Why SingTel's earnings could be finally spared by currency drag

Regional currencies have stabilised.

According to CIMB, SingTel’s conference call has revealed reasons to believe there is now a lower chance of earnings disappointments as regional currencies have largely stabilised.

Here's more from CIMB:

We believe there is now a lower chance of earnings disappointments as the AUD, INR and INR have largely stabilised.

The currency weakness, coupled with withholding tax on the dividends of its associates, were the main culprits contributing to a disappointing 2QFY14 core net profit.

However, going forward, we expect the cost of SingTel’s aggressive investments to weigh down earnings as top-line growth remains pedestrian. SingTel indicated that it will be “more aggressive” on content acquisition for its pay TV franchise.

The investments in LTE in Singapore and Australia elevate capex which will raise depreciation and amortisation. It had guided that capex will rise 25% to S$2.5bn or an estimated 14% of FY14 revenue vs. 11% inFY12.