Singtel adopts scrip dividend scheme

Vote to let shareholders opt for shares passed amid uncertain outlook from pandemic

Shareholders of mainboard-listed telco Singtel can be paid in shares instead of cash after a successful vote to include a scrip dividend scheme in the company's charter.

The amendment was passed at an annual general meeting (AGM) yesterday, even as the coronavirus pandemic hung over the group's outlook in the months ahead.

"Given the unprecedented disruption from Covid-19, we have not provided guidance on our outlook, capex and dividend for the current financial year," group chief executive Chua Sock Koong told shareholders at the AGM, which was delivered over live webcast.

Singtel recently cut its payout for the financial year to March 31 to 12.25 cents a share, down from 17.5 cents the year before.

That is even as the telco expects provisions for bad debts to increase in line with an economic slowdown, according to a bourse filing aimed at addressing common shareholder questions.

On how the Covid-19 pandemic has affected customers' ability to pay their bills on time, Singtel noted that prepaid mobile use has declined, while postpaid sales and collection are slower. But regional associates are promoting the use of online channels to collect top-ups and bill payments, while economic recovery in regional markets offers uplift, the group said.

"The full impact of the pandemic will only become clearer as the economic consequences unfold. Meanwhile, our associates are pushing ahead with their digital transformation to navigate the uncertainties and position themselves for a digital-led recovery."

The company also reassured investors that its network and operations remain resilient, despite earlier workforce and supply-chain disruptions from the pandemic.

For instance, handset shipments to Singapore have recovered from delays at the start of the outbreak, while resources in Singapore and Australia have helped to ease a labour crunch when lockdowns in Malaysia, India and the Philippines affected offshore service centres.

Singtel also reiterated its stance on financial prudence at the AGM, citing both Covid-19-related uncertainties, and the need to invest in 5G wireless technology, which it billed "a multi-year investment programme for long-term growth".

The company also recently clinched a licence to build and run a nationwide 5G network in Singapore, with the rollout expected to begin from next year.

 
 
 
 

While the telco does not expect 5G to be a key driver of returns in the near term, it still anticipates new revenue opportunities in the longer run from consumer applications such as cloud gaming, and enterprise applications such as edge computing.

"We expect that the industry will see more rational pricing decisions to enable acceptable returns and continued network investments," it said of the Singapore market.

Separately, key Singtel associate Bharti Airtel has posted a loss of 151.9 billion rupees (S$2.79 billion) for the three months to June 30, on the back of exceptional items such as adjusted tax charges and provisions for network-related fees owed to the Indian government.

In all, India-based Airtel clocked 155 billion rupees in exceptional charges for the quarter, after taxes and minority interests, with Singtel's equity share of this coming to $911 million.

Singtel will disclose its share of its regional associates' results - including Airtel's - next month, the group added in a bourse update on Wednesday.

THE BUSINESS TIMES

A version of this article appeared in the print edition of The Straits Times on July 31, 2020, with the headline 'Singtel adopts scrip dividend scheme'. Print Edition | Subscribe