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Singapore Telecommunications, Southeast Asia’s top telecom firm, plans to muscle into the fast-growing markets of Africa to grow further after it gave a cautious outlook for its core Singapore and Australian markets.
SingTel said on Wednesday it would either look at options in Africa on its own or support its partners such as Bharti Airtel in their quest for telecom assets.
SingTel had supported a bid by Bharti Airtel to buy South Africa’s MTN, a deal that collapsed in October on political instead of commercial issues.
“Africa is a market in the emerging mobile space, that is definitely worth our interest, and we are always talking to our associates,” SingTel CEO Chua Sock Koong told a news conference.
Facing a domestic market of 5 million people where virtually everyone has a mobile phone, SingTel has spent S$18 billion in recent years buying stakes in mobile operators in high-growth Asian countries such as India, Indonesia and in the bigger Australian market.
The city-state’s largest listed company with a market value of about $34 billion said its EBITDA in Singapore and Australia will expand at a low single-digit pace.
Singtel reported its highest underlying net profit since March 2008 but the numbers were below market estimates.
Lim Chuan Poh, SingTel’s head for international operations, said the company is also looking at Vietnam, which he described as an untapped emerging telecom market.
Sintel, around 55 percent-owned by state investor Temasek, posted July-September underlying net profit before goodwill and exceptionals of S$952 million ($685.9 million) compared with an average forecast of S$956 million in a Reuters survey of five analysts.
The quarterly underlying net profit was 18.8 percent higher than S$801 million reported a year ago.
Singapore and Australia accounted for 54 percent of the group’s EBITDA — earnings before interest, taxes, depreciation and amortisation — in the second quarter.
SingTel said operating revenue will grow at a single-digit pace in Singapore and Australia, an upward revision for the city-state where its previous guidance was for flat growth.
“People have very short memories,” CEO Chua said when asked why the company was so cautious. She said a year ago around the same time there were worries about whether businesses would get money to fund expansion.
SingTel owns Optus, the second-biggest telecom operator in Australia after Telstra.
“These results were not particularly dramatic, but the one area which significantly missed our expectations was Optus: revenues came in below expectations and although margins were stable, it would have been good to have seen some recovery,” Deutsche Bank said in a research note.
Chua said SingTel’s growth forecast for operating revenue in Singapore and Australia is ahead of industry forecasts and would help the company gain market share.
She said the company has made no decision to list any of its businesses such as Australia’s Optus. Her comments followed recent media reports that said SingTel may list Optus.
Analysts are expecting SingTel, which also provides high-speed Internet and pay-TV to its customers, to face tougher competition in its home market, especially after its two local rivals — StarHub and MobileOne — obtained licences to sell Apple’s popular iPhone.
SingTel shares, which rose 1 percent after the results in a steady market, have gained about 16 percent so far in 2009, underperforming a 54 percent gain in the broader market.