By Ayushman Ojha and Rishav Chatterjee
(Reuters) -Singapore Telecommunications' annual net profit more than halved on Thursday, hit by a previously announced S$3.1 billion ($2.30 billion) impairment charge, most of which relates to its Australian unit Optus.
Optus, Australia's No.2 telecom operator, has been one of Singtel's biggest investments overseas but it has recently drawn public ire over court cases amid a cyber attack in 2022, a massive network outage and falling carriage revenue on increased costs.
Southeast Asia's leading telecom firm posted an annual net profit of S$795 million, down 64% from S$2.23 billion a year ago.
The S$3.1 billion charge includes a S$2 billion provision on goodwill of Optus while S$470 million relates to Optus' enterprise fixed access network assets.
Singtel said it had been focussing on lifting core performance at Singapore operations and at Optus, forecasting earnings growth of high single digits to low double digits for the upcoming fiscal.
It will be paying a final dividend of 9.8 Singapore cents apiece, up from 5.3 cents a year earlier.
"We recognise that our market capitalisation is not fully reflecting the Group's value," said Yuen Kuan Moon, Group CEO, adding that the firm is lifting dividend payout ratio to between 70% and 90% of underlying net profit.
Since its strategic reset in 2021, the firm has been making further efforts to return more to shareholders and is currently undergoing a three-year cost out programme.
"Three-year cost-out programme will see indirect operating expenditure savings of up to S$600 million into fiscal 2026, driving stronger return on invested capital, in turn," RHB analysts said.
RHB sees potential for higher dividends being paid by Singtel on the top of the upgraded payout ratio.
Singtel said it has added a new "value realisation dividend" of 3-6 cents apiece per annum, on top of the core dividend, to increase returns over medium term.
($1 = 1.5103 Australian dollars)