SingTel

(16-11-2012, 04:16 PM)specuvestor Wrote: You probably didn't go back far enough then in FY2010 pre tax was S$978m and post tax S$848 for Bharti (page 40 of AR) Optus Net profit was S$676. Singtel profit that year was S$3.9b. That's how much Bharti had declined the past few years.

If you look at pg 35 of AR2010, it's interesting to see the 'Shares of associates' pre-tax profit' of S$2410M being added to Operational EBITDA = S$4847M. In such a case, the contribution from Bharti (even at 50% of associates) doesn't seem to be as significant a figure as the 1/4 you mentioned.

Also, pg 42 gives the FCF breakdown. Again, the contribution of Bharti is closer to 10%++ to group.

So, ya, it depends on where we're putting the contributions from Associates (or Bharti) to do our comparison of their significance of impact to the Group.

But yes, Bharti contribution had declined significantly since FY10, dropped to aro' 1/2. But, if we just look at Associates alone ie. ignore the individual contribution, Associates contribution had kind of stayed the same ie. drop in Bharti is balanced by increase from Telkomsel and AIS.

AIS is the gem. the rest just dun cut it. Optus even today looks bloody overpriced deal back then.

Investors should look beyond acquisition of Optus. whether it was overpriced or how overpriced it was is a done deal 10years ago. It doesn't have much bearing on singtel's earning today. the price was paid already. What's important is they don't do it again.


Ais is not the only gem. Telkomcel could be much better.

telkomsel the indonesians are forcing singtel to sell

(16-11-2012, 08:30 PM)freedom Wrote: Investors should look beyond acquisition of Optus. whether it was overpriced or how overpriced it was is a done deal 10years ago. It doesn't have much bearing on singtel's earning today. the price was paid already. What's important is they don't do it again.

Ais is not the only gem. Telkomcel could be much better.

I strongly believe they won't do it again. Because the genius has already left. Look at what happened to F&N, being sold piece by piece, yes so called unlock shareholder value, now tiger beer has gone to Holland.

I used to think the acquisition should be left behind, until i saw the staggering goodwill, $9.6b still on the book. It is going to be forever there until write off.

I don't know how is it going to impact, can we ignore it at all? The goodwill doesn't matter?

1 thing for sure Singtel will look much better without the acquisition, on the book.

(17-11-2012, 01:40 AM)hongonn Wrote:

(16-11-2012, 08:30 PM)freedom Wrote: Investors should look beyond acquisition of Optus. whether it was overpriced or how overpriced it was is a done deal 10years ago. It doesn't have much bearing on singtel's earning today. the price was paid already. What's important is they don't do it again.

Ais is not the only gem. Telkomcel could be much better.

I strongly believe they won't do it again. Because the genius has already left. Look at what happened to F&N, being sold piece by piece, yes so called unlock shareholder value, now tiger beer has gone to Holland.

I used to think the acquisition should be left behind, until i saw the staggering goodwill, $9.6b still on the book. It is going to be forever there until write off.

I don't know how is it going to impact, can we ignore it at all? The goodwill doesn't matter?

1 thing for sure Singtel will look much better without the acquisition, on the book.

ask yourself the following question:

Do you buy singtel based on its book value? What's the ratio are you looking at? Pb =?

Goodwill is an accounting requirement, if you like, you can write off its goodwill for your own convenience. And you can write off anything you don't like in the balance sheet. Your valuation does not need to follow accounting standards.

sounds to me goodwill is like an inflated no, that may or maynot be factored into future sales.

i guess most buy it for predictable cash flows, so EV/EBITDA looks a good metric.

I agree with freedom that goodwill is just an accounting requirement. The acquired price is still the same, with or without the "goodwill"

Business A: Book value of $10, and annual earning of $5. Selling price $15, goodwill = $5
Business B: Book value of $10, and annual earning of $2. Selling price $10, goodwill = $0

With all others are same, will you chose business B just because goodwill = $0?

In theory, of course we would like to choose Business A. But overpaying for goodwill will impair the future earnings of the company if everything being equal. ie. how many years of earnings before company can compensate or recover the goodwill money paid up-front. Furthermore goodwill is an "intangible asset" that can change as the company A evolves.
So IMO Business B may not be a bad buy too. Me think both is O. K. to buy. But i may prefer B.

i take it that if i pay positive good will to acquire A, i must have seen something good in A for it to earn an amt i require. companies usually impair the good will when that premise wasn't the case anymore.

now back to the point, if you pay so much for Optus, you must see that Optus future cash flow is rather superb. so now, its ROA is the lowest amongst all the telcos under singtel's stable, but its an important cash flow machine, i take it that it was a dud purchase. had they not buy that share holders would be better off. they made a decision to purchase because the parent wants them to expand out.