Singtel adds new ‘value realisation dividend’; full-year profit down 64% to $795 million

SINGAPORE – A previously announced $3.1 billion impairment charge stemming mostly from Australian subsidiary Optus helped send full-year earnings plunging at Singtel.

Net profit came in at $795 million in the 12 months to March 31, 64 per cent down on the $2.23 billion recorded a year earlier.

This was due to an exceptional loss of $1.47 billion, the firm noted on May 23. This was the result of a non-cash charge comprising a $2 billion provision on Optus’ goodwill and $483 million for its enterprise fixed access network assets.

It pushed Singtel into the red in the 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

over a 2022 cyber attack that affected more than 10 million customers. It also suffered a massive networkwide disruption in November 2023.

If the impairment charges are excluded, Singtel’s underlying full-year net profit rose 10 per cent to $2.26 billion, due in part to increased regional associate contributions and higher interest income.

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

The directors have proposed a final dividend of 9.8 cents a share – consisting of a core dividend of six cents and a VRD of 3.8 cents. This brings total dividend payout to 15 cents for the 2024 financial year – a 52 per cent increase over 2023’s 9.9 cents payout.

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 its last closing price, up from about 4 per cent previously.

The VRD comes from excess capital from the group’s capital recycling programme and includes a further $6 billion in assets Singtel has identified that it could 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, and enabling the group to return excess capital to shareholders through the VRD.

Group chief executive Yuen Kuan Moon told a results briefing: “Despite a challenging macro environment and significant currency headwinds, our underlying performance was resilient.”

Mr Yuen acknowledged that Singtel’s share price did not fully reflect the group’s value, and noted that by increasing the total dividend payout, the firm would “share the rewards with shareholders”, while showing its commitment to “creating sustainable shareholder value”.

He replied to a Straits Times query about the Australian regulator suing Optus over the data breach, saying that the $3.1 billion charge was not related to the lawsuit.

He added: “It’s too early to quantify how much provisions the group would need to set aside.”

Optus interim chief executive Michael Venter, who was at the briefing, said there had not been any further class-action suits, apart from the one by the regulator.

Bloomberg analysts recommended Singtel shares as a “buy”, an “overweight” or “outperform”, with the upward revision in the dividend payout among the reasons for their optimism.

DBS analyst Sachin Mittal told ST that Singtel’s results, particularly its underlying net profits, were in line with expectations.

He noted that the outlook for growth in core operating profit excluding associates stood out, explaining that this is “quite encouraging because the high single-digit to low-teens growth is more than double the 4 per cent Singtel achieved last year”.

Mr Sachin also feels that the VRD component of the dividend can be sustained.

“Singtel should be able to keep on going for another five years, assuming it pays out a middle-of-the-road four cents per share annually.”

Singtel shares closed up 0.4 per cent at $2.41 on May 23.