Singtel's sagging stock isn't an opportunity for investors but a sign of increasing risks

Singtel's net debt is nearly twice what it was 10 years ago, while its free cash flow has barely budged

Ben Paul

Published Sun, Aug 23, 2020 · 09:50 PM

SINGAPORE Telecommunications (Singtel) could be the cheapest blue chip stock in the local market that nobody wants to own. And, it may remain that way until the company fortifies its balance sheet and makes fundamental changes to the way it is run.

This past week, Singtel released a "business update" for the quarter ended June 30 that was worse than the market expected. Operating revenue declined 13.9 per cent year-on-year to just over S$3.54 billion, while earnings before interest, tax, depreciation and amortisation (Ebitda) fell 24.2 per cent year-on-year to S$897 million.

Singtel attributed the weakness to lower equipment sales, reduced roaming and pre-paid mobile revenues in Singapore and Australia as well as delays in some information and communications technology projects under its enterprise division.