Currency Sell-Off: The Impact On Regional Telecoms

Concern over the Fed's tapering programme has sent emerging market currencies into sharp deterioration in the past month. In Asia, the Indian rupee experienced the hardest hit reflecting its big current account deficit, while the Indonesia rupiah slide followed a close second. BMI examines the financial impact this will bring in H213 to regional telecom operators with substantial India and Indonesia exposure.

SingTel: Stake In India's Bharti and Indonesia's Telkomsel

The regional currency weakness is relevant to SingTel given India and Indonesia contributed 6% and 21% respectively to the group's Q213 post-tax profit. The fact that Singapore dollar is up 14% and 11% year-to-date against the rupee and rupiah respectively - with substantial proportion of those gains recorded in the past two months - is clearly a challenge to SingTel consolidated results. In the latest quarterly results, the group's share of Bharti Airtel's pre-tax operating profit was up strongly by 32% in local currency terms, but profit contribution fell to 27% after including the 4% depreciation of the rupee against Singapore dollar in the quarter. Similarly, pre-tax profit contribution of Telkomsel fell from 11% to 6% after factoring in the weakening rupiah.

INR and IDR Fell The Most Against USD
YTD Changes In Currency Vs US Dollar

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This article is tagged to:
Sector: Telecommunications
Geography: Asia, Australia, Indonesia, India, Malaysia, Singapore