Singtel to freeze wages amid weak sentiment

Singtel's group chief executive Chua Sock Koong said in a note to employees yesterday that the company needed to brace itself for uncertainty because of the coronavirus outbreak and weak business sentiment.
Singtel's group chief executive Chua Sock Koong said in a note to employees yesterday that the company needed to brace itself for uncertainty because of the coronavirus outbreak and weak business sentiment.ST PHOTO: NG SOR LUAN

Cost-cutting move to apply to all employees except for support, operational workers

Singtel will be implementing a wage freeze across the company this year - except for operational and support staff - as part of a cost-cutting exercise by Singapore's largest telco.

Group chief executive Chua Sock Koong said in a note to employees yesterday that the company needed to brace itself for uncertainty because of the coronavirus outbreak and weak business sentiment.

She said: "It's been a worrying start to the year. As we announced our third-quarter results, the Covid-19 threat emerged, disrupting not just lives but in many cases, livelihoods."

Ms Chua added that "risks to businesses have been significant enough to warrant interest rate cuts by central banks and budget measures from governments to help manage the economic fallout".

She noted that Prime Minister Lee Hsien Loong has also "not ruled out the possibility of a recession".

Ms Chua said: "The business and structural challenges we are already facing will be further aggravated by weak sentiment and economies made more sluggish by the virus threat.

"During this period, we need to strengthen our financial resilience and take out more costs. Times like these require us to tighten our belts, both as a company and as workers, to ensure the long-term competitiveness of our business."

The telco reported a 23.8 per cent slide in profits to $627.2 million in the third quarter of last year.

Last month, Fitch Ratings downgraded Singtel's long-term foreign-and local-currency issuer default ratings (IDR) and foreign-currency senior unsecured rating to A from A+.

The agency also lowered the long-term foreign-currency IDR and senior unsecured rating of the telco's wholly owned Australian subsidiary Singtel Optus to A-from A.

Fitch has a stable outlook on the IDRs for both Singtel and Optus.

The ratings downgrade reflects weaker-than-expected growth prospects, as well as capital expenditure pressure resulting in higher leverage than previously anticipated.

SAC Capital senior analyst Terence Chua said that the downgrade could potentially result in higher debt cost for Singtel, which will further impact its bottom line.

He added that "the wage freeze for all employees, except for operational and support staff, should come as no surprise to the market as the rest of the government-linked companies like CapitaLand, SingPost and Singapore Airlines have all separately announced varying levels of wage cuts due to the Covid-2019 outbreak".

Ms Chua also informed employees that a worker who had contracted the coronavirus is in stable condition.

Singtel is also in close contact with the worker's colleagues who had been in close proximity with him "as they work from home this week, monitoring for symptoms while contact tracing is under way", she said.

"We are doing all we can to support (the patient's) family," she added.

Singtel's management has also moved to aid those affected by the current outbreak.

Ms Chua said: "The management committee and I will each contribute at least half a month's pay (to the Singtel Touching Lives Fund) while top management has been strongly urged to make voluntary contributions of a quarter's month's pay."

She encouraged staff to give as well, adding that the company will match staff contributions dollar for dollar before directing the donations to the Community Chest's Courage Fund and other beneficiaries working to fight the fallout from the virus outbreak.

A version of this article appeared in the print edition of The Straits Times on March 10, 2020, with the headline 'Singtel to freeze wages amid weak sentiment'. Print Edition | Subscribe