Singtel flags $3.1 billion impairment hit, net loss in second half of FY2024
About $2 billion of the impairment provisions originate from its Australian unit Optus’ goodwill, Singtel said. PHOTO: ST FILE
UPDATED
APR 29, 2024
BENGALURU - Singtel on April 29 forecast non-cash impairment provisions of $3.1 billion for the second half of financial year 2024 which would lead to the telecom giant reporting a net loss for the period.
The company also warned that it would report a lower net profit for the full year ended March 31, 2024.
About $2 billion of the total impairment provision originates from its Australian unit Optus’ goodwill, Singtel said in its bourse filing.
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 expects a non-cash impairment provisions 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 IT service provider NCS Australia.
Singtel said the impairment provisions will not impact the 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.
The company is scheduled to report results for the financial year ended March 31 on May 23.
In a separate announcement on April 29, Singtel said its unit Optus struck a deal with local rival TPG Telecom to provide access to its local radio network in regional Australia.
As a part of the agreement, TPG will increase its mobile network in regional Australia to 2,444 network sites, with Optus providing TPG Telecom access to its regional radio access network and sharing spectrum in regional Australia.
“The agreement will reduce combined 5G network rollout costs in regional Australia, which will enable the rollout of 5G infrastructure to be completed two years earlier than previously planned,” said Optus interim chief executive Michael Venter.
The agreement is expected to be operational by early 2025 and has an initial term of 11 years with an option for TPG to extend it for five more years. REUTERS
