Singapore Telecommunications Ltd (SingTel) warned Tuesday that costs related to the launch of third-generation iPhones and a strong Singapore dollar will hurt the firm's second quarter earnings. SingTel, Southeast Asia's biggest telecom firm by revenue, will announce its earnings results on November 12.
The company said expenses related to its introduction of Apple's iPhone cut earnings before interest, taxes, depreciation and amortisation (EBITDA) by about 27 million Singapore dollars (18.2 million US) in the second quarter. The impact of the iPhone launch also reduced EBITDA for its wholly owned Australian subsidiary, SingTel Optus, by around 44 million Australian dollars (29.25 million US), SingTel said in a filing with the Singapore Exchange.
"Higher subsidy costs are associated with iPhone 3G. Consequently, the successful iPhone 3G initiative will have a dilutive impact on earnings and margins in the near term," the company said. SingTel said the strong Singapore dollar also eroded earnings, because of the substantial contributions coming from its Australian subsidiary and mobile phone associates in Bangladesh, India, Indonesia, Pakistan, the Philippones and Thailand.
The depreciation of the currencies of these countries against the Singapore dollar ranged between 5.9 percent and 17.2 percent year-on-year. SingTel holds significant stakes in India's Bharti Airtel, Indonesia's PT Telkomsel, Thailand's Advanced Info Service, Pakistan's Warid Telecom, the Philippines' Globe Telecom and Pacific Bangladesh Telecom. SingTel posted a net profit of 878 million Singapore dollars in the fiscal first quarter to June.
For the June quarter, 42 percent of SingTel's EBITDA came from its regional mobile associates, while Optus accounted for 31 percent. SingTel shares were at 2.35 dollars apiece in afternoon trade Tuesday, off 16 cents or 6.4 percent, compared with the main Straits Times Index which was down 0.52 percent at 1,873.87.