Quarter		YOY	Half Year		YOY
	Sep 2007 (S$m)	Sep 2006 (S$m)	Change	Sep 2007 (S$m)	Sep 2006 (S$m)	Change
Operating revenue	3,695	3,332	10.9%	7,261	6,560	10.7%
Operational EBITDA	1,123	1,090	3.0%	2,240	2,130	5.2%
Share of associates' ordinary earnings	633	510	24.1%	1,289	1,005	28.2%
EBITDA	1,742	1,703	2.3%	3,511	3,323	5.7%
Net profit attributable to shareholders	988	956	3.3%	1,915	1,796	6.6%
Underlying net profit [1]	914	815	12.1%	1,782	1,568	13.6%
Underlying earnings per share (S cents)	5.74	4.92	16.7%	11.21	9.43	18.9%

 

Group

Group revenue grew an impressive 11 per cent to S$3.70 billion, the second consecutive quarter of double-digit growth.

In Singapore, the focus on winning share in growth segments and maintaining leadership position in key segments helped to achieve double-digit revenue growth for the second consecutive quarter. Optus delivered a resilient performance against a highly competitive market. In Australian Dollar terms, Optus recorded a 3.7 per cent revenue growth while in Singapore Dollar terms, the growth was 12 per cent as the Australian Dollar strengthened by 8 per cent from a year ago.

The regional mobile associates continued to record strong profit growth. Excluding exceptional items, the associates' pre-tax earnings were up 24 per cent to S$633 million, driven mainly by Bharti.

Net profit increased to S$988 million. Underlying net profit[2]grew 12 per cent to S$914 million and the corresponding earnings per share was up a higher 17 per cent to 5.74 cents.

In the quarter, free cash flow[3] was up a strong 20 per cent to S$1.13 billion, with S$332 million from the Singapore operations, S$360 million from the Australia operations and S$437 million from the associates.

Dividend

Singtel is pleased to announce that its Board of Directors has approved an interim ordinary dividend amounting to S$891 million or 5.60 cents per share, up 52 per cent from 3.69[4] cents per share a year earlier. This interim payout represents 50 per cent of the Group's underlying net profit for the half year ended 30 September 2007.  

Ms Chua Sock Koong, Singtel Group CEO, said: "The Group posted its second consecutive quarter of double-digit revenue growth and continued to deliver healthy earnings growth. Our Singapore business continued its strong performance with another quarter of double-digit growth. We are forging ahead in growth segments and are pursuing strategic initiatives to develop new revenue streams. Optus remains resilient in a tough Australian market. Through continuous innovation and successful marketing, Optus posted the highest quarterly postpaid net adds in over two years.

She added: "Our regional mobile associates are now in six countries with the completion of our investment in Warid Telecom in Pakistan. They are among the fastest growing mobile markets in the world. Together with Singtel and Optus, we have 158 million mobile subscribers, the largest in Asia outside China. The success of our international expansion has created a diversified earnings base. Our overseas operations now contribute 74 per cent of proportionate EBITDA, up from 71 per cent a year ago."

Singtel

Singtel posted its second consecutive quarter of double-digit revenue growth due to its continued success in growth segments and assisted by strong economic conditions. Operating expenses grew 17 per cent.  

Operational EBITDA remained stable at S$509 million. Overall operational EBITDA margin declined 4.1 percentage points to 42.2 per cent, reflecting the change in revenue mix as the lower-margin IT business grew faster than the telecom business. Margin was also impacted as Singtel continued to pursue a number of key growth and customer initiatives in both the consumer and corporate businesses.

Although not expected to make a significant contribution to Singtel's revenue in the near future, mio TV, launched in July 2007, enables customers to enjoy a comprehensive suite of services tailored to their needs. As at 30 September 2007, there were 10,000 customers who have signed up for mio TV.

The mio Plan subscriber base reached 42,000 as at 30 September 2007, up 13,000 or 44 per cent from a quarter ago.

Data & Internet revenue grew 9.3 per cent to S$343 million in the quarter. Corporate data services grew 9.5 per cent, backed by strong growth in demand for corporate data. The demand for bandwidth remained strong, although average prices for international leased circuits continued to decline during the quarter.

Internet revenue grew 8.9 per cent to S$100 million. Broadband revenue grew 11 per cent to S$76 million, as a result of a higher number of broadband lines. Despite intense competition, Singtel retained its lead in the broadband Internet market with 455,000 lines as at 30 September 2007. The number of broadband lines increased 17 per cent or 65,000 lines from a year ago.

Revenue from Mobile Communications grew 13 per cent year-on-year to S$322 million. Continuing the growth trajectory from the June quarter, Singtel further expanded its lead in the mobile market. It added a record 185,000 mobile customers in the quarter and grew its overall market share by 1.3 percentage points to 40.3 per cent as at 30 September 2007. This comprised 163,000 prepaid and 22,000 postpaid customers respectively. In the prepaid market, Singtel increased its market share by 3.6 percentage points to 35.3 per cent, reflecting its success in penetrating the foreign worker segment. We also maintained our strong position in the postpaid segment with 44.4 per cent share in the market.

Continuing the growth momentum in the preceding quarter, revenue from IT & Engineering for the quarter grew 30 per cent year-on-year, driven largely by higher hardware sales and systems integration projects mainly from outside Singapore. 

Overseas revenue accounted for 26 per cent of total IT & Engineering revenue for the current quarter, up from 17 per cent a year ago. The key overseas markets are China, Australia, the Middle East and Hong Kong. 

Major overseas and local contract wins were recorded in the quarter. NCS secured new contracts with the Ministry of Manpower and an overseas company, the China Pacific Insurance.

International Telephone revenue was up 3.4 per cent to S$152 million in this quarter due to higher international telephone traffic. International telephone outgoing traffic (excluding Malaysia) was stimulated by the stronger economy.  "Free IDD¡" prepaid price plans, which offer free international telephone calls to destinations such as Bangladesh and India, also stimulated international telephone traffic while collection rates declined correspondingly.

Revenue from National Telephone declined 5.7 per cent to S$108 million, as the number of fixed lines declined marginally. Voice and dial-up usage continued to decline due to increasing broadband usage, mobile substitution and competition.  Despite the decline in fixed lines, Singtel continued to retain a 95.1 per cent share of fixed lines in Singapore.

Operating Expenses increased 17 per cent or S$102 million year-on-year, due largely to Cost of Sales which posted the largest increase of 30 per cent or S$37 million on the back of higher IT revenue.

Selling and Administrative expenses increased 17 per cent or S$25 million year-on-year, partly attributable to the launch of mio TV in July 2007 and its related content costs. Excluding expenses related to strategic initiatives, the increase would be 11 per cent. This increase was attributable to higher postpaid mobile acquisition and retention costs as well as increased marketing and promotion expenses to drive the growth in the prepaid mobile business.

Staff costs increased 16 per cent, due mainly to annual salary increments, higher provision for bonus, increased headcount to support business growth as well as increase in the employers' CPF rates with effect from July 2007. Compared to a year ago, headcount increased by 351 or 3.7 per cent, mainly to support the expansion in overseas IT activities.

Singtel continued to generate strong cash flows. Free cash flow, excluding dividends from associates, was up 16 per cent to S$332 million.   

Singtel Optus

In the second quarter, Optus delivered an increase in operating revenue of 3.7 per cent to A$1.93 billion and strengthened its market position through aggressive customer acquisition strategies and new product launches.

"This has been a strong quarter for innovation and market disruption from a reinvigorated Optus. We launched market leading products in mobile, fixed line and broadband and continued to take the fight to the incumbent for greater competition and choice," Mr Paul O'Sullivan, Optus Chief Executive said.

"Our trading strength is demonstrated by our maintenance of top line growth in the face of two significant factors trending in the other direction - the ACCC's decision to drive down mobile termination rates by 40 per cent and our decision to stop selling unprofitable resale services.

"These initiatives reflect disciplined pursuit of our strategic priorities as we invest for growth and optimise our product mix to match our network investments."

Optus had a strong quarter in Mobile net adds. Overall, 92,000 new mobile subscribers were added this quarter, of which 65,000 were postpaid. This was the highest quarterly number of postpaid net adds in over two years. The total mobile customer base reached 6.89 million.

In the Fixed business, there were impressive take-up levels for Optus Fusion - a market 'first' under whichcustomers on Optus' network pay a fixed monthly amount for unlimited local and national calls, unlimited calls to Optus mobiles, and a highly attractive broadband offering. The success of this highly disruptive product has contributed to the 32 per cent growth in broadband subscribers, compared to a year ago. The total number of broadband subscribers now stands at 895,000.

Optus also accelerated migration of customers to its Unbundled Local Loop (ULL) network. 70,000 ULL telephony subscribers were added this quarter, almost double the take-up rate of 38,000 in the June quarter.

In the Business and Wholesale segment, Optus is gaining market share whilst continuing to improve margins. This reflects Optus' focus on developing IP based solutions as transformation offerings to Chief Information Officers that leverage Optus' major competitors' constraints in this area.

Despite the strong trading momentum in the second quarter, Optus' operational EBITDA decreased by 1.5 per cent year-on-year. This mainly reflected the 40 per cent decline in mobile termination rates imposed by the ACCC. Margin was 24.7 per cent, down 1.3 percentage points from a year ago, in a competitive market environment with higher costs associated with a number of major product launches, strong subscriber growth in mobile and broadband, as well as higher ULL migration activity.

Free cash flow generated by Optus in this quarter was A$279 million, up 58 percent year-on-year, reflecting strong working capital management. Underlying net profit for the quarter decreased by 5.6 percent or A$7 million to A$123 million.

In this quarter, Optus Mobile revenue grew 3.9 per cent to A$1.08 billion. Supported by new product launches and aggressive customer acquisition strategies, Optus maintained scale in the mobile market.

The Optus Mobile subscriber base reached 6.89 million, representing an increase of 4.5 per cent compared to a year ago. As at 30 September 2007, 868,000 subscribers had been provisioned with 3G services, an increase of 27 per cent compared to a quarter ago.

Optus continued with its successful Black & White campaign which targets the incumbent's lack of value in its mobile plans. Optus further leveraged popular capped offerings by introducing a A$19 mobile postpaid capped plan. Virgin Mobile, a wholly-owned Optus subsidiary, launched a highly innovative new bundled home telephony and broadband product using the Optus 3G High-Speed Downlink Packet Access (HSDPA) mobile network ¨C an offer which is already proving popular with our customers.

Outgoing service revenue increased by 7.4 per cent to A$749 million. Incoming service revenue decreased by 17 per cent due to the 40 per cent decline in ACCC mandated termination rates from 15 cents per minute to 9 cents per minute. Equipment revenue was up by 20 per cent driven by higher sales volumes.

In line with its strategy of growing non-voice revenues, Optus continued to stimulate SMS and other data revenue which increased to 28 per cent of ARPU. The proportion of non-SMS data revenue grew to 4.6 per cent of ARPU, compared to 3.0 per cent a year ago.

Optus continues to expand its 3G HSDPA mobile network, enhancing the quality and speed of mobile services across the country in its rollout of 3G coverage to 96 percent of the population.

Optus Business and Wholesale fixed also had a strong quarter with revenue growth of 6.6 per cent, driven by a robust 10 per cent growth in Optus Business fixed revenue.

Operational EBITDA for the combined Business and Wholesale division grew strongly by 34 per cent to A$104 million. EBITDA margin increased from 18 per cent to 23 per cent, reflecting continued growth in higher margin Data and IP and a further shift in traffic mix towards on-net.

Optus Business fixed voice revenue grew by 4.7 per cent mainly driven by an increase in the number of customer lines.

Business Data and IP revenue increased by 20 per cent compared to the same quarter last year, underpinned by revenue growth in the rapidly expanding Ethernet market, and Optus' continued success in migrating customers to IP VPN. Information and Communication Technology and Managed Services revenue increased by 5.2 per cent as Optus continued to successfully expand its business of delivering converged business applications to corporate customers. 

Optus won major corporate and government deals this quarter including Medicare, Orica and Department of Immigration and Multicultural Affairs (DIMA).

Wholesale Data and IP revenues grew 22 per cent as demand for Internet bandwidth and transmission capacity continues to be strong. Optus successfully launched D2, the second of three D-series satellites, on 6 October 2007. The third D-series satellite is expected to be launched in 2009.

In Optus Consumer and SMB Fixed, on-net growth momentum continued this quarter,with the on-net revenues up by 18 per cent and the number of telephony subscribers increasing by 30 per cent year-on-year. EBITDA margin was stable at 7 per cent.

Optus accelerated its Unbundled Local Loop (ULL) addition rate, with 201,000 subscribers provisioned with services on ULL, up from 131,000 a quarter ago. This strong take-up was driven by the popularity of the Fusion products and continued strong migrations.

Consumer fixed on-net revenue grew by 18 per cent to A$202 million, offsetting declines in off-net revenues due to the decision to exit unprofitable resale services.

"We are making excellent progress towards our strategic objective of moving traffic onto our own network. This quarter, 60 per cent of Optus' consumer fixed revenue was on-net, up from 50 per cent a year earlier.  This increase in on-net traffic has also contributed to interconnect spend for the quarter being 8.6 per cent lower than the previous corresponding quarter," Mr O'Sullivan said.

Broadband revenue grew strongly by 24 percent to A$94 million. As at 30 September 2007, Optus had 895,000 broadband customers, up 61,000 from a quarter ago.

In September 2007, OPEL Networks Pty Limited (OPEL), the 50:50 joint venture between Optus and Elders, signed the agreement with the Government for A$958 million in funding to extend high-speed broadband services to rural and regional Australia. OPEL will be eligible to receive the agreed funding once certain specified conditions are met and it will commence business at that point in time. The conditions include the Australian Government's approval of commercial arrangements between Optus and Elders and satisfactory completion of further network planning. Detailed planning and preparation for the build of the OPEL network is presently being conducted by Optus and Elders. Within Optus, over 80 full-time equivalent staff are involved in this network planning and preparation phase.

Associated companies

Contributions from Singtel's regional mobile associates continued to grow. On a post-tax basis, earnings from associates grew 21 per cent to S$477 million and accounted for 52 per cent of the Group's underlying net profit. Pre-tax earnings from the regional mobile associates grew 21 per cent to S$600 million, spurred by Bharti's robust performance. 

Year-on-year, the Group's combined mobile subscriber base expanded 57 per cent to 158 million - partly boosted by the first-time inclusion of Warid Telecom which had 11.9 million subscribers as of end September. The subscriber base rose 16 per cent or 22 million from a quarter ago.

In the quarter, the Group's share of Telkomsel's pre-tax ordinary profit grew 16 per cent in Rupiah terms on the back of improved operational performance and a higher subscriber base. However, in Singapore Dollar terms, pre-tax ordinary profit contribution was up 9.6 per cent to S$286 million as the Rupiah depreciated 6 per cent against the Singapore Dollar in the quarter.

Telkomsel added 1.6 million mobile subscribers in the quarter, bringing its total subscriber base to 44.5 million, an increase of nearly 12 million or 37 per cent from a year ago. However, due to stiffer competition, Telkomsel's market share in the Indonesian cellular market fell to 53 per cent from 57 per cent a quarter ago.

Bharti's operating revenue increased a robust 45 per cent, led by strong subscriber gains. The Group's share of Bharti's pre-tax profit rose significantly to S$197 million. The higher contribution was also helped by a 9 per cent appreciation of the Indian Rupee against the Singapore Dollar.

Bharti added 6.2 million net mobile subscribers in the quarter, another record growth, enlarging its total subscriber base to almost 49 million. In October 2007, Bharti crossed the 50-million subscriber mark, barely 14 months after crossing the 25-million mark in July last year. With this achievement, Bharti has become the first telecom company in India to make it to the list of global top 10 operators which have over 50 million subscribers in a single country.

Globe's pre-tax profit contribution from its core operations increased 23 per cent year-on-year to S$69 million. Overall pre-tax profit contribution declined 3.5 per cent to S$71 million as the corresponding quarter recorded larger forex and mark-to-market gains. Globe added 1.1 million net mobile subscribers this quarter, bringing its total base to 19.2 million, up 33 per cent from 14.5 million a year ago. 

The Group continues to generate strong free cash flow.

In the quarter, free cash flow rose strongly by 20 per cent to S$1.13 billion from a year ago due mainly to higher operating cash flow.

Singtel continued to maintain an efficient capital structure while retaining significant flexibility for further investments. Net debt gearing was up 8.0 percentage points to 28.4 per cent from 20.4 per cent a quarter ago, as gross debt increased mainly from bank borrowings of S$1.25 billion; and cash balance fell following the payments of S$2.54 billion for final and special dividends and S$1.16 billion for the acquisition of Warid Telecom in this quarter.

Net debt was 1.2 times of EBITDA and the EBITDA interest cover was at 22 times.

Outlook

The guidance issued earlier with the results for the financial year ended 31 March 2007, with updates provided in the preceding quarter, is affirmed.

Please refer to the Group's Management Discussion and Analysis

document for a full commentary on the Group's results for the quarter and half year ended 30 September 2007.