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TeleChoice's Net Profit Increased 34.6% To S$6 Million

Main board-listed TeleChoice International Limited (“TeleChoice”), a regional provider of telecommunications solutions and services, today announced its
financial results for the second quarter (“2Q10”) and six months (“1H10”) ended 30 June 2010.

Results Summary The Group registered stronger sales and net income in 2Q10 and 1H10 as compared against 2Q09 and 1H09 with revenue rising by 37.7% and 37.2% to S$97.3 million and S$172.6 million respectively.

The improved sales were led by the Group’s Personal Communications Solutions (“PCS”) Services division, which enjoyed higher regional sales and revenue from its prepaid card business. This was offset by decreased revenue from Telecommunications Services, mainly attributed to its discontinued legacy mobile data business. Engineering Services division also registered an overall revenue decrease in 2Q10 and 1H10 due to lower sales of transmission equipment in Singapore.

With higher revenue, Group gross profit increased by 17% from S$6.7 million in 2Q09 to S$7.9 million in 2Q10. For 1H10, gross profit increased by 21.5% to S$15.2 million from S$12.5 million in 1H09.

Gross profit margin decreased marginally by 1.4 percentage points quarter on quarter and by a smaller 1.1 percentage points comparing 1H10 with 1H09. This was attributed to a variation in the sales mix with an increase in contribution from PCS Services. PBT margins also declined slightly to
3.8% in 2Q10 (2Q09: 4.0%) and 4.1% in 1H10 (1H09: 4.2%) on account of Telecommunications Services’ lower gross margin attributable to the intense competitive environment.

The Group’s balance sheet continued to be healthy with cash at S$38.0 million after a dividend payment of S$7.9 million. Mr Andrew Loh, President, TeleChoice International Limited, said, “PCS Services led the Group’s strong performance in 1H10 driven by economic recovery and improved consumer sentiment. Market demand has also increased with the introduction of new and attractive smartphone models. To capitalise on the better business climate and higher consumer spending, PCS Services has opened two new Planet Telecoms outlets in Parco Marina Bay and Esplanade MRT Station, with a third
scheduled to be opened in 3Q10 at Bedok Point.”

“For Telecommunications Services, since going to market with its new suite of “cloud computing” solutions, it has secured over 500 seats of various cloud services on recurring subscription model.

This includes its Nexwave One Voice “Communication-as-a-Service” solution and SaaS offerings like e-HR and Google Apps. The continued focus on the enterprise segment with innovative solutions has also helped its complementary IDD traffic to grow by 13% from 1H09’s levels. On the consumer side, its VOIZ unlimited package has shown good traction and as a result the consumer IDD traffic has also grown by 7% from 1H09’s consumer IDD traffic levels. Overall Telecoms has made good progress in its transformation effort into a next generation communications and application solutions provider.”

“Network Engineering Services enjoyed higher revenue contribution from increased radio network planning projects in Indonesia and products sales in the region. This helped to offset some of the revenue decline in the Singapore market. The current recovery in regional economies should bring about steadily increasing capital expenditure in network infrastructure which will further benefit this business division.

In keeping with this expectation, the company has established a representative
office in Vietnam. This is in addition to its existing operations in Indonesia, Malaysia and Singapore. ”

Outlook and Strategy
Based on 1H2010 performance and the current outlook, and barring any unforeseen circumstances, the Group expects FY2010 operating performance to improve over last year.

Mr Loh added, “While the extremely strong pace of growth in 1H10 is unlikely to be sustained, the improving economic climate, globally and in Singapore across all sectors, is expected to continue into 2H10. The increase in consumer demand for converged mobile devices, including smartphones, is expected to persist and will positively impact PCS Services’ performance.

Telecommunications Services is well-positioned to benefit from the exponential growth in Cloud Computing applications and the upsurge in demand for mobile data solutions. Engineering Services will continue to actively pursue regional opportunities presented by investment in infrastructure and mobile network upgrades.”

“TeleChoice has emerged from the recent economic downturn in a sound financial position. With the improved economic outlook, we are well-placed to be more aggressive in expanding our businesses, particularly in growth markets such as Vietnam, Indonesia and Malaysia. We will continue to strengthen our organic operations while also stepping-up our inorganic growth initiatives to expand our product offerings and geographic footprint.”

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