29-4-2024 (SINGAPORE) In a bombshell revelation, Singapore Telecommunications (Singtel) has cautioned investors that it anticipates booking a staggering S$3.1 billion (US$2.28 billion) in non-cash impairment provisions for the second half of its 2024 fiscal year. This mammoth write-down, the telecom behemoth warned, would precipitate it plunging into the red for the period, reporting a net loss.
The grim forecast didn’t end there. Singtel, South-east Asia’s largest telecommunications operator, also forewarned that its full-year net profit for the financial year concluding 31 March 2024 would underwhelm compared to previous periods.
In a regulatory filing, the company disclosed that a whopping S$2 billion of the total impairment provision stems from a reassessment of the goodwill value of Optus, its Australian mobile network arm. This ominous write-down comes hot on the heels of Singtel ruling out an “impending deal” for Optus, following widespread reports that talks about a potential stake divestment had fallen through.
The woes compound for Optus, which is expected to account for a further S$470 million in non-cash impairment provisions pertaining to its enterprise fixed access network assets. Singtel attributed this substantial hit to “weaker prospects, increased cost of capital and a bleak macroeconomic outlook.”
Alarmingly, a strategic review of Optus’ enterprise business unveiled that it is grappling with precipitous declines in fixed carriage revenue, mirroring an industry-wide downtrend plaguing the Australian market, the filing revealed.
Singtel’s tribulations extend beyond its Australian operations. Its Asia Pacific cyber security business is bracing for a S$340 million non-cash impairment provision against goodwill, while IT service provider NCS Australia anticipates a S$280 million comparable hit.
Amid the turmoil, Singtel attempted to strike an optimistic tone, asserting that it remains “on track to pay at the upper end of its dividend policy for the financial year ended 31 March 2024.”
The downtrodden telecommunications giant is slated to unveil its full-year results on 23 May.
In a separate development on Monday, Singtel’s Optus subsidiary announced inking a deal with domestic rival TPG Telecom to secure access to its regional radio network across rural Australia.
