on completion of the offer," the company said.

Concern over SingTel expansion

SingTel has stakes in telecom companies in the Philippines, Thailand, India, Taiwan and Belgium.

The group's aggressive regional expansion will continue to be a concern for investors in the near term, analysts said.

Lee Hsien Yang, SingTel's president and chief executive officer, said revenue contribution from overseas had risen to just under 29 percent in the last financial year from slightly under a quarter in the previous one.

"Pressure will increase on its domestic operations going forward and the focus will be on its regional expansion," said Gregory Yap, analyst at OCBC Investment Research.

"However, its overseas investments are not going to be contributing positively in the near term and the market will take that negatively."

SingTel shares have lost about a third of their value since its cash and scrip bid of up to $9 billion for Optus was announced in March on concerns that it has overpaid and there would be little synergies from the acquisition.

SingTel shares traded late Friday at S $1.71, down 0.03 cents.

Reuters contributed to this report.

Bharti set to soar with $460M injection
May 7, 2001
Optus rings up an upwardly mobile profit
May 10, 2001
SingTel says Optus bid is on track
May 9, 2001

SingTel
Cable & Wireless Optus

Note: Pages will open in a new browser window

External sites are not endorsed by CNN Interactive.