Published: Thursday, 13 Aug 2009 | 2:28 AM ET

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Singapore Telecommunications, Southeast Asia's biggest telco, reported on Thursday a lower-than-expected 10.3 percent increase in first quarter underlying net profit, and said it will keep exploring investment opportunities.

Sharon Lorimer

SingTel, which owns Optus in Australia and stakes in mobile operators across Asia, has been struggling to grow revenues and earnings in recent years due to slow growth in its core markets and increased competition faced by its mobile
affiliates.

"We will explore and monitor investment opportunities and will be disciplined when reviewing these opportunities," SingTel's chief executive Chua Sock Koong said in a statement.

"The current operating environment remains a challenge. We will continue to monitor the macro environment and our cost management initiatives," she added.

The company, around 55 percent-owned by state investor Temasek,posted April-June underlying net profit before goodwill and exceptionals of S$945 million ($654.4 million) compared with an average forecast of S$985 million in a Reuters survey of analysts.

The quarterly underlying net profit was 10.3 percent higher than the year-ago's revised S$857 million, as revenues rose at a slower pace due to a weaker Australian dollar <AUDSGD=R> against the Singapore currency.

SingTel's first-quarter net attributable profit rose 7.7 percent to S$945 million from S$878 million.

Kelvin Goh, analyst at CIMB, said prior to the announcement that "robust performances of Telkomsel and Bharti as well as regional currencies (which had been) swinging back in favour of SingTel" were major factors in the April to June results.

Singapore's biggest company by market value increased its aggregate global subscriber base by a third to 262 million, helping boost revenue by 1.9 percent to S$3.85 billion.

Its Indonesian affiliate, PT Telekomunikasi Seluler (Telkomsel), reported a 32 percent rise in quarterly net profit, helped by easing competition as a tariff war subsided.

Bharti Airtel  reported a 24 percent rise in its second-quarter net profit thanks to strong subscriber growth and a foreign exchange gain. SingTel shares are up by around 25 percent so far in 2009, underperforming a 46 percent gain on the broader Singapore share index.

Facing a domestic market of just 4.8 million people where virtually everyone has a mobile phone, SingTel has spent S$18 billion in recent years buying stakes in mobile operators in high-growth Asian countries such as India, Indonesia and in the bigger Australian market.

SingTel derives around three-quarters of its revenue and EBITDA from operations outside Singapore.

Despite the positive results, SingTel had warned that gaining market share during the global economic downturn would be tough, but predicted the EBITDA margin for its Singapore operations would remain steady at 36-38 percent.

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