SINGAPORE – Singtel shares fell as much as 3.3 per cent on April 29 to a more than one-week low after it forecast non-cash impairment provisions of $3.1 billion for the second half of its 2024 financial year.
The impairment provisions would lead to the telecoms giant reporting a net loss for the second half and a lower net profit for the full-year ended March 31, it said in a filing to the Singapore Exchange before trading began.
Singtel shares fell sharply on the news, with the counter closing down 6 cents or 2.5 per cent at $2.35 on April 29. It was the second most traded counter by volume, behind Seatrium, with 95.6 million shares changing hands.
Singtel said the impairment provisions will not impact its payment of dividends. “Singtel is on track to pay at the upper end of its dividend policy for the financial year ended 31 March, 2024,” it said in the filing.
“Singtel highlighted that this won’t impact its dividend which is based on 70 per cent to 90 per cent of the underlying net income while the non-cash impairment charges will be booked as one-offs,” Maybank Research analyst Hussaini Saifee wrote in a research note on April 29.
Maybank Research reiterated its buy rating on Singtel with an unchanged price target of $3.05.
About $2 billion of the total impairment provision originated from its Australian unit Optus’ goodwill, Singtel said.
An “impending deal” for Optus was recently ruled out by Singtel following reports that talks for a potential stake divestment had fallen off.
Singtel added that Optus expected a non-cash impairment provision of $470 million on its enterprise fixed access network assets, mainly due to weaker prospects, increased cost of capital and a bleak macroeconomic outlook.
After conducting a strategic review of its enterprise business, Optus found that it was reporting steep declines in fixed carriage revenue, in line with an overall market decline in Australia, the Singtel filing stated.
Among other units, the Asia-Pacific cyber-security business is expected to report non-cash impairment provision for goodwill of $340 million, with $280 million of the same expected from information technology service provider NCS Australia.
The company is scheduled to report its FY2024 results on May 23.
In a separate announcement on April 29, Singtel said Optus and rival TPG Telecom have signed network-sharing agreements to increase TPG’s coverage and cut capital spending.
TPG will now cover a total of 2,444 mobile network sites in regional Australia, up from 755 previously, and will gain access to Optus’ regional 5G network as it is rolled out.
TPG expects to pay a total of around A$1.17 billion (S$1.04 billion) to Optus over the 11-year term of the agreement.
Optus will also license some of TPG’s spectrum for use in the newly created multi-operator core network.
TPG indicated that the spectrum receipts from Optus over the 11-year term would be around A$420 million, assuming a similar level of spectrum being licensed.
The companies indicated the facilities under the new network sharing agreement would be available to customers in early 2025 but were subject to relevant approval from regulators.
The Australian Competition Tribunal in June 2023 upheld a decision to block a similar asset transfer deal between TPG and the country’s largest telco, Telstra Group. REUTERS
