Underlying net profit rose 10% driven by strong performances from all businesses

Singapore and Australia posted double-digit revenue growth

Singapore, 13 August 2009 -- Singapore Telecommunications Limited (Singtel) announced today its first quarter’s underlying net profit rose 10 per cent to S$945 million reflecting strength in the Singapore and Australian businesses, and the return to earnings growth by the major regional mobile associates. The growth was achieved despite the negative currency translation impact.

Singtel outperformed the market and registered strong growth in mobile, data and IT and Engineering revenue. The increase in IT and Engineering was primarily a result of the acquisition of SCS Computer Systems Pte. Ltd., formerly known as Singapore Computer Systems Limited., completed in December 2008.

In the first quarter, revenue increased 10 per cent to S$1.38 billion from S$1.25 billion a year ago and achieved its highest EBITDA in many years of S$578 million, an increase of 11 per cent. 

Singtel continued to deliver new content, multimedia and ICT services to customers, in line with its aim to drive new future revenue streams beyond providing traditional telco services.

For consumers, Singtel launched Football Frenzy, inSing.com, a one-stop lifestyle portal for everything Singaporean, iMedia, an advertising unit, and AMPed^TM, an integrated music experience for postpaid mobile customers. It also introduced Singtel Marketplace, an Internet- based service that will deliver business applications on a subscription basis to small businesses and enterprises.

Allen Lew, CEO Singapore, said: “The Singapore business had a very strong quarter because we achieved two goals. Firstly, we continued to gain profitable market share despite the challenging environment. Secondly, with the growth of mio TV and the launch of our new content, multimedia and software solutions, we have established new long-term growth platforms that also create significant differentiation for ourselves in the key areas of innovation and customer experience.”

Operational EBITDA margin was unchanged at 41.8 per cent as improved margin at the Singapore telco business was diluted by increased revenue contribution from the IT and Engineering business which has lower margins but requires lower capital expenditure.

Data and Internet revenue gained 5.9 per cent to S$392 million. Revenue from data services increased 8.6 per cent. Managed Services revenue expanded 11 per cent as Singtel successfully pursued new revenue streams.

Mobile revenue grew 7.1 per cent to S$372 million as a result of a larger customer base. In the quarter, Singtel gained 15,000 net new customers, bringing its total mobile customer base to 2.99 million or 45.9 per cent of the total Singapore market, maintaining its leadership position.

Net additions were affected by a 7,000 decline in the number of prepaid mobile customers as a result of deactivating improperly registered customers while adding 22,000 postpaid mobile customers.

Demand for 3G mobile services remained strong with net additions of 64,000 in the quarter. That brought Singtel’s total 3G mobile customer base to 1.28 million as at 30 June 2009 and accounted for 84 per cent of its total postpaid base.

mio TV reached a new milestone as it surpassed the 100,000 customer mark in its second year of service. As of 30 June 2009, it had 101,000 customers after adding a record 23,000 customers in the first quarter. mio TV attracted new customers with the widely popular mio Home bundled plans, broad content suite and the constant introduction of new and more exciting content services.

As at the end of June 2009, there were 134,000 customers on mio Plan and mio Home bundles.

IT and Engineering revenue in the quarter grew 50 per cent to S$271 million, including contribution from SCS and the first-time inclusion of revenue from the fibre rollout for OpenNet Pte. Ltd. Revenue from IT and Engineering accounted for 20 per cent of total operating revenue, an increase of 6 percentage points from a year ago. Singtel owns a 30 per cent stake in OpenNet.

The NCS Group had also won significant contracts both locally and overseas, with an order book of approximately S$1.27 billion as at 30 June 2009.

In the quarter, the number of 3G customers increased to 2.76 million including a base of 586,000 wireless broadband customers.

Mobile EBITDA margin was at 25 per cent. The iPhone 3G acquisitions and recontracts reduced the EBITDA margin by 5 percentage points, but delivered accelerated growth in postpaid customer acquisitions.
Total Business and Wholesale Fixed revenue grew 6.4 per cent. Significant new customer contracts, including ANZ Bank, drove growth in Optus’ Business ICT and managed services. Wholesale revenue growth from domestic on-net voice traffic and strong demand for internet bandwidth and access mitigated a decline in corporate voice and data usage. Operational EBITDA for Optus Business and Wholesale was up 13 per cent in the quarter with EBITDA margin up 1 percentage point at 23 per cent.

Excluding the one-off benefit of a A$14 million adjustment for call diversion charges in the last corresponding quarter, underlying EBITDA grew 8.7 per cent, with margin expansion of 2 percentage points to 15 per cent.

Pre-tax ordinary contribution from regional mobile associates in the first quarter rose 12 per cent to S$624 million from S$557 million a year ago, on improved performance from Telkomsel and mark-to-market gains on foreign currency liabilities for Telkomsel and Bharti. The increase in earnings was achieved despite the weaker regional currencies against the Singapore dollar.

If exchange rates had remained constant against the Singapore dollar from the same quarter last year, contributions from the regional mobile associates would have increased 19 per cent.

The Group’s combined mobile customer base grew 64 million, or 33 per cent, to 262 million from a year ago.

In the first quarter, the Group’s share of Bharti’s pre-tax ordinary profit in Indian rupee terms increased 26 per cent as it added 8.4 million customers, another record quarter of customer growth. Bharti, India’s number one mobile phone operator, crossed the 100 million mobile customer mark and had 102.4 million customers as at 30 June 2009, an increase of 48 per cent from a year ago.

In the quarter, the Group’s share of fair value gains on Bharti’s US dollar and Yen borrowings was S$23 million compared to a loss of S$15 million a year ago as the Indian rupee strengthened against these currencies.

Telkomsel, the largest cellular operator in Indonesia, increased its customer base by 23.6 million or 45 per cent from a year ago to 76 million. During the quarter, it increased its market share for the second consecutive quarter to 51.1 per cent as at 30 June 2009.

In Indonesian rupiah terms, the Group’s share of pre-tax ordinary profit rose 17 per cent on a larger customer base and higher minutes of use. In the quarter, Telkomsel also recorded fair value gains on its US dollar and Euro vendor payables. The Group’s share of the gain amounted to S$17 million, up from S$1.0 million a year earlier.

The Group’s share of Globe’s pre-tax profit in Philippine peso terms rose 13 per cent as the company reported a stable operating performance helped by a small fair value gain compared to a fair value loss a year ago.

Globe added 2.3 million mobile customers from a year ago or 10 per cent more, bringing its base to 25 million. It registered a net reduction of 0.7 million mobile customers from a quarter ago as it churned out some marginal mobile customers.

AIS, the largest mobile communications operator in Thailand, added 1.9 million new customers, 7.5 per cent more from a year ago, to 27.9 million, as at 30 June 2009. Its pre-tax ordinary profit for the three months ended 31 March 2009 fell 13 per cent from a year ago in Thai baht terms impacted by the slowing economy and political uncertainty which resulted in lower revenue from voice and international roaming.

Warid, a key challenger in Pakistan, added 2.4 million mobile customers or 15 per cent more from a year ago to 17.9 million as at 30 June 2009. In the first quarter, the Group’s share of Warid’s loss was S$15 million compared to a loss of S$22 million a year ago. Warid reported an improvement in operating results and lower mark-to-market losses on its US dollar liabilities.