SINGAPORE (May 15): Singtel’s current level of dividend is sustainable, say analysts, given the telco’s projected FY2020 cash flow is forecast to be at $3.3 billion.
In its FY19 results announcement on Wednesday morning, Singtel says it will pay a final dividend of 10.7 cents, bringing full-year dividend to 17.5 cents.
See: SingTel ends FY19 with 44% lower earnings of $3.1 bil; proposes 10.7 cents final dividend
This represents 101% of the underlying net profit and 88% of free cash flow of $3.65 billion for FY19 with biggest contribution coming from associates’ dividends at $1.4 billion.
In the past year, most of Singtel’s regional associates pre-tax earnings fell 37% to $1.5 billion due to tough competition and market disruption.
But Singtel is confident of its associates’ prospects.
“We remain optimistic of regional associates as a whole and we hope the worst is over last year,” says Arthur Lang, Singtel’s CEO of international business.
In India, Lang says Bharti Airtel’s mega rights and bonds issue to raise up to 320 billion rupees ($6.2 billion), if successful, would help the latter survive a three-corner fight for market share in the sub-continent.
The Edge Singapore previously reported Airtel is still losing subscribers and 4G market share to its competitor Jio despite the latter not having to lower prices.
Singtel controls a 39.5% stake in Airtel.
Lang adds that the Indonesian market is stabilising as countrywide SIM card registration has been completed.
In Thailand, fixed-speed unlimited data plans are off the market, which will bring some stability to existing players.
Analysts say that significant recovery for Singtel’s associates would likely come in two years from now.
And although Singtel keeps its fixed dividend policy or change it to earnings payout ratio is anyone’s guess, the telco has historically never lowered their regular dividend.
As at 1.27pm, shares in Singtel are down 3 cents at $3.12.
