Singtel 1Q ended 30th June 2017

Singtel's 1st Quarter 30 June 2017 Profit After Tax stands at S$886.1 m compared to S$940.5 m a year ago. I did not look into the lesser loss due to exchange differences. Operating Activities Cashflow is positive at $1,885.7 m compared to 2016 - $1,736.8 m. Free Cash Flow is definitely positive. Singtel uses 340.4 m for payment for acquisition of subsidiary, net of cash acquired. On 10th April, Singtel's Amobee acquired 100% of share capital of Turn for S$401million.

Turn develops and provides an advertising platform for marketers, brands and agencies. The company provides its solutions in areas of digital data centralization, media planning and execution, consumer intelligence, media intelligence and brand intelligence. Net assets acquired is $$50m and goodwill is S$350.6m. I think this is aligned with their strategy but whether this goodwill is overpaid will be determined within a few quarters duration. 

I do not see Singtel moving into further acquisition of national telcos due to geopolitical forces at play and protectionism at work. In addition, telecommunication business is not the sexiest and competition is intense. In Singapore, the other two telcos' stock prices are suffering after their financial results are out. 

Singtel's unsecured borrowings increases as now it includes certain bank loans of Trustwave and Turn. Singtel's Optus has a tax position paper from Australian Taxation Office due to the acquisition financing of Optus. Singtel Australia Investment would be entitled to refund of withholding tax A$89m while this year March received further notices of assessment total A$67m for penalties. Singtel will continue to defend this position and has made no provision for this.

Bharti Airtel has disputes with various government authorities in respective jurisdictions where its operations are based. Local Department of Telecommunications issued a demand for Rs 52.01 billion (S$1.11 billion) towards levy of one time spectrum charge. Airtel is having disputes for taxes custom duties for Rs 136 billion (S$2.90 billion).

AIS also has disputes amounting to THB 27.1 billion (S$1.1 billion). Globe Telecom is facing issues with Philippine Competition Commission for the joint acquisition filed by Globe, PLDT and San Miguel Corporation.

On 19th July, Singtel completed its disposal of units in NetLink Trust as well as the IPO, sold 100% stake for S$1.88 billion with cash of S$1billion and 25% less one unit in Trust. This will recognise a gain of $2 billion in next quarter. JC Fund is waiting for the special dividend to be issued in 2018 then will sold all the shares to higher ROE stocks.