(Reuters) – Shares in Singapore Telecommunications (SingTel) fell as much as 3.3% on Monday after the company said it expected non-cash impairment provisions to be S$3.1 billion ($2.28 billion) in the second half of 2024. It was the lowest price in more than a week.
Singtel said the telecom giant is expected to post a net loss in the second half of the year due to impairment provisions, and its net profit is expected to decline for the full year ending March 31, 2024.
Singtel shares were down 2.5% at S$2.35 per share as of midday on Monday, less than the 0.2% decline in the broader benchmark stock index.
Hussaini Saifi, an analyst at Maybank Research, said: “Singtel emphasized that this will not impact its dividend, which is based on 70-90% of underlying net profit, but the non-cash impairment charge will be recorded as a one-off. ” he wrote in his research notes. on monday.
Maybank Research maintained Singtel's price target at S$3.05, reiterating its buy rating.
“Singtel intends to pay a maximum dividend policy for the financial year ending March 31, 2024,” the Singapore-based telco said.
About S$2 billion of its total impairment provisions arise from the goodwill of its mobile network operator Optus, Singtel, Southeast Asia's largest telco, said in a filing. Stated.
An “imminent deal” for Optus was recently ruled out by Singtel following reports that talks for a potential stake sale had collapsed.
Singtel added that Optus expects to make non-cash impairment provisions of S$470 million on its enterprise fixed access network assets, mainly due to the deteriorating outlook, higher cost of capital and challenging macroeconomic outlook. Ta.
Singtel's filing said Optus undertook a strategic review of its enterprise business and found that its fixed fleet revenues were declining significantly, in line with the decline in the broader Australian market.
Among other segments, the Asia Pacific cybersecurity business is expected to report S$340 million in non-cash impairment provisions on goodwill, of which S$280 million will be reported at IT service providers. expected to originate from one NCS Australia.
The company is scheduled to announce its financial results for the fiscal year ended March 31 on May 23.
In a separate announcement on Monday, Singtel said Optus had struck a deal with local rival TPG Telecom to provide access to local wireless networks in regional Australia.
(1 dollar = 1.3616 Singapore dollar)
(Reporting by Poonam Behra in Bengaluru, Ankur Banerjee and Yantortla Gui in Singapore; Editing by Diane Craft, Aurora Ellis and Mrigank Dhaniwala)
