SingTel Could Pay Up To S$4.2 Billion In Dividend For FY06 - Analysts

SINGAPORE -(Dow Jones)- Singapore Telecommunications could pay shareholders a bumper total dividend of up to S$4.2 billion for the fiscal year ending March 31 due to the absence of large acquisitions in the past 12 months, analysts said.

"SingTel's capex has been declining and they didn't have major acquisitions recently like Telkomsel or Bharti in the past, so they have more cash at their disposal," CLSA research analyst Neel Sinha said.

Analysts believe Southeast Asia's largest telecommunications company by market capitalization has the potential to offer a total dividend yield of between 8% and 9.4%, which translatesto between 21.3 Singapore cents and 25 Singapore cents per share.

"But how much they are actually going to pay out is anybody's guess," Sinha said.

Morgan Stanley said in a recent research note that SingTel could offer a total dividend yield of up to 9.4%, while Goldman Sachs said it is looking at a "potential total cash return of 8% over the next few months."

For fiscal 2005, SingTel paid out a total dividend of 13 Singapore cents per share.

Faced with a fast-maturing market in Singapore, where more than nine out of 10 people now own a handphone, SingTel has spent more than S$20 billion over 10 years building a regional presence to bolster growth.

SingTel, which competes with StarHub and MobileOne, has a 38% share of the local mobile phone market.

SingTel currently has stakes in Thailand's Advanced Info Service, India's Bharti Telecom, the Philippines' Globe Telecom), Pacific Bangladesh Telecom and Indonesia's PT Telkomsel.

In the past year, SingTel's acquisitions have been relatively small compared to previous deals like its 2001 purchase of a 22.3% stake in Telkomsel for US$602 million. In the past 12 months, it lost a bid for a 26% stake in state-owned Pakistan Telecommunications Ltd. to United Arab Emirates-based Emirates Telecommunications.

One of its recent larger purchases was an additional 5.85% stake buy in Bharti for US$252 million in May 2005.

According to the Morgan Stanley report, Singapore's No. 1 mobile phone operator by customers could alternatively carry out a capital reduction of up to S$3 billion.

"SingTel is one of our key regional picks due to its strong earnings growth, balance sheet strength, management track-record and rising dividend stream," it added.

Goldman Sachs also said in a report that SingTel's recent share price weakness "represents a good buying opportunity as there is no change in the company's strong fundamental story."

Shares in SingTel have fallen about 5% since Temasek Holdings, Singapore's state-owned investment company, sold part of its SingTel stake last month. Temasek now holds 56.3% of SingTel.

The report also listed SingTel's potential capital management initiatives and industry restructuring over the next 12 months in Australia, where the company has a presence through its Optus unit, as "potential catalysts" for the company's share price.

Goldman Sachs said it maintains its outperform rating on SingTel with a target price of S$3.10. SingTel closed Monday at S$2.67.

-By Jessica Tan, Dow Jones Newswires; 65-6415-4150; jessica.tan@dowjones.com
-Edited by Alan Soughley

(END) Dow Jones Newswires"

Posted to the site on 4th April 2006