Singapore Telecommunications, Southeast Asia’s biggest phone company, reported an unexpected drop in profit after competition reduced earnings at partners in India and Indonesia.

Net income fell 6.7% from a year earlier to $892 million in the quarter ended in September, SingTel, as the company is known, said in a statement today. That missed the $969 million average of four analyst estimates compiled by Bloomberg.

Bharti Airtel in India and PT Telekomunikasi Selular in Indonesia led a drop in earnings from regional affiliates, overshadowing gains from Australian unit Optus. SingTel Chief Executive Officer Chua Sock Koong is counting on the popularity of smartphones such as Apple Inc.’s iPhone to revive profit growth by boosting demand for wireless data and applications as markets saturate worldwide.

 

“Contributions from the regional associates reflect the competition in the markets that they operate in such as India and Indonesia,” said Carey Wong, an analyst at OCBC Investment Research Pte in Singapore. “Singapore and Australia are matured markets but you can still expect single-digit growth.”

 

SingTel declined as much as 1.2% to $3.21 and changed hands at $3.24 at 9:30 a.m. in Singapore. Of the 23 analysts tracked by Bloomberg in the past 12 months, nine had buy ratings, one recommended that investors sell the stock, and the remainder rated “hold.”

 

Pretax profit contributions from regional associates fell 6.2% to $536 million, the company said. Regional mobile companies accounted for 43% of earnings before interest, tax depreciation and amortization, or EBITDA.

 

Optus contributed to 31% of EBITDA while the Singapore business provided 24%, the statement said.

 

SingTel owns 32% of Bharti, India’s biggest wireless provider, and 35% of Telkomsel, as the Indonesian company is known. New Delhi-based Bharti reported a worse-than-expected 27% drop in earnings yesterday.

 

SingTel is boosting investments to access new technologies as surging smartphone sales drives up demand for wireless data services. The company in September started a S$200 million fund to invest in startups.

 

“It’s important to make these investments and we have made inroad,” Chua said in a statement. “The strategic initiatives are however expected to incur costs before delivering longer term scale benefits.”

 

SingTel, whose largest shareholder is Singapore state investment company Temasek Holdings, boosted its dividend payout ratio to 55% to 70% of underlying profit from the previous 45% to 60%.

 

The company defines underlying profit as net income before exceptional items and exchange differences on capital reduction of certain overseas subsidiaries. SingTel will pay an interim dividend of 6.8 cents a share, 10% more than last year, the statement said.

 

The group’s mobile customer base grew 35% from a year ago to 368 million as of the end of September.

 

At Optus, Australia’s largest phone operator after Telstra Corp., net income increased 15% to A$175 million ($226.6 million) in the quarter. Operating revenue rose 4.7% to A$2.3 billion. Net income at the Singapore business declined 12% to $295 million.