"Analysts can't really go wrong because management has said to expect flat or lower full year profits," Andrew Ng, analyst with securities firm J.M. Sassoon & Co Pte Ltd, told Reuters.

"But with the competitive factors that are coming into play, we've got to look for how SingTel faces up to costs," he said.

SingTel, Singapore's biggest company, is set to reveal interim results to September 30 on Friday and chairman Koh Boon Hwee has already flagged the possibility of flat or falling profits for the full year.

Profits rose 11.8 per cent to Singapore $1.89 billion($1.15 billion) when SingTel published its last set of annual results in May. Even then the firm cautioned it would be fortunate to achieve good single-digit growth in the coming 12 months.

A slowdown ininternational call traffic -- about 41 per cent of SingTel revenues -- prompted by the region's economic crisis as well as the launch of rival discounted international direct dial services are expected to have a big impact.

Tariff cuts agreed as part of the global drive to bring down telecom charges are also going to undercut earnings growth.

"SingTel is definitely facing pressure on the revenue topline because international traffic is slowing and tariffs are falling," ING Barings analyst Gautam Kapoor said.

Analysts want to see SingTel get costs firmly under control before April 1, 2000, when its domestic phone services monopoly is ended with the arrival of a new player, StarHub.

StarHub is a consortium comprising British Telecom, Nippon Telegraph and Telephone Corp and government-owned Singapore Technologies Telemedia and Singapore Power.

"When StarHub comes into play it will be a real test," Ng said. "Its backers know how to compete in the international telecommunications market. They have beendoing it a long time so they are a serious factor."

Analysts say the success of mobile phone operator MobileOne, which became SingTel's first competitor in April 1997 and has rapidly built a significant market share, is a good indicator of what could lie ahead.

Kapoor sees the intensification of the economic crisis in Asia exacerbating SingTel's traffic decline, with no hope of an upswing in the current financial year.

Even the prospect of an acquisition -- SingTel is estimated to have a cash pile of about S$4 billion -- does not excite him.

"Acquisition is not going to drive profit growth, it has got to come from the home business which is why SingTel has to focus on reworking its cost structure," Kapoor said.

"We are looking for an earnings decline to around S$1.79billion for the full year to March 31, 1999," he added.

The picture is even less rosy when analysts factor in S$340million of SingTel tariff cuts announced on Tuesday as part of the Singapore government's proposals to slash overallbusiness costs in the city state by 15 per cent.

"I had been expecting full year earnings to rise to S$1.98billion, but that has got to be revised downwards to take into account the general outlook and new cuts outlined on Tuesday," an analyst with a Singapore securities house said.

"I think we're looking at S$1.85 billion for the full year and about S$940 million for the first half. Basically the earnings outlook is not good," the analyst added.