Hot stock: Singtel shares fall nearly 2% in heavy trading as investors weigh Optus lawsuit

SHARES of telco giant Singtel were heavily traded on Friday (Nov 1) after court proceedings against its subsidiary Optus Mobile in Australia commenced the day before.

The counter hit a low of S$2.90 at 9 am after the market opened amid heavy trading and this marked the lowest price recorded since August 2024.

Two married deals were recorded in early trade, ShareInvestor data indicated.

At 9.03 am, 621,000 shares changed hands at S$2.985, while 1.2 million shares changed hands at S$3.095 as at 10.35 am.

By 1.24 pm, Singtel was the most actively traded counter in terms of both volume and value. The counter recovered slightly to trade at S$3.07, down 1.9 per cent or S$0.06, with 45.7 million shares having changed hands.

Later at 1.38 pm, another married deal took place, with 673,900 shares having changed hands at S$3.085.

Another two were completed at 5.07 pm, with 770,500 shares changing hands at S$3.074.

The heavy trading of Singtel shares comes after the Australian Competition and Consumer Commission (ACCC) filed court proceedings against Optus Mobile over allegations of inappropriate sales conduct.

The commission is pursuing penalties, consumer redress, a compliance programme and costs from Optus. Singtel said in a Thursday bourse announcement that while it could not “determine the quantum of penalties, if any”, it has taken disciplinary action against staff who engaged in misconduct.

Some of its employees are suspected of inappropriate sales practices, including the use of debt collectors to pursue customers despite knowing their contracts were fraudulent. The commission’s press statement said Optus allegedly sold mobile phones and plans to vulnerable customers, including those with cognitive impairments and learning disabilities. All in, 429 customers were affected.

The court proceedings against it may lead to penalties, even though Singtel’s leverage ratio of less than two times provides a buffer, said Bloomberg Intelligence credit analyst Sharon Chen.

She added that alleged improper sales conduct could hurt Optus’ reputation and might result in subscriber losses. Nevertheless, she added that the impact of improper sales tactics may not be as severe as the data breach and network outage of recent years.

In a similar case, Australian telco Telstra was fined A$50 million (S$43.5 million) in 2021 for comparable charges affecting 108 users.

The case could, however, damage parent Singtel’s ESG profile as it “reignites reputation concerns”, noted Bloomberg Intelligence analysts Chris Muckensturm and Marvin Lo. Concurrently, a need to revamp its commission structure and potential penalties may hurt margins. 

“Disciplinary actions won’t be enough to avert an impact on its earnings recovery, with changes to remuneration likely required,” they said.

Singtel will unveil its financial results for the half year ended Sep 30, 2024, on Nov 13, it said in a statement.