Impairment takes Singtel's FY2024 earnings down 64% y-o-y to $795 mil; boosts full year dividend to 15 cents

Singtel is increasing dividend for the third year

Singapore Telecommunications has reported a net loss of $1.34 billion for its 2HFY2024, as it took another hefty impairment on the value of its Australia subsidiary Optus and enterprise tech services unit NCS.

In contrast, the telco recorded earnings of $2.1 billion in the year-earlier ended March 2023. This brings full-year earnings to $795 million, down 64% y-o-y.

If the exceptional items are excluded, Singtel's underlying net profit for the year was up 10% y-o-y to $2.26 billion.

Revenue for the full year was down 3.4% y-o-y to $14.1 billion.

Despite the lower bottom line, the company plans to increase its total FY2024 payout to 15 cents, an increase of 52% over what was paid for FY2023. This will be the third increase in dividends.

On top of an interim dividend of 5.2 cents already paid, Singtel plans to pay a final dividend of 6 cents per share, plus, a so-called value realisation dividend (VRD) of 3.8 cents. This VRD, to be maintained at between 3 and 6 cents a year, is drawn from the excess cash from Singtel's asset recycling efforts, minus off capex required to invest for new growth.

The so-called core dividend will continue to come from Singtel's operations, and to be paid at a range of 70-90% of underlying earnings.

Group CEO Yuan Kuan Moon says Singtel's market capitalisation does not fully reflect its value.

"Through lifting our core performance and returning excess capital from our capital recycling programme, we aim to share the rewards with shareholders through increasing the total dividend payout."

Through its various asset recycling since 2021, including the partial sale of stakes in its regional associates such as Bharti Airtel, Singtel has raised $8 billion.

It has a further $6 billion monetisation target for the coming three years.

In the face of higher rates, Singtel has been actively paying down borrowings too, with net debt 7% lower to $7.78 billion. Cash, meanwhile, has reached $4.63 billion.

In FY2024, Singtel's various regional associates contributed $2.33 billion in pre-tax profit, up 3%, thanks to cost control and better industry dynamics.

Singtel's new growth engine Digital InfraCo generated 8% higher revenue, driven by its Nxera data centre business, which was up 10%.

Singtel expects tough economic conditions to persist in this financial year.

It remains focused on improving its domestic business, and that of its Australia unit Optus, while driving new growth.

“As our strategic reset draws to a close, we are now primed for the next phase of growth," says Yuen.

Singtel shares closed May 21 at $2.40, down 0.41% for the day and down 2.04% year to date.

 

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