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I AGREE
17 Aug 2009
Singapore, August 17, 2009 -- Moody's Investors Service says that Singapore Telecommunications Limited's
("SingTel") first quarter results to 30th June , 2009 were generally
in line with the agency's expectation and had no impact on the company's
Aa2 rating. The rating outlook is stable.
SingTel's overall group revenue and EBITDA grew by approximately 1.9%
and 3.2%, respectively, including the impact
of currency fluctuations. Currency fluctuations aside, the
group revenue would have grown 12% year-on-year with
the Australian and Singapore businesses up 12% and 10%,
respectively.
"SingTel's Singapore business growth was driven by continued momentum
in data and mobile revenues, as well as the impact of the company's
acquisition of SCS Computer Systems Pte. Ltd.", says
Laura Acres, a Moody's Vice President. Adding "SingTel Optus'
(rated Aa3/stable) primary growth driver was continued success in expanding
its mobile subscriber base ".
The group's share of post-tax profit contribution from associates
grew by 16.3%, driven by improved performance at Telekomunikasi
Selular (Baa2 / Stable) and one-time gains on mark-to-market
valuations on foreign denominated liabilities.
"In Singapore, the mobile subscriber base grew moderately,
to 2.99 million in June from 2.97 million in March 2009,
all of which was at the post-paid level and driven in part by strong
demand for iPhones for which SingTel has an exclusive distribution arrangement.
This also helped to mitigate the decline in pre-paid ARPU's
such that blended ARPU held flat at S$50/month. Australia
also saw a moderate increase in mobile subscribers again driven by demand
for iPhones, as well as growth in unlimited mobile plans and wireless
broadband"
Financial metrics improved across the board, driven primarily by
i) a decline in debt, as SingTel repaid about S$434 million
of debt in the quarter; and ii) a marginal increase in EBITDA year-over-year
and quarter-over-quarter.
"SingTel's strong performance and financial metrics continue to leave
its rating well positioned at Aa2 rating level", says Acres,
also Moody's lead analyst for SingTel.
Moody's assessment of SingTel's fundamental credit strength may experience
upward pressure if profitability strengthens, with such improvements
more likely to come from its overseas investments. An overall improvement
worthy of an upgrade may be reflected by credit metrics that demonstrate
an EBITA/average assets ratio in excess of 14% and a net adjusted
debt/adjusted EBITDA ratio of less than 1.0x. However,
given that required leverage metrics necessary for an upgrade are significantly
below SingTel's desired level of gearing, upward rating pressure
is limited.
Downward pressure on the underlying rating may occur if SingTel undertakes
further material capital returns in the near term, potentially in
conjunction with a cash/debt funded acquisition, and/or there is
evidence of prospective weakness in operating results within the company's
increasingly important Australian operation.
As indicators of prospective weakness, Moody's would look for credit
metrics which demonstrate an EBITA/average assets margin of less than
10% and/or an adjusted retained cash flow/net adjusted debt ratio
of below approximately 40% on an ongoing basis.
In addition to the factors listed above, SingTel's rating may also
be impacted by material changes in the ratings of its support provider,
Temasek. Likewise, the rating may be affected should Moody's
assess it likely that there will be support changes, or industry
developments that materially undermine SingTel's relationship with the
government - these would include a reduction in Temasek's shareholding
below 50%.
The principal methodology used in this rating this issuer was the Global
Telecommunications Industry methodology, which can be found at www.moodys.com
in the Credit Policy and Methodologies directory, in the Ratings
Methodologies subdirectory. Other methodologies and factors that
may have been considered in the process of rating this issuer can also
be found in the Credit Policy & Methodologies directory.
The last rating action on SingTel was on May 4, 2006 when Moody's
affirmed the company's Aa2 rating with a stable outlook.
SingTel is the leading integrated communications services provider in
Singapore, and, through its wholly owned subsidiary SingTel
Optus, is the second largest integrated telecommunications operator
in Australia. SingTel also has a number of investments in cellular
operators throughout the region which give it a regional footprint in
8 countries and more than 262 million mobile subscribers.
SingTel is 55% owned by Temasek Holdings (Pte) Limited ("Temasek")
- itself rated Aaa - which in turn is 100% owned
by the Singaporean government.
Hong Kong
Laura Acres
Vice President - Senior Analyst
Corporate Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 3551-3077
Singapore
Tony Tsai
Senior Vice President
Corporate Finance Group
Moody's Singapore Pte Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (65) 6398-8308
Moody's says SingTel's first quarter results in line with expectation
No Related Data.
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