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Carrier Services
Leading Asia Pacific telcos reveal mixed results
Upbeat performance shows benefits of SingTel’s diversification strategy
by Ek Heng, Asia-Pacific Correspondent
It appears that multi-country business interests may be the way to go as Singapore’s incumbent telco, SingTel, reported strong performance for the second quarter while mixed results were recorded by leading telcos in China, India and Japan.
SingTel posted strong results for its latest quarter ending September 30, 2009 with revenue rising 5.4 percent to S$4.1b (US$2.9b) while net profit at S$956m (US$682m) was up 10.1 percent, compared with the same period last year.
Significant contributions from Optus and regional associates
The largest operator in South East Asia after acquiring stakes in regional telcos, SingTel’s upbeat performance stems from higher local and overseas contributions. Continued growth of the mobile sector boosted revenues in Australia - where it owns Optus - by 7.4 percent and by 8.2 percent in Singapore which is underpinned by its enlarged IT and engineering activities locally and income from its rollout of Singapore’s next generation fiber network.
Despite the impact of negative currency exchange, pre-tax contributions from its regional mobile associates were higher by 32 percent at S$571m (US$407m). India’s Bharti Airtel and Indonesia’s Telkomsel are the biggest contributors but with growing competition SingTel expects lower dividends from its associate telcos in future. For the quarter under review, the SingTel group saw a 26 percent increase in mobile customers to have a total of 273 million subscribers.
While Bharti Airtel in India achieved a revenue of INR 98.46b (US$2.1b) and net profit of INR23.21b (US$493.m) for its 3Q2009 results - up by 9 percent and 13 percent, respectively, from the same period last year, the intense competition has crimped the profitability of the country’s second biggest telco, Reliance Communications (RCom).
Net profit down for most leading telcos in China, Japan and India
For the quarter ended 30 September 2009, RCom’s profit was reduced by half to INR7.4b (US$154m) against INR15.1b (US$324m) a year ago. Attributing the reduced profit to forex losses to the tune of INR2.8b (US$59m) and the high cost of deploying its GSM network, its chairman, Anil Dhirubhai also expressed concern about ‘ the increased competitive intensity and aggressive rebalancing of tariffs by all leading players mobile sector’. Its turnover for the quarter was slightly higher at INR57b (US$$1.22 b) against last year’s INR56.4b (US$1.21b).
In the case of China, the drop in profits for the nine-month period ending September 2009 was 34 percent for China Telecom whereas China Mobile’s profit was marginally higher by 1.8 percent.
The woes of the Chinese telcos are attributable to competition following restructuring of the sector and below expected consumer response to the 3G services as hefty budgets were incurred by all three telcos to start up and market the new mobile platform.
China Mobile’s net profit for January-September 2009 was CNY 83.94b (US$12.3b) with revenues topping CNY326.98b (US$48b), up 8.9 percent from the same period last year.
For China Unicom, its nine-month revenue was CNY114.9b (US$16.8b) against CNY115.2b (US$16.9 b) which was estimated in a Bloomberg survey, whereas its net profit was CNY9.3b (US$1.37b). No comparison is made against past year profit in view of its acquisition late last year of fixed-line services.
At CNY11.39b (US$1.67b), China Telecom’s net profit for January-September 2009 was down 33.9 percent year-on-year, inspite of a 15.3 percent increase in total revenue at CNY154.75b (US$22.7b).
Meanwhile, NTTDoCoMo and KDDI, two of Japan’s biggest telcos, also reported lower profits and revenues. DoCoMo’s revenue for the six months ended 30 September 2009 at JPY2145.8b (US$20.4b) declined by 5.4 percent year-on-year while pre-tax income at JPY479b (US$4.5b) was 14.3 percent lower than the same period last year.
KDDI recorded a net profit of JPY58.8b (US$640m) down by 25 percent year-on-year on the back of marginally lower revenue of JPY 869.3b (US9.45b) reflecting 0.9 percent decline from a year ago.
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