Singtel Expects Net Loss in Second Half of Fiscal Year 2024
Singapore Telecommunications Prepares for Challenging Times
Net Loss Announcement
Singapore Telecommunications, or Singtel, announced on Monday that it anticipates reporting a net loss for the second half of fiscal year 2024. The company highlighted exceptional non-cash impairment provisions amounting to S$3.1 billion ($2.28 billion) for the period. This news comes as a significant blow, signaling difficult times ahead for the telecom giant.
Lower Full-Year Profit Warning
Additionally, Singtel warned investors that it would also report a lower net profit for the full fiscal year ending on March 31, 2024. The company’s financial outlook appears grim, with challenges expected to persist in the foreseeable future.
Origin of Impairment Provisions
About S$2 billion of the total impairment provision stems from its mobile network operation unit, Optus’ goodwill. Singtel, being Southeast Asia’s largest telecom operator, highlighted this as a significant setback in its filing. The revelation underscores the tumultuous landscape that the company is currently navigating.
Optus’ Impending Deal
Furthermore, an “impending deal” for Optus was recently ruled out by Singtel following reports of a potential stake divestment falling through. This unexpected turn of events adds complexity to Singtel’s already challenging financial situation.
Optus’ Non-Cash Impairment Provisions
In a separate development, Optus expects non-cash impairment provisions of S$470 million on its enterprise fixed access network assets. This decision is primarily influenced by weaker prospects, increased cost of capital, and a bleak macroeconomic outlook. The uncertainties surrounding Optus further compound Singtel’s financial woes.
Dividend Policy Commitment
Despite the setbacks, Singtel remains committed to its dividend policy, aiming to pay at the upper end for the financial year ending on March 31, 2024. The company’s resilience in the face of adversity is commendable, as it strives to uphold its financial commitments to shareholders.
($1 = 1.3616 Singapore dollars)
