Singtel requests trading halt after 4.3% early morning plunge

Singtel has again denied media reports over a potential deal regarding Australian subsidiary Optus, after its shares fell as much as 4.3 per cent in early trading on April 3.

This came after Australian media reported its talks with Canadian private equity firm Brookfield to sell a 20 per cent stake in Optus for about A$3.2 billion (S$2.8 billion) to A$3.6 billion failed to result in a deal.

In a bourse filing on April 3, Singtel said there was “no impending deal to divest Optus”, and added that the Australian unit remains a “strategic and integral part of the Singtel group”.

As at 9.17am, the counter was down 11 cents or 4.3 per cent to $2.43 with 18.4 million shares changing hands. It recovered slightly, falling nine cents or 3.5 per cent to $2.45 with 22.7 million shares transacted.

Singtel was the top-traded counter as at 9.31 am, before the company requested a trading halt at 9.38 am.

The Australian newspaper broke the news earlier in the day that the negotiations to sell a 20 per cent stake in Optus – Australia’s second-largest mobile phone service provider – had fallen through, without saying where it got the information.

It reported that the parties were unable to agree on terms, including the price, and Brookfield has walked away from the potential deal. The private equity firm declined to comment.

Singtel requested to lift the trading halt at around 10.30am, reiterating that there was no upcoming deal to sell Optus, and that it had previously highlighted regular strategic reviews of its portfolio including Optus, to optimise the asset and business values. It will also explore all options to maximise shareholder value.

“Given the movement in Singtel’s share price this morning, the group would like to advise shareholders of Singtel and potential investors to exercise caution in their review of any media reports relating to Optus in the absence of any definitive announcements when dealing with the shares of the company,” it said.

The company had on March 13 denied any deal discussion, after the Australian Financial Review (AFR) reported that the telecommunications giant was in advanced discussions to sell its Australian unit to Brookfield. The Australian daily claimed that the deal was estimated to be worth some A$16 billion, and the discussions were “well advanced”.

“Optus remains an integral and strategic part of the Singtel group and we are committed to Australia for the long term,” said Singtel at the time.

“Our current focus has been on improving network resilience and conducting a CEO (chief executive officer) search (for Optus).”

Despite Singtel wanting to quash expectations of the transaction, market reacted to the potential deal with brewing confidence. Analysts, at the same time, noted that the company’s shares remain undervalued despite the earlier climb, highlighting a potentially robust boost to the stock price by a stronger recovery from Optus’ performance.

On Jan 30, 2024, Singtel denied exploring transactions involving the enterprise business of Optus, in response to a report by AFR. It highlighted its stake in Optus as “strategic” while reiterating its belief in the long-term outlook of the Australian telco that it has been investing in since 2001.

The company reported in February a 12.5 per cent decline in third-quarter net profit to $465 million. This was attributed to a higher net exceptional loss that came mainly from Optus and Bharti Airtel, including a provision for costs related to a November outage due to Optus’ network failure, which affected about 10 million Australians and 400,000 businesses.

Based on Singtel’s latest financials, Optus’ operating revenue for the quarter ended Dec 31, 2023, fell 5.4 per cent year on year to $1.8 billion – while earnings before interest, taxes, depreciation and amortisation declined 1.8 per cent on the year to $465 million. Straits Times