Singtel reports $1.3b loss in second half of financial year due to Optus-led impairments

SINGAPORE — Singtel on May 23 posted a 64 per cent drop in full-year net profit hit by a previously-announced $3.1 billion impairment charge, most of which came from its Australian subsidiary Optus.

The company said net profit for the year to March was $795 million, compared with $2.23 billion a year ago, as a result of an exceptional loss of $1.47 billion.

This was the result of a non-cash charge comprising a $2 billion provision on the goodwill of Optus, and $483 million for Optus' enterprise fixed access network assets.

It pushed Singtel into the red for the fiscal second half year with a net loss of $1.3 billion, compared with a net profit of $1.1 billion in the same period a year earlier.

Optus announced on May 22 that Australia's media regulator is taking legal action against it over a 2022 cyber attack that affected more than 10 million customers. It also suffered a massive network-wide outage in November 2023.

However, excluding the impairment charges, underlying full-year net profit rose 10 per cent to $2.26 billion, reflecting increased regional associate contributions and higher interest income, Singtel said.

Also on May 23, Singtel announced that it has added a new "value realisation dividend" (VRD) of three cents to six cents per share per annum, on top of the core dividend, to increase shareholder returns over the medium term.

The directors have thus proposed a final dividend of 9.8 cents per share - consisting of a core dividend of six cents and a VRD of 3.8 cents. This compares with the 5.3 cents dividend for the year-ago period. It brings total dividend payout to 15 cents for fiscal 2024, a 52 per cent increase year on year.

Singtel said this is its third increase in dividends since its strategic reset three years ago. It added that the VRD will lift the telco's dividend yield to 6.3 per cent at last close price, up from about four per cent previously.

The VRD comes from excess capital from the group's capital-recycling programme and includes a further $6 billion in assets that Singtel has identified that it could potentially monetise over the medium term, in addition to the $8 billion it has already recycled in the last three years.

It is understood that this capital would go towards funding growth opportunities, paring debt, as well as enabling the group to return excess capital to shareholders through the value-realisation dividend.

Commenting on Singtel's performance, group chief executive Yuen Kuan Moon said, "Despite a challenging macro environment and significant currency headwinds, our underlying performance was resilient."

Recognising that Singtel's share price did not fully reflect the group's value, Yuen said that by increasing the total dividend payout, the group would "share the rewards with shareholders", while showing its commitment to "creating sustainable shareholder value".

Replying to a query from The Straits Times about the Australian regulator suing Optus over the data breach, Yuen said the $3.1 billion charge was not related to the lawsuit. He was speaking at the group's results briefing on May 23.

He said: "It's too early to quantify how much provisions the group would need to set aside."

Optus interim chief executive Michael Ventner, who was also at the briefing, added that there hadn't been any further class action suits, apart from the one by the regulator.

Shares of Singtel were trading unchanged at $2.40 as at 11.22am on May 23.

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This article was first published in The Straits Times. Permission required for reproduction.