Singtel forecasts $2.3 bn impairment hit, expects net loss in 2024 second-half
A woman using a mobile phone walks behind a Singtel signage at their head office in Singapore
Singapore Telecommunications (Singtel) anticipates a huge non-cash impairment of S$3.1 billion (equivalent to $2.28 billion) for the latter half of 2024, indicating an impending net loss for the period.
According to Reuters, the telecom company also warned of a diminished net profit for the full year concluding on March 31, 2024.
The company’s share of this impairment, approximately S$2 billion, stems from the goodwill of its mobile network operation unit, Optus, Singtel revealed in a filing.
This revelation follows the shelving of a possible stake divestment deal for Optus, which had been under discussion.
Optus, a major entity within Singtel's portfolio, is expected to incur non-cash impairment provisions to of up to S$470 million on its enterprise fixed access network assets.
This downturn is primarily attributed to dimming prospects, heightened cost of capital, and a pessimistic macroeconomic outlook.
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A review of its enterprise business revealed declines in fixed carriage revenue, consistent with broader market trends in Australia, as outlined in Singtel's filing.
Additionally, Singtel foresees non-cash impairment provisions amounting to S$340 million for the goodwill of its Asia Pacific cyber security business and S$280 million for IT service provider NCS Australia.
Singtel said that it was committed to ensuring shareholder returns, further saying that it would adhere to the upper threshold of its dividend policy for the fiscal year culminating on March 31, 2024.
The company is scheduled to announce its financial results for the aforementioned period on May 23.
Concurrently, Singtel's subsidiary Optus struck an agreement with local competitor TPG Telecom to grant access to its regional Australian radio network, as disclosed in a separate announcement on Monday.
The disclosure of an impairment provision by Singtel brings out some major challenges that the telecom industry faces, particularly with regard to fixed access networks and cyber security.
(With inputs from Reuters)