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Post Info TOPIC: SingTel
davidv426


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Savings Interest Rates
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hi
this forum has more information about Savings Interest Rates and it is use ful and i am glad to visit this forum.................................



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tfwee


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RE: SingTel
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Telecom Sector
A closer look at risks and opportunities

Singapores telecom sector is a defensive play with attractive dividend yield. We project 3.3% cash yield for SingTel, 4.7% yield for StarHub and 7.3% yield for M1 in the current year. With investors wary of CDO exposure in the financial sector, the telecom sector provides a safe heaven in the current turmoil and is a direct beneficiary of the healthy growth in the domestic economy.

We expect the consumer business to see continuous growth from pre-paid mobile and broadband subscribers whilst the strong economy would bolster enterprise spending on networks and services. As for IPTV, SingTel has positioned itself as a niche pay TV service provider and in our estimates, should be able to capture 12-15% pay-TV market share within the next three years. Meanwhile, IDA has further delayed the invitation for tender for the construction of Next Generation National Broadband Network (NBN) by another three months. We now expect the bids to start in Dec 07 and contracts to be awarded earliest, by 2Q 2008. In our view, NBN will pose a long-term risk for StarHub and as such could be negative on the stock.

We have upgraded SingTel to BUY due to better business prospects in Singapore and multiple catalysts in place. We have downgraded StarHub to HOLD, as we expect intensifying competition on most of its business lines to impede EBITDA margins improvement. We maintain HOLD for M1, mainly for its attractive dividend yield. Our top pick in the sector is SingTel.


-- Edited by tfwee at 23:27, 2007-09-10

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ahkian


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From BT 14 Aug 2007

SingTel's Q1 profit up 10% to $927m


Singapore Telecommunications, on Tuesday beat market expectations with a 10.4 per cent rise in first-quarter net profit reflecting good business at home and abroad.

State-controlled SingTel reported April-June attributable net profit of $927 million (US$611 million) versus $839.5 million last year and above an average net profit forecast of $894 million by four analysts polled by Reuters.

SingTel, headed by new Chief Executive Chua Sock Koong - posted underlying net profit, before goodwill and exceptionals, of $868 million in the quarter, versus $837 million a year ago.


Battling heavy competition at home, where the mobile phone penetration rate has reached 100 per cent, SingTel has spent $18 billion in recent years buying firms in high-growth Asian countries and in the bigger Australian market.



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ah Kian
KK


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SingTel - Fraser
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17 Jul 07

SingTel ($3.50) can be expected to move up to $3.60-70 ahead of Aug 7 ex-dividend and estimated Aug 3 interim results announcement

The share price behaviour in past month or so with strong support at $3.40 and the stock starting to trade higher from $3.40-44 to $3.46-52 in recent days suggests that the next 2-3 weeks could see it move up to $3.60 with a 50-50 chance of testing years $3.70 high.

The attractive coming dividend payout of 16 cents payable on Aug 30 (special 9.5 cents and final 6.5 cents on top of 4.6 cents interim paid earlier, give a total of 20.6 cents (5.9% yield) for the last fiscal year).

ST has so far not rallied much ahead of the results as traders had misread the earlier rally, which came well ahead of the May 9 full results announcement. As it had turned out then, the counter rallied from $3.02 in early March to as high as $3.60 in mid-April (ie 3 weeks ahead of results) but fell back to $3.30 around results release date. 

Now with less than 3 weeks away from the expected Aug 3 1Q results, ST has moved back to the middle of the $3.40-60 range, backed by the latest month-long strong support base at $3.40-44. 

It may also be high time ST test years $3.70 high on Feb 2 when the ST Index was at around 3200 showing how much it has under-performed the STI. But whether it will take place in coming days ahead of the Aug 3 results depends on its ability to clear $3.52 convincingly.  

The ex-dividend date of Aug 7 too should underpin the share price. Technical indicators such as bollinger bands suggest that while resistance at around $3.60- the higher band can be stiff, the higher base support at $3.40-44 could push the shares above $3.60 to $3.70. 

Lower bases around $3.10-20 have ushered in rallies to $3.60-70 last December and March this year ie 40 to 60 cents higher and for a 20-30 cent push from $3.40 should be a mediocre achievement.

Whatever the case ST remains a good medium term dividend play even if a short term rally does not materialise ahead of results.

The strong uptrend with weekly MAs well below price chart, suggests it should finally clear its closest resistance ie the 1993 low of $3.70 and 1998 high of $3.72. The next achievable targets later this year are the 1993 close of $3.76 followed by the 1994 high of $3.86.

The main target of course is the 1996 peak of $4.10 that could be seen early next year along with a market rally to new peaks on the STI above our year-end target of 3750.

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KK


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SingTel - Lehman Brothers
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9 Jul 07

Revising Up Target to S$4

Investment Conclusion

We are raising our Mar'08 price target on SingTel from S$3.9 to S$4.0 per share to include our recently revised DCF ests on Bharti Airtel (extowerco), Warid Pakistan acquisition, revised exchange rates given sharp appreciation YTD, and slight changes to our Telkomsel, AIS & Sing earnings. We reiterate 1-OW and see SingTel as the best all-in-one Asian telco stock with its mix of growth potential and value assets.

Summary

Core valn (ex-associates) appears compelling at 5x Mar'08E EV/EBITDA & 9x PE. Our optimisticcase scenario leads us to a S$4.3 NAV.

We recently raised our Bharti FY08-10 est EPS 7-15% to reflect stronger subs growth (2mn/ month) on the back of accelerated capex spend & pop covg targets, well-positioned tariff cuts, and spectrum & execution delays at competitors.

We have reflected 2-7% strength in SingTel overseas mkt currencies versus the SGD, positive for both earnings contribution & NAV.

We incorporate earnings from Warid - dilutive in FY08-09, +ve from FY10 onwards. We use acquisition price in our SOTP NAV.

We have now also adjusted our SG revs 5-6% to reflect roaming gross. Neutral on EBITDA.

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ahkian


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RE: SingTel
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SINGTEL, cl remains OUTPERFORM

- SingTel's target price has been upgraded by 7% to S$3.85/sh on the back of 3 factors: upgrades to Globe and Bharti target prices by 7% and 5% respectively in June, upward tweaks in Optus revenue assumptions based on our impression from recent meetings that its strategy to drive fixed to mobile substitution is gaining traction and the recent entry into the high growth Pakistan market with a 30% stake in Warid Telecom. The stock holds 13% to our revised target and also has possible further upside from options to increase its Bharti stake. Maintain Outperform.

- Globe and Bharti target prices were raised 7% and 5% recently. After meeting Globe management, CLSA has better expectations of subs net additions and growth sustainability with effects of the economic boom filtering through to mass market spending. TRAI data shows, market share leadership aside, Bharti is also leading revenue share. Against the backdrop of the industry's spectrum allocation, rising share is important to driving future valuations. Bharti's growth and margin improvement continue to surprise our already bullish view.

- Optus revenue assumptions have been modestly revised upwards after recent meetings to factor in our view that its two pronged strategy to drive fixed line substitution in mobile and building scale to tap the industry fixed profit pool is gaining traction. Also, availing government funding last month for is JV with Elders JV should speed up its ability to compete in broadband in regional Australia.

-   Its new investment of 30% of Warid Telecom in Pakistan further expands SingTel's footprint in fast growing Asian mobile markets. We expect positive contribution to associate profits and growth in late FY09. Pakistan's mobile market is in high growth phase with 36% penetration of 36%; Warid is currently the third largest operator but with SingTel's backing could likely overtake its nearest competitor.

- Temasek's recent option to buy an effective 4.99% stake in Bharti also has rights of first refusal to Bharti group and SingTel on the shares acquired, subject to unspecified conditions. Given lack of detail, this deal is a bit perplexing - logically, SingTel should have acquired the stake directly due to its existing interest and also Temasek typically focuses on much larger strategic stakes. While not imputed in our valuations, the prospect of eventually raising its Bharti stake by ~5% could hold further upside to SingTel valuations.

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KK


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SingTel - UBS
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29 Jun 07

Entry into Pakistan

SingTel acquires 30% of Warid Telecom
SingTel announced the acquisition of a 30% stake in Warid Telecom in Pakistan. In our view, this acquisition is a positive for SingTel as it allows the company to enter into yet another potential high growth market. SingTel can use its experience from other emerging telco markets to capture the growth in Pakistan.

Implied valuation does not look unreasonable
Implied valuation on a EV/Sub of US$299 does not look unreasonable given emerging market telco asset prices have gone up significantly. In the medium to long term, emerging market acquisitions tend to pay off due to the huge growth potential.

Acquisition details

SingTel will acquire 50% existing shares and 50% new shares of Warid. With the price tag at US$758m, Warid is valued at an EV of US$2.9b. The acquisition will be made in cash, funded through internal and/or external sources of funds. SingTels balance sheet will not be considerably impacted.

Valuation: Maintain Buy 1 with S$3.90 price target
Warid is net income negative and we expect it to dilute SingTel earnings in the near term. We have yet to incorporate Warid into our valuation of SingTel and will do so in due course. SingTel remains a well managed company which offers a good mix of growth and stable cash flows for investors. We maintain our Buy 1 rating with a SoTP derived price target of S$3.90.

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KK


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SingTel - BT
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2 Jul 07

Warid stake significant for SingTel

SHAREHOLDERS seem largely indifferent to Singapore Telecommunication's purchase of a 30 per cent stake in Pakistan's Warid Telecom for an estimated US$758 million. After the deal was announced last Thursday, the stock closed 10 cents down to $3.40 on Friday - with one analyst telling Bloomberg that the deal was a long-term acquisition for SingTel and would not have any effect on the company's immediate earnings.

Sure enough, paying US$758 million for Warid, the third-largest of Pakistan's six mobile phone operators, may not be as significant as some of SingTel's previous acquisitions. Before last week's deal, SingTel had spent $17 billion on overseas acquisitions. Its last major acquisitions were in 2001, including the A$14 billion (S$18 billion) purchase of Australia's second-largest telco Optus, and the $1.93 billion buy of a 35 per cent stake in Telkomsel, Indonesia's leading mobile firm. In 2005, it paid $204 million for a 45 per cent stake in Pacific Bangladesh Telecom.

But the importance of the Warid acquisition should not be understated. SingTel has been under pressure to deliver growth as its two core markets of Singapore and Australia are saturated. In May, Chua Sock Koong, SingTel's new chief executive, said the group is gunning for double-digit earnings growth over the medium term. She said this when she presided over her first results announcement, renewing a commitment made previously by the telco.

As margins continue to slide in SingTel's core markets of Singapore and Australia, the group has been relying on regional associates, namely India's Bharti and Indonesia's Telkomsel, to drive earnings growth. Bharti and Telkomsel are their respective country's No 1 mobile operators. Associates contributed 43 per cent or S$1.5 billion of group underlying net profit last year, up from 37 per cent a year ago. Despite the stellar performance of its regional mobile associates, SingTel posted flat revenues of $13.15 billion and a net profit of $3.78 billion - down 9.2 per cent - for the year ended March 31, 2007.

The telco needs new earnings boosters, and Warid is in a sweet spot to deliver. Since starting operations in 2005, it has built up a market share of about 17 per cent of Pakistan's 58.4 million mobile subscribers, based on April figures. It is owned by the Abu Dhabi Group, which was awarded a 15-year licence after it paid US$291 million to operate mobile services in Pakistan, Azad Jammu and Kashmir, and the Northern areas. Warid's management has established an impressive operational track record, turning Ebitda - earnings before interest, taxes, depreciation and amortisation - positive in only 17 months after its commercial launch.

Pakistan, with a population of 164 million, is a magnet for foreign telco investors attracted by its soaring growth rates. At end-2004, it had only five million subscribers. Pakistan has a moratorium on the issue of new mobile operator licences, so the only way international telecoms companies can enter the market is by buying stakes in existing players. Landing the stake in Warid is critical to SingTel's strategy of getting back on its growth track. It also went some way to redressing a missed opportunity in 2005 when SingTel lost out in a bid for a stake in Pakistan Telecommunication.

And not a moment too soon. According to Financial Thomson data, telecommunications was the most targeted sector for takeovers in Asia ex-Japan deals in the first six months of this year. An Ernst & Young report said the technology, media and telecom or TMT sector was one of the leading areas for private equity deals in Asia in 2006.

Reports said SingTel had to contest with MTN of South Africa and Britain's Vodafone for the Warid stake. Telco operators such as Vodafone and China Mobile have been aggressive in buying up stakes in emerging markets. As well as each other, telcos have had to compete with rich private equity funds such as Middle East investors for assets.

Warid is unlikely to be the only acquisition under Ms Chua's helm, although she has said that mergers and acquisitions alone cannot be a long-term growth strategy. This year, SingTel paid out a lower $3.3 billion to shareholders - compared to the previous record of $4 billion - which was interpreted as an effort to keep some cash handy for investments. Having had to forgo more dividends, shareholders will be looking to Warid to start boosting SingTel's earnings soon.

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KK


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29 Jun 07

SingTel buys stake in Pakistani telco

The 30% stake in Warid gives a boost to SingTel which has been struggling to deliver growth

SINGAPORE Telecommunications has entered into a deal to buy a 30 per cent stake in Pakistan's Warid Telecom for an estimated US$758 million, its first significant acquisition since 2001 .

The stake in Warid, the third largest of Pakistan's six mobile phone operators, gives a boost to SingTel which has been struggling to deliver growth as its two core markets of Singapore and Australia are saturated. For the year ended March 31, it posted flat revenues of $13.15 billion and a net profit of $3.78 billion, down 9.2 per cent.

Yesterday, the company pointed out that it has made substantial investments in markets with high growth potential in South Asia. 'Warid Telecom in Pakistan is a natural fit,' said CEO Chua Sock Koong.

'We see strong upside in terms of the company's performance and look forward to its continued contribution towards the development of mobile communications in Pakistan.' Warid, owned by the Abu Dhabi Group, has a 15-year licence. Since starting operations in 2005, it has built up a market of about 17 per cent of Pakistan's 58.4 million mobile subscribers, based on April's figures.

Pakistan, with a population of 164 million, is a magnet for foreign telco investors attracted by its soaring growth rates. At end-2004, it had only five million subscribers. Pakistan has a moratorium on the issue of new mobile operator licences, so the only way international telecoms companies can enter the market is by buying stakes in existing players, according to Reuters.

An earlier Financial Times report said SingTel beat rivals MTN of South Africa and Britain's Vodafone for the Warid stake.

This year, China Mobile, the world's biggest wireless carrier, agreed to buy an 89 per cent stake in loss-making Pakistan operator Paktel for US$284 million - its first acquisition outside its home market.

Apart from Warid and Paktel, now known as CM PAK, Pakistan's other operators are Mobilink, now a 100 per cent-owned subsidiary of Egypt-based Orascom Telecom, Norway's Telenor, Ufone, part of Pakistan Telecommunication, and private Instaphone.

The Abu Dhabi Group is one of the largest foreign investor groups in Pakistan and also owns Bank Alfalah and Wateen Telecom. It has a stake in United Bank.

SingTel's last major acquisitions were in 2001 for its A$14 billion (S$18 billion) purchase of Australia's second largest telco Optus and a $1.93 billion buy of a 35 per cent stake in Telkomsel, Indonesia's leading mobile firm.

In 2005, it paid $204 million for a 45 per cent stake in Pacific Bangladesh Telecom. Before yesterday's announcement, SingTel had spent $17 billion in overseas acquisitions.

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KK


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SingTel - CIMB
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28 Jun 07

Potential 30% stake in Warid

According to a Business Times report on 27 Jun 07, SingTel is a front-runner in acquiring a 30% stake in Warid, one of Pakistans leading mobile-phone operators. The deal reportedly values Warid at US$1bn (S$1.54bn) and could be closed as early as next month. NTM of South Africa and Vodafone of Britain have also expressed interest in Warid.

Owned by the Abu Dhabi Group, Warid is one of the six mobile-phone operators in Pakistan. Since beginning operations about two years ago, the company has garnered 10m customers and a market share of 17%. The mobile players in Pakistan are Mobilink (47% market share), Ufone (21%), Warid (16%), Telenor (14%), Paktel (3%) and Instaphone (1%).

Pakistans telco market is attractive to foreign telcos, given its low penetration rates of around 36% and high growth prospects of around 40% yoy projected for 2007. However, due to intense competition, local players have been willing to sell stakes to foreign telcos for technology and marketing skills to gain a competitive edge.

Comments

The potential acquisition is a unique opportunity for SingTel to expand further into high-growth regional markets. As such, we view it positively. SingTel stands ready to finance the potential US$300m (S$460m) acquisition of Warid with its S$1.5bn war chest. We do not expect Warid to be profitable or even EBITDA-positive in the near term, given Pakistans competitive telco market. For instance, Telenor Pakistan, with its slightly smaller market share of 14%, posted negative EBITDA (328m kroner, US$55m) and operating losses (777m kroner, US$130m) on revenue of 1,299m kroner (US$218m) in 2006.

However, we believe that SingTel has the capability to bring in the necessary technical and marketing expertise to turn Warid into a more competitive and profitable player in a fast-growing market over the longer term. Given the scope for mutual strategic benefits and SingTels financial discipline, we believe the risk of SingTel overpaying for Warid is low.

Valuation and recommendation

Maintain Neutral and target price of S$3.75. Our target price is based on sum-ofthe-parts valuation (Figure 1). The potential Warid stake is not expected to have a significant impact on SingTels earnings and valuation in the near term. In addition, the US$300m/S$460m investment (vs. cash in hand of S$1.5bn) is not expected to affect our dividend payout assumption. At current valuations and with the lack of near-term catalysts, we maintain our Neutral rating on SingTel.

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KK


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SingTel - BT
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27 Jun 07

SingTel eyes stake in Pakistani telco

Price for 30% stake could value Warid at US$1b: report

(SINGAPORE) Singapore Telecommunications is reported to be the front runner to acquire a stake in leading Pakistani mobile phone company Warid.

Quoting sources, The Financial Times newspaper said yesterday that SingTel is in advanced talks to buy about 30 per cent of Warid in a deal likely to value the company at US$1 billion. An agreement could be signed as early as next month, the paper said.

Warid, owned by the Abu Dhabi Group, has a 15-year licence. It began operations two years ago and is one of six mobile phone operators in Pakistan.

A SingTel spokesman yesterday declined to comment on the report.

According to the report, Warid is 'assessing' other offers and these are from South Africa's NTM and UK's Vodafone.

SingTel is interested in the Pakistani market, a SingTel senior executive told analysts at a briefing on Thursday last week. SingTel chief executive Chua Sock Koong and chief executive international Lim Chuan Poh met the analysts.

In 2005, SingTel lost out in a bid for a stake in Pakistan Telecommunication.

Pakistan, with a population of 164 million, is a magnet for foreign telco investors attracted by its soaring growth rates. There are some 58.4 million mobile subscribers, up from five million at end-2004, according to the Pakistan Telecommunication Authority (PTA).

Warid has 9.7 million subscribers or a 17 per cent market share, said PTA. According to Prashant Singhal of Ernst and Young India: 'With significant activity already having taken place in India, the next set of target investment destinations are high-growth nations such as Pakistan, Indonesia, and Bangladesh, with markets such as Pakistan expected to show high annual net additions of nearly 20 million and year-on-year growth of nearly 40 per cent by the end of 2007.

'SingTel has a 30.5 per cent stake in India's leading mobile operator Bharti.Last year mobile operators invested US$2 billion in Pakistan - accounting for 54 per cent of total foreign direct investment in the country.Mobile mumber portability (MNP) has been launched in Pakistan, intensifying competition in the sector.

PTA chairman Shahzada Alam was reported as saying in April that Pakistan's telecom industry has attracted US$9 billion of foreign investment in the last three years and a further US$4 billion is expected in the next 3-4 years.

'We can see Pakistan taking the lead by being the first country in South Asia to have implemented the MNP facility,' he said. 'After MNP, the growth of the industry has become more promising as this would intensify competition among operators and act as a catalyst in making the sector more competitive.

'SingTel, under pressure to expand its geographic reach in the past few years, has found this increasingly difficult given the interest in telcos from global investors loaded with cash.Western telco operators are jostling with private equity investors and Middle East oil-rich investors to purchase emerging market telco assets.

SingTel may have an advantage in that it is a leading operator that can share business and technological support. But it is also known to drive a hard bargain and is reluctant to get into a bidding war.

SingTel has said it remains focused on Asia while exploring new markets.It told analysts last week it looks for investments with a 'sizeable under penetrated market with strong growth potential or mature operations with significant scope for SingTel to add value'.

-- Edited by KK at 20:11, 2007-06-27

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SingTel - CIMB
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22 Jun 07

Breakthrough in Australia?

SingTel held its annual investor day yesterday and came away with the impression that Optus may be breaking through on broadband in Australia. The other key takeaways are:

Australia

Fixed line competition favoured? The advocacy of a fair fibre-to-the-node (FTTN) competition scored a major boost when the regulator announced that an expert will decide which party will build the network. The Optus/G9 consortium has prepared a rival FTTN proposal which would offer consumers a more attractive value proposition. We understand Optus could offer A$25-A$35 per line compared to the estimated A$55-A$65 that Telstra needs in protecting its margins.

We gather that the Australian government is favouring more openness and competition in the fixed line industry, especially in the run up to the election this year. Optus and its joint venture partner Elders has secured a A$958m funding from the Australian government to further extend high-speed broadband services to rural Australia by Jun 09. The network, covering 638,000 sq km, will deploy 1361 broadband wireless sites and install ADSL2+ in 312 exchanges. Optus is optimistic that this could be a turning point for the Optus-led G9 consortium looking to roll out a fibre-to-the-node (FTTN) in urban areas which will open up the urban broadband industry to competition. This proposal competes with incumbent Telstras FTTN ambition.

Two-pronged strategy. Optuss current strategy is two fold: 1) build scale on its mobile business. This will enable Optus to compete should the industry consolidate. Optus believes that the Australian mobile industry is likely to consolidate into a threeplayer market from four currently. hile it wont be a major driver of consolidation, it will pursue opportunity if a clear one does emerge as its past experience have demonstrated, (e.g. AlphaWest, UECom, Virgin Mobile). 2) garner more fixed line revenue, which is discussed above.

Singapore

Prepaid strategy paying off. SingTel is still concentrating on the prepaid segment which it sees is a growth area. It believes that it can greater traction within this segment as it relied too heavily on its pricing proposition in the past to which its competitors responded to. Going forward, it will differentiate themselves in the distribution channels and on-the-ground activities such as targeting foreign workers to establish themselves here. In fact, if the month of April is anything to go by, then signs are encouraging as it took 62% of the net adds. It also noted that 60% of its gross adds are foreign workers which have higher ARPUs.

Ready to launch IPTV. We sense that SingTel may launch its IPTV offering in the next two months given that it has started to run teaser ads. It plans to offer: 1) true video on demand; 2) content: high definition, Mandarin and dialects, infotainment and documentaries; 3) unbundled packages where subscribers are not required to sign up for basic programming. SingTel cautioned that by itself, IPTV is not an attractive financial investment but to: 1) offer IPTV as part of a bundle; 2) increase its value-add instead of a pure carrier business model; and 3) to increase customer stickiness. We think SingTels IPTV will be a niche offering, and unlikely to be a significant contributor to its Singapore operations.

Associates & investment strategy

Telkomsel to continue aggressive rollout. A lot of time was devoted to answer questions regarding Telkomsels rising cost pressures, which were due to: 1) higher labour costs to retain key personnel due to the entry of more players in the market; and 2) its aggressive network rollout to the outlying areas where gensets are required. SingTel said it Telkomsel must continue to roll out aggressively to preserve its market share and stay ahead of competition. It has learned is lesson in the Philippines where Globe Telecom lost market share as a result of not expanding to the rural areas.

To lower capex, Telkomsel plans to: 1) redeploy older equipment in the urban areas to the rural areas. It believes it can swap 30% of the equipment. 2) specify for gensets to be included in the supply tender, which should lower the cost of gensets. 3) It is also trying to consolidate the procurement of gensets for Telkomsel, India and Philippines, which are also facing the issue of the lack of power supply in rural areas, to obtain greater discounts.

In conclusion, we gather that Telkomsel will continue to roll out aggressively to the rural areas to stay ahead of the pack, at the expense of margins in the medium term. Lastly, SingTel welcomes the idea of listing Telkomsel because: 1) it raises transparency; and 2) instils greater financial discipline on the cellco. We also view any potential listing of Telkomsel positively as it would unlock values for SingTel and Telkom Indonesia (Rp9750, TLKM IJ, Underperform) but we think the final decision lies with Telkom which is the major shareholder. We rate the probability of listing Telkomsel as being very low as it would affect the valuation of Telkom given that the former is the key earnings driver for the group.

WiMAX features in SingTels strategy. SingTel is developing a centralised strategy to be deployed across all its associates, and at a later stage possibly extending it to the Bridge Mobile Alliance members. One of this initiative involves deploying WiMAX across the group. It is currently conducting field trials in India and Philippines where there opportunities for wireless broadband. Optus will also deploy WiMAX in addition to ADSL 2+ in its rural broadband rollout. WiMAX is preferred over HSDPA in the long term given its superior spectrum efficiency.

Acquisition strategy. While the region remains SingTels focus market, it is now looking further to Central Asia and the Middle East. We do not think SingTel may up is stake in Bharti Airtel for now as it feels that current valuations are excessive. We suspect SingTel may eye WiMAX operators in countries where it does not have a large presence, such as Taiwan. In Vietnam, SingTel feels that the government is not ready yet to privatise the state-owned telcos, and the timeline for foreign telcos to enter the market is still unclear. Based on the above, it does not appear that a large acquisition is likely in the foreseeable future.

Valuation and recommendation

Maintain NEUTRAL on SingTel with an unchanged SOP-based target price of S$3.75. We think SingTel lacks immediate price catalysts.

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tfwee


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RE: SingTel
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Extracted from Kim Eng

Broadbanding Rural Australia

Funding obtained for rural and regional broadband network. Singapore Telecom (SingTel) announced yesterday that OPEL Networks Pty Limited (OPEL), a joint venture of Optus and Elders Telecommunications Infrastructure (Elders), has secured in-principle approval of A$958m in funding from Australias government to build the OPEL network, a rural and regional wholesale broadband network. Australias government requires the network to be built by 30 June 2009. This project should not be confused with Optuss expansion of its 3G mobile network which was announced on 30 Jan 2007.

Details on OPEL
Being a joint venture between Optus and Elders, OPEL is able to leverage on the strengths of both companies. For instance, Optuss existing transmission infrastructure and Elderss 280 retail stores in rural areas. On top of the A$958m funding from Australias government, Optus and Elders will jointly contribute A$917m to the project in the form of upgraded infrastructure, cash financing of A$200m and in-kind contributions. Under this project, OPEL will wholesale backhaul capacity to Optus, Elders and other local internet service providers at more competitive rates than the incumbent Telstra, thus breaking its current monopoly.

Growth to come from associates
We feel that with this network, Optuss competitive position in the broadband business is improved visa-vis the incumbent. At this juncture, however, we do not expect a significant impact on SingTels earnings arising directly or indirectly from the OPEL network. Looking ahead, we expect competition to remain intense in both Australia and Singapore. In our opinion, SingTels growth will continue to come from its associates. As seen from its FY07 results, growth in underlying net profits of S$261m from FY06 was underpinned by the increase in after-taxed associate profits of S$331m.

Maintain DCF target price of $4.08.
We maintain our DCF target price of S$4.08. Key industry events this year and next year will be the awarding of the tender for the Next Generation Broadband Network and the implementation of true mobile number portability. Maintain BUY.


-- Edited by tfwee at 21:50, 2007-06-19

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KK


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SingTel - CIMB
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1 Jun 07

IPTV launch within three months

According to BT report on 30 May 07,

SingTel announced that it is aiming commercial launch of IPTV within the next three months. This follows a four-month trial pilot that started in November last year, after it received a trial licence from MDA.

Consumers will need to get a special set-top box and plug it to their ADSL 2+ modems and televisions to view SingTels IPTV programs.

SingTel gave assurance that the service will not have the quality issues that often plague other television programming streamed over the internet.

Key features of the IPTV service are:
1. Access to channels streaming standard and high-definition programmes
2. Video-on-demand rental from an extensive content library
3. Instant subscription and viewing of new channels via IPTV interface
4. Time-shift recording (the ability to pause, rewind and forward live programming) will also be possible through the IPTV set-top box, which will come with 80GB hard disk space

Comments

The timing of the launch is not unexpected. We do not expect the IPTV to be a serious competitor to StarHubs cable TV offerings in the near term. It remains premature to determine the longer term success of the IPTV service. Key hurdle in our opinion is that it requires a significant change in customer mindset to the TV experience.

Valuation and recommendation

Maintained Neutral with unchanged target price of S$3.75. Our target price is based on sum-of-parts valuation (Figure 1). While we continue to like SingTels investment portfolio of high-growth regional associates, we believe SingTel is unlikely to outperform the STI at current valuations. Maintain Neutral.

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Extracted from www.asia1.com


Foreign companies to be included in Australian stock indexes from June

SYDNEY, Australia (AP) -- Foreign companies, including News Corp. and Singapore Telecommunications Ltd., will be included in Australia's benchmark stock indexes from mid-June, it was announced Friday.

Index provider Standard & Poor's and its Australian exchange partner ASX Ltd. said the changes on June 16 will affect the S&P/ASX 200 and over 90 other indexes, and result in a more diversified investable benchmark.

News Corp. will replace construction materials group Boral Ltd. in the S&P/ASX 50 and all incremental indexes, while SingTel will be added to the S&P/ASX 200.

Other changes, effective from close of business on June 15, include drilling services provider Boart Longyear Ltd. being added to the S&P/ASX 100, from which Iluka Resources Ltd. and Resmed Inc. will be removed.

Other additions to the benchmark S&P/ASX 200 include Mincor Resources NL Queensland Gas Co. Ltd. and Sally Malay Mining Ltd.

Australian Pharmaceutical Industries Ltd., Arc Energy Ltd., Bendigo Mining Ltd., Kingsgate Consolidated Ltd., Kimberly Diamond Co. NL and Tower Ltd. will all be removed from the S&P/ASX 200.



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SingTel - BT
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22 May 07

SingTel dismisses talk of offer for Telkomsel stake

Setdco Group says it's ready to offer US$1.6 billion for SingTel's 35% share

SINGAPORE Telecom has dismissed talk of a US$1.6 billion offer from an Indonesian investor for its 35 per cent stake in that country's biggest mobile phone operator. SingTel said yesterday it has had no contact with businessman Setiawan Djody, whose interest in regaining a foothold in PT Telekomunikasi Seluler (Telkomsel) hit the front pages in Indonesia. The chairman and CEO of private conglomerate Setdco Group said on Sunday that his company was eyeing SingTel's share in Telkomsel.

SingTel acquired a 22.3 per cent stake - about a fifth of which had been owned by Setdco - in 2001, and another 12.7 per cent from parent company PT Telkom in 2002, paying a total of US$1.03 billion.

But Mr Djody, a former business associate of ex-president Suharto's son Hutomo 'Tommy' Suharto, said Setdco is now prepared to offer US$1.6 billion for these stakes, with 30 per cent coming out of its own pocket. The remainder would be bankrolled by investors from Japan and the Middle East. 'They are ready to cooperate with Setdco in preparing the money,' he told reporters.

Mr Djody, who also plays in a rock band with popular singer-songwriter Iwan Fals, called an impromptu press conference on Sunday after a rehearsal with his band for its latest album. He said he had sent a proposal to the Singapore parties involved, but was evasive when reporters pressed him for names.

SingTel yesterday dismissed Mr Djody's claims. 'This is pure market speculation. We are not in contact with Mr Djody,' SingTel spokesman Peter Heng told BT.

Many analysts, too, are sceptical about what they feel was at best an attempt to 'stir up market talk'.

Arhya Satyagraha, deputy head of research for Trimegah Securities, said: 'Telkomsel is the number one player and the most profitable. There's no way SingTel would let go of a gem like that.' He also questioned Setdco's valuation of Telkomsel. 'At US$1.6 billion for 35 per cent, this means the total worth is estimated at US$4.6 billion. To me that's below value, considering that Telkomsel is the driver of the telco industry in Indonesia,' he said.

No 2 player Indosat, which has a 27 per cent market share compared with Telkomsel's 55 per cent, already has a market capitalisation of about US$4 billion.

An analyst with a foreign brokerage echoed Mr Arhya's sentiments. 'There are plenty of willing buyers now for Indonesian telcos. But the biggest question is, who's going to sell? Will SingTel sell? I doubt so,' he said.

Shares of Telkomsel's parent company PT Telkom dipped 100 rupiah or 1.04 per cent yesterday to close at 9,500 rupiah.

The Indonesian telco sector's huge growth potential has been attracting many investors, among them Russian telco Altimo. Earlier this month, there was a buzz over its reported interest in Indosat, specifically the 42 per cent stake held by ST Telemedia, a Temasek Holdings subsidiary. Mr Djody denies any links with Altimo.

Despite market scepticism, he maintains he is serious about the offer for SingTel's Telkomsel stake - and is not above fanning the nationalist flame.

He claimed that back in 2001, Setdco had put in a higher bid than SingTel for the Telkomsel stake. But it lost the bid when it should have had first bite at the cherry, as an original owner and a national company, he argued.

Setdco business development director Desra Ghazfan said the attempt to buy out SingTel is an effort to abolish Temasek's 'monopolistic hold' on the telco market here.

He was dredging up a familiar complaint by nationalist lobbyists, who frequently take aim at Temasek's holdings in Telkom and Indosat through SingTel and ST Telemedia.



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22 May 07

Globalstar, SingTel team up to expand coverage in M'sia

SingTel will operate a Globalstar station at its Seletar site

(NEW YORK) California-based Globalstar Inc, a provider of mobile satellite voice and data services to the government and private sectors, has teamed up with Singapore Telecommunications Ltd (SingTel) to extend its satellite coverage to Malaysia and much of the region. As part of the strategic alliance, SingTel will build and operate a Globalstar gateway ground station at its Seletar satellite earth station in Singapore to provide satellite coverage throughout Malaysia and Singapore as well as parts of Indonesia, Brunei and the surrounding South-east Asian maritime shipping region.

The agreement has been described by both parties as the 'initial step' for Globalstar to offer services with SingTel via the Seletar earth station. Globalstar will provide the engineering and technical training support for SingTel to operate the station. In addition, the agreement paves the way for both companies to deliver tracking and trace solutions for the maritime and logistics industries, using the Globalstar Simplex data network.

Tony Navarra, president (global operations) of Globalstar Inc, said: 'Because of the heavy maritime traffic, the region is particularly suited to Globalstar's ability to provide voice, data and asset tracking and monitoring services beyond the reach of traditional land-based wireless infrastructure.'

Meanwhile, reports from Karachi said Warid Telecom, Pakistan's third largest mobile phone operator, is in talks with several foreign firms, including SingTel, to sell a minority stake, industry sources said yesterday. 'Warid has been approached by several international telecom companies over the last six or eight months, including those from the Far East, the Middle East and Europe,' said a source close to the company. 'But no final decision has been taken as yet,' he said. 'The picture will become clear by July or August.' There was no word on how much the deal could be worth.

Another industry source said the companies in talks with Warid included SingTel, Britain's Vodafone Group and Kuwait's Mobile Telecommunications Co (MTC). When contacted, a SingTel spokesman said: 'We do not comment on market rumours.' Sources said Warid was not willing to sell a controlling stake, or to give up its brand. A spokeswoman for Warid declined to comment. 'Anything which is going on is between the sponsors and the interested parties and the management of Warid is not involved. But there is nothing concrete to say at the moment,' she said.

Warid is owned by the private Abu Dhabi Group, which is one of the largest foreign investor groups in Pakistan and also owns Bank Alfalah Ltd and Wateen Telecom. It also owns a stake in United Bank Ltd.  Warid started operations in 2005 and has around 10 million customers in Pakistan - a market share of roughly 17 per cent.

Analysts said the only way for international telecoms companies to enter the growing Pakistani mobile sector was by acquiring stakes in existing players, as there is a moratorium on the issuance of new licences. - Reuters, Bernama

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SingTel - Phillip
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10-May-07

FY07 Results

Underlying NPAT up 8% yoy driven by associates earnings. For FY07, Group underlying net profit rose 8% yoy to S$3.6bn, while its underlying EPS grew faster by 11% to 22 cents per share, due to the Sep 06 capital reduction which reduced the share base. Regional mobile subscribers increased by 38.8m subscribers or 46% yoy to 123.8m subscribers as at end 31 Mar 07. The Group has the largest aggregate mobile customer base in Asia-Pacific (ex-China). For FY07, share of profits of associates, which formed its key earnings driver, rose significantly by 26% yoy to S$2.1bn. Foreign currency had a negative impact on earnings as both the Australian dollar and Indian rupee weakened during FY07, while the Indonesian rupiah was flat.

Robust Q4 FY07 results beat concensus estimates. For Q4 FY07, revenue increased by 2.1% yoy to S$3.3bn while NPAT decreased 41.2% yoy to S$989m. The NPAT was higher than concensus NPAT of S$930m. The decrease in NPAT was due to an exceptional gain of S$673m and a one-off tax credit of S$152m a year ago. Underlying NPAT, excluding exceptional items, increased 13% yoy to S$971m from S$856m in Q4 FY06.

Bumper dividend on higher FCF. The Group has recommended a total distribution of S$3.3bn, based on an ordinary dividend of S$1.8bn and a special dividend of S$1.5bn. This brings its cumulative payout since 2000 to S$20bn, or 87% of NPAT. For FY07, a final ordinary dividend of 6.5cps and a special dividend of 9.5cps were proposed. Together with the interim dividend of 4.5cps paid in Jan 07, the total ordinary dividend amounts to 11.0cps, or a 50% payout ratio. The cash distribution for FY07 is 20.5cps, equivalent to a 6% yield based on previous closing price of S$3.32. We think that the special dividend of S$1.5bn, which was lower than the FY06s capital reduction of S$2.3bn, is conservative given that the Group would like to maintain its flexibility in financing future M&A opportunities.

Buy with fair value of S$3.81 due to decent yield. Our sum-of-the-parts valuation method derived a fair value of S$3.81 (was S$3.87) as a result of the higher market revaluation of associates and lower margins in FY08, while we introduce our FY09 forecasts. Our fair value implies FY08 P/E and P/B of 16.1x and 2.8x, respectively.

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10-May-07

Associates and dividends

Within expectations. FY07 core net profit came in 1% ahead of consensus and our estimates. Key takeaways are: 1) costs continue to rise in Singapore; 2) margins improved at Optus; 3) associates posted a strong showing; and 4) fullyear dividends coming ahead of expectations.

Costs continued to climb in Singapore. Singapores operating EBITDA margins slipped by another 40bp qoq due to higher expenses related to growth initiatives, as well as subscriber acquisition and retention costs of broadband customers.

Margin improvement at Optus. EBITDA margins improved 230bp qoq to 28.3%, thanks to cost controls employed in all divisions. Revenue dipped 3.9% qoq due to seasonally weaker post-paid ARPU and reduced customer acquisition initiatives.

Associates power on. Associate PBT contributions grew 11% qoq, led by Bhartis 22% qoq core profit growth.

Full-year dividend ahead of expectations. A final dividend of 6.5cts and special dividend of 9.5cts were announced, bringing full-year dividend to 20.5cts (vs. our estimated 17cts). This will be funded by operating cash flow.

Lower margin prospects for Singapore and Optus. Key reasons for our view are: 1) Singapore faces rising costs associated with growth initiatives such as its IPTV launch, as well as retention costs ahead of MNP; 2) Optus continues to face a competitive environment and burden of 3G rollouts in rural areas.

Maintain Outperform, SOTP-based target price raised to S$3.70 (from S$3.59 prev). We tweak our FY08-09 earnings up by 2-3% as upward revision for Bharti based on consensus forecasts offsets our reduced margin assumptions for Singapore and Australia. We also introduce our FY10 estimates. Our target price is lifted as: 1) Bhartis valuation is revised upward; 2) currency assumptions are updated. SingTels attractiveness lies in its capital growth potential through associate holdings while reasonably attractive yields limit downside risk. SingTel is our top pick for integrated telcos with regional exposure. Maintain Outperform.

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SingTel - OCBC
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10-May-07

Will it break downwards?

- Singtel has been trading within a descending triangle formation over the last 2 weeks. A descending triangle is viewed as a bearish formation.

- Singtel made a third unsuccessful attempt yesterday to break below the support base at S$3.32. It again rebounded to close higher after hitting an intra-day low at S$3.30.

- However, we believe that the spike in traded volume yesterday may be a signal that Singtel may try to break the support of descending triangle again in the near future.

- Another bearish signal is the movement of the 50-day moving average below the 100-day moving average.

- Immediate support level is at S$3.32 and the next support can be found at S$2.80-2.90. Resistance level is maintained at S$3.70.

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SingTel - BT
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10-May-07

SingTel plans lower payout

Dividend of 20.5 cents per share as full-year underlying net up 8% to $3.6b

(SINGAPORE) Singapore Telecommunications yesterday reported a 3.7 per cent fall in quarterly underlying net profits amid sluggish markets at home and Australia. It proposed a total payout of $3.3 billion or 20.5 cents per share to shareholders, lower than last year's $4 billion distribution.

For the full year which ended on March 31, underlying net profit was up 8 per cent to $3.6 billion. Net profit for the quarter fell 41 per cent to $989 million from $1.68 billion because of a one-off gain recorded in the previous corresponding quarter, mainly the $618 million from the deconsolidation of C2C. The result beat an average net profit forecast of $904 million from 17 analysts polled by Reuters Estimates. Net profit for the full year was down 9 per cent to $3.8 billion.

Disappointed investors who had become used to telco stocks' high dividend yields sold SingTel lower. SingTel closed 8 cents down to $3.34, up from the day's low of $3.30.  SingTel's full year dividend of 20.5 cents comprises a 6.5 cents final dividend and 9.5 cents special and an interim 4.5 cent dividend. The previous year distribution of $4 billion or 23.7 cents, made up of a capital reduction and 10 cents final dividend represented a yield of 8.6 per cent yield, based on SingTel's closing price then.

According to SingTel chief executive officer Chua Sock Koong yesterday, this year's total distribution 'represents a 6.3 per cent yield based on the stock price of $3.28 as at 30 March'. She said the group is balancing its objective 'for an efficient balance sheet with financial flexibility to make further investments.'

Said Citigroup analyst Anand Ramachandran who is maintaining his 'buy' rating with a price target of $3.80: 'Decent dividends, but could have been higher.' He had forecast a 24 cent payout.

Ramakrishna Maruvada of Macquarie said he had forecast a special dividend of 13.7 cents per share but he was not disappointed with the actual 9.5 cents . 'Yes, a bit short on estimate, but we think it is hardly a big miss. Certainly, the short fall from forecast doesn't represent a lack of commitment on the part of the management. More likely, we think the company is probably keeping cash handy for investments (Middle East perhaps?),' said Mr Maruvada. 'We think the market should take comfort from the fact that new chief executive will continue to deliver on the capital management front in the future,' he said.

But Deutsche Bank analysts William Bratton and Matt Adams said: 'This (dividend) is significantly ahead of expectations.' They rate the stock a 'buy' with a price target of $3.65.

SingTel said the group's operating trends were strong for the quarter. Operating revenue was up 2.1 per cent to $3.33 billion, while operational Ebitda - earnings before interest, tax, depreciation and amortisation - were stable at $1.10 billion. For the full year, operating revenue was flat at $13.15 billion, while operational Ebitda fell 4.1 per cent to $4.28 billion. Free cash flow rose a slight 1.2 per cent to $920 million, full year it was up 0.8 per cent to $2.80 billion.

Overseas associates, particularly Bharti and Telkomsel, continued to report strong growth profit on the back of rapid expansion in their subscriber base. The group's share of pretax profit from associates was up 16 per cent to $543 million. For the full year, it was up 26 per cent to $2.1 billion. Associates now contribute 43 per cent to group's underlying net profit, up from 37 per cent a year ago.

SingTel holds 21.5 per cent of Thailand's Advanced Info Service, 30.8 per cent of India's Bharti, 44.6 per cent of Globe Telecom in the Philippines, 35 per cent of Indonesia's PT Telkomsel and 45 per cent of Pacific Bangladesh Telecom. SingTel's Singapore business in the quarter struggled to hold margins. Operational Ebitda margin was down 1.3 per cent to 42.3 per cent. Underlying net profit was up 14 per cent to $784 million.

Optus, the group's biggest unit and Australia's second largest telco, continued to show improvement. SingTel said Optus's operational Ebitda grew 4.3 per cent to A$524 million (S$657.8 million) - the highest quarterly Ebitda in two years. Operational Ebitda margin was up 0.7 per cent to 28.3 per cent and net profit rose 11 per cent to A$155 million.

Ms Chua reaffirmed the group's target of double digit earnings growth over the medium term. Pretax profit contribution from associates to continue at double digit pace. As for acquisitions, the group will remain mainly in Asia and be disciplined in its approach, she said.

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SingTel - UBS
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9-May-07

Overall in-line results; Special dividend of 9.5 cents

SingTel FY07 results broadly in line with our estimates
SingTel's FY2007 results announcement were broadly in line with our estimates - FY07 Revenues were S$13.15b vs. UBSe of S$13.24 b; EBITDA was S$4.28b vs. UBSe of S$4.25b, NPAT reported of S$3.78b vs. UBSe of S$3.75b. SingTel management recommended a final dividend of 6.5 cents per share and special

dividend of 9.5 cents per share.

Lower guidance for Singapore operations
SingTel management provided lower guidance for Singapore operations - Low single digit revenue growth, telecom margin at mid 40% level, overall margin at 40%, high single digit capex/sales. While the lower margin guidance partly reflected the change in accounting for mobile roaming, it also included cushion for new growth initiatives such as the IPTV launch.

Stable guidance for Optus
Optus guided for 2.5%-3% revenue growth, Maintain EBITDA, Capex of A$1.1bn. Optus aims to defend and grow scale in the mobile business and drive profitable fixed on-net growth. Optus plans to invest in 3G and new customer care systems in FY2008.

Valuation: Maintain Buy 1 with S$3.90 price target
SingTel offers a good mix of growth and stable cash-flows, in our view. We also believe that SingTel is quite well managed with management incentives linked to shareholder value. We reiterate our Buy 1 rating with SoTP based S$3.90 price target.



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SingTel - DBS
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9-May-07

Weak Home, Stable Australia and Growing Associates

Comment on Results

SingTel reported a net underlying profit of S$971m down 3.7% yoy but up 14% qoq. The company also announced a final dividend of 6.5 cents (has paid 4.5 cents as interim dividend) and special dividend of 9.5 cents. The results are inline with our estimate of S$910m, keeping in mind S$60m savings on deferred tax due to corporate tax reduction and inter company loans.

1) Singapore operational EBITDA declined by 5.6% yoy due to margin pressure with operational EBITDA margins at 42.3%, down from 43.6% yoy.

2) Optus performance was better with net profit at S$155m up 11% yoy and EBITDA margin at 28.3% up from 27.6% last year.

3) Associate contributed S$543, up 19.6% yoy. While Bhartis contribution was up 92% yoy, Telkomsel registered an unimpressive 5.2% increase yoy reaffirming our doubts over slower growth ahead in Indonesia. Globe was impressive with contribution 23% up yoy while AIS contribution declined 24% yoy.

Outlook

Guidance issued by the company

1) Low single digit revenue growth for Singapore with EBITDA margin declining close to 40% from current 45% level, This will come from various growth initiatives and accounting changes.

Our interpretation - Overall, it would imply a decline in net earnings in the home market.

2) About 2-3% growth in revenues for Optus in FY08 with EBITDA remaining stable.

Our interpretation This is actually good news, and implies stable Optus outlook.

3) Double digit growth in earnings led by Bharti and Telkomsel.

Our insight - We think that Bharti would be the main driver and Telkomsel would secure a single digit growth. Globe and AIS combined together should be stable.

Recommendation

We maintain HOLD at our one-year targe price of S$3.60 based on sum-of-the-part valuation (SOTP). The major change in our valuation is tha Bharti accounts for 30.8% of SingTel valuation, up from 27.1% earlier as our targe price is raised to Rs. 930 from Rs 800 earlier Telkomsel accounts for 15.6%, down from 18.7% as we had assumed slower growth of 10% vs 30% earlier.

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SingTel - BT
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9-May-07

SingTel Q4 profit down, softer 2008 guidance

SINGAPORE - SingTel, Southeast Asia's largest phone firm, posted a 3.7 per cent drop in quarterly profit as weakness in Australia and Singapore offset buoyant emerging markets, sending its stock to a four-week low.

State-controlled Singapore Telecommunications, proposed returning $3.3 billion (US$2.2 billion) in capital through a dividend of 20.5 Singapore cents a share, but the total shareholder payout was lower than 2006's $4 billion.

SingTel shares fell 3.5 per cent, while the benchmark Straits Times Index off 0.27 per cent.

SingTel's new chief executive Chua Sock Koong, 49, cooled investors' 2008 profit expectations for its Singapore operations - its main money spinner - as the company steps up efforts to defend its fixed-line business and changes accounting of its operational earnings. 'The accounting change would mean the overall margin for the Singapore business is 43 per cent (in 2007) and we are guiding them to 40 per cent,' Ms Chua told her first results briefing as CEO. 'There are a number of strategic initiatives that we are undertaking which will drive medium-term growth ... we would expect the payback to be in the next few financial years.'

Excluding these investments, 2008 operational earnings would be flat, she said.

Lower payout

Some analysts noted that while the 2007 dividends were higher than the $2-$2.5 billion expected, the total payout was below 2006, when the company also announced a capital reduction.

'This (dividend) is significantly ahead of expectations,' Deutsche Bank analysts William Bratton and Matt Adams said, rating SingTel a 'buy' with a $3.65 price target.

Citigroup analyst Anand Ramachandran, who also has a 'buy' on the stock, said the dividend could have been higher.

SingTel, which owns Australia's No 2 phone operator Optus and stakes in several Asian mobile firms, earned underlying net profit before goodwill and exceptionals of $971 million in January-March, down from $1 billion a year ago. It attributed the drop to a tax charge, excluding which earnings grew 13 per cent.

Fourth-quarter attributable profit fell 41 per cent to $989 million - beating market expectations of $904 million - reflecting the absence of $618 million in one-off gains booked last year after creditors took over its loss-making submarine cable unit C2C.

Full-year net attributable profit was $3.78 billion against $4.16 billion in 2006 and a market consensus of $3.69 billion.

SingTel said it hopes to achieve double-digit underlying earnings growth over the medium term.

Battling heavy competition and a mobile phone penetration rate of 100 per cent in its limited home market of 4.5 million people, SingTel has spent about $20 billion in recent years buying firms in high-growth Asian countries and in Australia.

SingTel owns 21.5 per cent of Thailand's Advanced Info Service, 30.8 per cent of India's Bharti Group, 44.6 per cent of Globe Telecom in the Philippines, 35 per cent of Indonesia's PT Telkomsel and 45 per cent of Pacific Bangladesh Telecom.

The businesses accounted for 43 per cent of underlying net profit in January-March, up from 35 per cent last year.

In Australia, where Optus faces fierce competition, quarterly net profit rose 11 per cent to A$155 million (US$128 million). -- REUTERS



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Singapore Telecom: Better than expected 4Q

Summary: Singapore Telecommunications Ltd (SingTel) reported a good set of 4Q07 results. Revenue came in at S$3.3bn, +2.1% YoY and -1.4% QoQ. However, at the net profit level, SingTel suffered a growth decline of 41.2% YoY and -0.4% QoQ to S$989.5m. The results beat market estimate of about S$901m.

The poorer bottom-line performance was due to high base effect from the disposal of properties and recognition of tax credit in previous year. Excluding the one off effect, SingTel's underlying pre-tax profit would have improved by about 9% YoY to S$1054m. The key driver to earnings growth came from its associates. In terms of the two key operating units, Singapore operations margins deteriorated slightly mainly due to higher operating costs. In Australia, the reverse is true and Optus' margins expanded on the back of cost reduction. SingTel has announced a final dividend of 16.15 cents. This together with the interim dividend of 4.35 cents means that full year dividend will be 20.5 cents (yield of 6.0%).

There will be an analyst briefing later this morning and subject to that, we retain our fair value of S$3.32 and HOLD rating. (Winston Liew)

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SingTel - CIMB
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9-May-07

Nice dividend surprise

Within expectations. FY07 core net profit came in 1% ahead of consensus and our estimates. Key preliminary takeaways are: 1) retention and subscriber acquisition rates continued to rise in Singapore; 2) margins improved at Optus; 3) associates posted a strong showing; and 4) full-year dividends are ahead of expectations.

Costs continued to climb in Singapore. Singapores operating EBITDA margins slipped by another 40bp qoq due to higher subscriber acquisition and retention costs of broadband customers.

Margin improvement at Optus. EBITDA margins improved by 230bp qoq to 28.3%, thanks to cost-control across all divisions. Revenue declined 3.9% qoq on seasonal weakness.

Strong showing by associates. Associate contributions grew 14% qoq on a core basis. Bharti and Telkomsels contributions grew 10% and 7% qoq respectively.

Full-year dividend ahead of expectations. A final dividend of 6.5cts and special dividend of 9.5cts were announced, bringing full-year dividend to 20.5cts (vs. our estimated 17cts).

Maintain Outperform, target price under review. We are reviewing our sum-ofthe-parts valuation for SingTel with the possibility of an upgrade. More details will follow after this mornings conference call with management.

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SingTel - BT
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16-Apr-07

Recently appointed group CEO Chua Sock Koong acquired more shares of telecom giant Singapore Telecommunications at slightly higher than her previous purchase prices. The CEO bought 2.1 million shares on April 12 at $3.44 each, which increased her deemed stake by 11 per cent to 20.8 million shares. She previously acquired 2.3 million shares from Jan 10 to 11 at $3.22 to $3.30 each. The recent purchase was made after Ms Chua was appointed as group CEO on April 1.

Investors should note that the Capital Group Companies became a substantial shareholder on Jan 4 following the purchase of 4.9 million shares at $3.40 each. The trade increased its deemed holdings to 796.6 million shares or 5.01 per cent. Singtel announced its Q3 results in February with net profit up by 12.7 per cent to $993.7 million for the three months to Dec 31, 2006. Earnings for the first nine months rose by 12.5 per cent to $2.7898 billion. The stock closed at $3.46 on Friday.

BT

Comments - Hmmm.... A good entry price for us would be <$3.40, ideally <$3.22 wink

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SingTel - CIMB
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12-Apr-2007

Upside from Down Under

Surging Aussie dollar

The A$ has surged to a 16-year high against the US$ and 16-month high against the S$. This is on the back of economists expectations that the Reserve Bank of Australia will be raising interest rates from the current 6.25%, thanks to a robust, commodity-driven economy. Any further appreciation should benefit SingTel, which has exposure to Australia via its 100%-owned Optus. Optus contributes 19% to our sum-of-the-parts valuation of SingTel and 19% to its FY08-09 PBT.

The A$ is now at S$1.2518, against our assumption of S$1.20/A$. Assuming the A$ remains at this level for FY08 and beyond, SingTels FY08-09 net profits could be boosted by 0.9%, while our sum-of-the-parts target price could be lifted by 3cts or 0.8%. Every 1% appreciation of the A$ against the S$ has the potential to raise our FY08-09 net profit estimates and target price by 0.2%. That said, we are leaving our forecasts unchanged for now, as we continue to assume an exchange rate of S$1.20/A$.

Valuation and recommendation

Maintain OUTPERFORM with target price of S$3.59, despite the recent strength in its share price. On a total return basis (price appreciation and dividends), SingTel offers a 5% upside over our target for the STI.

Key catalysts for a re-rating could include: 1) a further strengthening of the A$; and 2) a generous dividend payout by SingTel in its upcoming FY07 results announcement on 10 May. We expect SingTel to declare a DPS of 17cts for FY07. Since 8 Mar 07, SingTels share price has rallied 6%. We also prefer SingTel to Telekom Malaysia for exposure to regional telcos. SingTel is still among the most attractively-valued integrated telco in the region  despite its recent run-up.

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SingTel
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BT, Published March 2, 2007

SingTel shares attractive now, says Merrill

Stock price now at 6% discount to its valuation of $3.33

BUY Singapore Telecommunications shares after its sharp correction from a peak of $3.70 to $3.12, said Merrill Lynch's Patrick Russel yesterday morning in a note to investors. 'The stock is now trading at a 6 per cent discount to our $3.33 valuation. When our price objective of $3.50/share (based on 12-month projected discounted cash flow valuation) is combined with the dividend and capital management prospects, SingTel is offering a return of at least 15 per cent from current levels,' said Mr Russel, who had been one of the telco's harshest critics. 'For this key reason, we have decided to upgrade our recommendation to 'buy' from 'neutral',' he said.

SingTel ended 12 cents lower to $3.08 yesterday on heavy volume of 38.5 million shares. It was among the top ten most traded stocks.

Mr Russel said the main thing he likes about SingTel relative to other incumbent telcos is its large exposure to high-growth emerging telco markets. 'Indeed, SingTel's emerging market mobile associates portfolio accounts for 60 per cent of our projected economic value, with Bharti 29 per cent and Telkomsel 21 per cent alone,' he said.'We think these two companies have the potential to at least double in value over the next 3-5 years with rising wireless and broadband penetration in India and Indonesia, and sustained high returns on capital from being the scale/leading players.'

If this occurred, Merrill Lynch's SingTel valuation in 3-5 years would lift to at least $5.30/share, even if the domestic operations, Optus, AIS and Globe went collectively nowhere, he said.

SingTel owns 31 per cent of Bharti and 35 per cent of Telkomsel, the largest mobile operators in India and Indonesia respectively. It also owns 21 per cent of AIS, Thailand's leading mobile company, and 45 per cent of Globe in the Philippines. Optus, 100 per cent owned by SingTel, is Australia's second largest telco and was the reason last August for Mr Russel to downgrade his call to 'sell' from 'neutral'. In December, he revised his call to 'neutral'.

Mr Russel last August had a very negative view on the prospects for a turnaround in Optus and said investors could access Bharti directly and Telkomsel via PT Telkom.

Last month, Optus, SingTel's largest revenue contributor, reported a net profit of A$135 million (S$162 million), down 15 per cent for the third quarter ended Dec 31, 2006. Its net profit has declined for seven quarters. The high emerging market exposure makes SingTel's stock price more volatile than most incumbent telcos, but the growth prospects are materially higher, Mr Russel noted yesterday.

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9-Feb-2007

Concerns over domestic business

Domestic business could continue to remain under margin pressure. Although operating revenue showed growth of 1.5% q-o-q, EBITDA recorded a dip of 6% q-o-q. SingTel said many post-paid customers have completed their two-year contracts, as such the company offered heavy subsidies for 3G handsets in order to retain them and acquire new customers. Hence, acquisition cost per customer rocketed to S$310, up 50% q-o-q and y-o-y. We expect this trend to continue for operators offering handset subsidies to lock-in subscribers before full mobile number portability (MNP) kicks in during 4Q07. With the launch of Mio platform, we foresee additional dilution of margins in 4Q07. As such, we have lowered our EBITDA margin estimate for Singapore business to 46.5% for FY07, which might dip to 45% level in the next 2-3 years. This is a key change from our earlier assumption where we assumed 48.5% margins for FY07 and FY08.

Associate growth should continue to offset negatives. Earnings contributions from Telkomsel, Globe and AIS were lower in 3Q07 compared to 2Q07. Part of the lower contributions from Telkomsel in 3Q07 can be explained by: (1) compulsory pre-paid registration exercise in Indonesia, leaving lower subscriber base and (2) difference in accounting period for Telkomsel with financial year end in December. We believe Telkomsel should be able to achieve 25% to 30% growth, up from 8.6% y-o-y shown in 3Q07. Globe and AIS are expected to show slightly negative to flat growth in the future, while Bharti should lead the pack with c. 40% CAGR over the next couple of years.

Key catalysts. (1) Additional 10% stake in Bharti can be a near-term catalyst upside, though it may not be value accretive if SingTel has to pay much higher than the current target price of Rs800-850 per Bharti share (c.S$5bn to S$5.5bn for 10% stake); (2) SingTel is expected to invest in Vietnam as soon as the Vietnamese Government liberalises the telecom sector, though timing for liberalisation is uncertain; and (3) if no major investment is announced, then a cash return of 14 cents is highly likely with full-year results.

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