SINGAPORE—Shares in Singapore Telecommunications, Southeast
Asia’s largest telco, fell as much as 9 percent on Tuesday after it said the
launch of iPhone 3G and a stronger Singapore dollar will hurt its earnings in
the September quarter.
SingTel, which owns Optus in Australia and stakes in several
regional mobile phone operators, said versus the Singapore dollar so far this
year, the Indian rupee and the Thai baht had both declined by about 17 percent,
while the Indonesia rupiah and Philippine peso had both declined by nearly 8
percent.
"A stronger Singapore dollar will reduce the earnings
contributions from the overseas operations," SingTel said in the statement.
SingTel is scheduled to report its fiscal second quarter
earnings for the three months ended September on Nov 12.
DBS Vickers analyst Sachin Mittal said he had on Tuesday
downgraded SingTel shares to "Fully Valued" from "Hold" which implies the stock
would offer a negative return of more than 10 percent over the next 12 months.
"There is downside risk to earnings if the forex situation
does not improve," he said, adding that every 10 percent decline in the
Australian dollar, Indian rupee and Indonesian rupiah could shave about 2
percent off the group’s earnings each. Mittal said the stock could fall to as
low as S$2.02.
"We advise investors to accumulate the shares if the price
falls below that level."
SingTel shares slid 7.2 percent to S$2.33 by 0510 GMT, versus a 1.4 percent
drop in the broader Singapore index. Its shares are still up around 20 percent
from a near-five-year low a week ago. - Reuters
