SingTel

SingTel: 1Q11 results slightly below expectations at net profit level, dragged down by weak associates, mainly due to Bharti which was hit by costs related to its acquisition of African operations. Also, stronger S$ against regional currencies resulted in associates seeing some MTM losses vs gains a year ago. As a result, net profit was flat at $943m while revenue rose 12% to $4289m, with Optus contributing 65% of revenue, up 12% YoY despite seasonally weaker quarter due

Challenges this year will be on the cost side given obstacles faced by its numerous investments overseas, especially Bharti as it integrates Africa. In Singapore, we need to keep a watch on the company responses to upcoming NBN launch this quarter which we expect to benefit competitors more than SingTel, as well as developments on the Pay TV front. Meanwhile, subscribe base, after fast growth to 220k in 1Q, could level off. KE maintains its HOLD rating with TP of $3.13.