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Singtel net profit down 10%!

Singtel today released its 3rd quarter results and it looks weak due to a few factors.

  1. Overall profit is down 10%. I can’t recall the last time I see such an impact to Singtel. I must have not been tracking it for sometime.
  2. EBITDA for Singapore down 7%
  3. EBITDA for Opus up 2%
  4. Regional Telcos earnings down 8%
  5. Singapore post paid mobile customers have been increasing but ARPU have fallen
  6. Retention costs and acquisition costs have risen 22%
  7. Optus post paid mobile customers have increase but ARPU have fallen as well
  8. Retention costs and acquisition costs have fallen 13% quarter on quarter
  9. AIS have been the gem in which profit rose 23%
  10. Bharti have been the problem. Profit down 30%
  11. Net debt have risen drastically 4546 mil to 7416 mil
  12. Free cash flow is at 844 mil

Overall, this is rather disappointing result which puts it in the number 3 position in profits reported this quarter. By no means will dividend payment capability be affected. But this goes to show how intense the competition is. Compare M1 and Starhub which have been able to defend their ARPU, Singtel suffered in a reduction in Singapore ARPU and a high customer retention cost.

Take aways from this result is whether Singtel, will continue to see a problem keeping that ARPU or even expanding it.

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Thursday 16th of February 2012

Hi Drizzt,

I would agree in terms of ROA and with the benefit of hindsight - bearing in mind the law of diminishing returns.

I still think it is good to expand into other markets. From a business POV, it makes strategic sense to have interest overseas. Such decisions are definitely hard to make. And ST would (should) have a much longer term view on such capital investments than retail investors like us.



Tuesday 14th of February 2012

Singapore and Australia still OK in my opinion. Not too much of a worry, yet.

I am definitely losing patience with Bharti. Biggest letdown so far - and more to come following tax disputes of over S$407 million (ST equity portion).

Imagine if they are forced to let go of Telkomsel...


Tuesday 14th of February 2012

hi G,

this goes to show that not the most diversified telco will end up being the winner. Bharti, Optus and Globe have not been great deals. had they kept money in Singapore, their ROA would have been far better.

Dividends Warrior

Monday 13th of February 2012

It is kinda weird why the price did not drop after the results came out?


Tuesday 14th of February 2012

hi DW,

well u get the drop today. but this have very limited impact to overall dividends.

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