Singtel’s dividend cash outflows expected to ‘more than halve’ in 2021

Singtel recently saw its credit outlook drop from ‘stable’ to ‘negative’ due to its recovery being viewed as more uncertain than regional peers.

  • Singtel continues to be one of the most actively traded stocks on the Singapore Exchange, two weeks after its digital full bank licence win
  • Last week, the telco saw its credit outlook get reduced from ‘stable’ to ‘negative’ by S&P Global Ratings
  • The agency said that Singtel’s performance was ‘hit harder’ than expected
  • It forecasts that dividend cash outflows will more than halve to about S$1.3 billion in FY2021 from S$2.86 billion in FY2020

Singtel share price: What’s the latest?

Singtel was one of the top three most active counters on the Singapore Exchange on Thursday (17 December 2020), experiencing a trade volume of over 12 million by mid-day.

As at 14:00 SGT, Singtel shares are trading at S$2.35 apiece.

Singtel’s credit rating fall to ‘negative’?

Last Tuesday (08 December), US credit rating agency S&P Global Ratings lowered its credit outlook for the group from ‘stable’ to ‘negative’, so as to ‘reflect the company’s deteriorating leverage’.

The agency said in a press release that the group has been ‘hit harder than we expected by the Covid-19 pandemic and weakened economic conditions’. It added that Singtel’s performance was hit with a larger decline than its regional peers.

That’s because Singapore and Australia (its two main markets) are more mature markets with limited growth potential. Structural decline in its business, including strong competition within Singapore and Australia, also impacted performance.

Moreover, earnings in Singtel’s Australia subsidiary Optus have also been impacted by the implementation of the National Broadband Network in Australia.

S&P Global projects that Singtel’s adjusted EBITDA will decline by 11%-13% in fiscal 2021 and remain below pre-Covid levels in fiscal 2022, with government support schemes expected to ‘taper off’ in the second half of FY2021.

As such, they noted that Singtel’s recovery will be more uncertain than other telcos, stating that ‘a significant improvement in Singtel’s performance depends, to a large extent, on the return of some normalcy in operating conditions’.

What’s the impact on dividends?

In terms of dividend payouts, S&P Global wrote that ‘continuing competition and a need to maintain high capital outlay to deploy advanced networks could constrain the ability of Singtel’s regional associates to pay more dividends to the parent’.

As such, they anticipate that Singtel’s cash dividends from associates will be S$1.4 billion annually in fiscal 2021 and 2022, largely flat from fiscal 2020.

The group also announced a reduction in its final dividend shareholders in May 2020, and again in November 2020 with interim payouts - applying a scrip dividend scheme to both rounds.

Consequently, the agency forecasts that cash outflows from dividends will more than halve to about S$1.3 billion in fiscal 2021 from S$2.86 billion in fiscal 2020.

In response, Singtel said: ‘Singtel and Optus' credit ratings are strong and we remain financially disciplined and committed to maintaining our investment-grade credit ratings.’

How to trade Singtel with IG

Are you feeling bullish or bearish on Singtel’s stocks?

Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <Singapore Telecommunications> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.