Telecom Lead Asia: Singapore Telecommunications is planning to spend $1.6 billion on acquisitions.
The acquisition, which will take place within the next three years, is part of the Southeast Asia’s biggest phone company’s strategic initiative to boost growth after fourth-quarter profit fell 33 percent.
The investment may include increasing stakes in regional associates, AFP reported.
In fact, Bharti Airtel, one of the regional associates of SingTel, has already invested in Warid Telecom Uganda and Bangladesh for picking up stakes in their respective regional operations.
On the other hand, SingTel in March completed the sale of its 30 percent stake in Warid Telecom for $150 million. It took a loss of S$225 million from the deal.
It is not known whether SingTel wants to increase equity stake in Bharti Airtel from the present around 30 percent. Recently, Airtel offloaded 5 percent stake to Qatar Foundation. It will be difficult for SingTel to increase stake in Airtel substantially, with $1.6 billion.
Increasing stake in existing regional associates and buying companies in the Southeast Asia region is important as SingTel’s fourth quarter net income declined to S$868 million from S$1.29 billion a year earlier, after taking a loss on a stake sale and higher taxes. Excluding one-time items, profit fell 2 percent to S$1 billion in the quarter.
Besides Bharti Airtel, SingTel has in Thailand’s Advance Info Service and Optus unit in Australia.
In addition, Singtel has exposure to Indonesia, Thailand and Philippines.
The company also owns stakes in Indonesia’s PT Telekomunikasi Selular and Globe Telecom in the Philippines.
Group revenue this year will be little changed while earnings before interest, tax, depreciation and amortization will rise by a low single-digit level, SingTel said.
The company has also been investing to improve its core business and to create the next growth engine in the digital space.
Fourth-quarter EBITDA at Optus, an Australian phone company, rose 3.4 percent to A$700 million ($694 million). Revenue fell 5.4 percent. The unit agreed to pay A$649 million for an allocation of airwaves to build up its wireless network to attract more customers from Telstra Corp. and other competitors.
SingTel made 62 percent of its sales in Australia during the quarter.
The earnings contribution from regional associates rose 3.2 percent to S$540 million in the quarter as strong results from Indonesia and Thailand limited the effect of weaker results at Bharti.
