Singtel share price faces disaster

What a calamity. Singtel share price looks set for a roller-coaster ride following a shocking 2^nd quarter loss amounting to $674 million. Yes, that’s right. It is net loss of $674 million, vis-à-vis $661 million of net profit recorded in 2QFY2019. The mind-blowing loss was attributed to Airtel’s exceptional item.

The latest result came on the back of an eighth consecutive quarter of declining profits/losses. Question now is: where would Singtel share price go from here?

I have been a big fan of Singtel for years but I could not recall the last time in which Singtel recorded such massive losses. To be honest I am totally speechless by the latest results. Given the latest development, there is a high possibility of Singtel share price reaching my entry price of $2.60 in the coming days.

According to Singtel’s media release, the telco’s subsidiary, Airtel was hit by an adverse Indian court ruling in relation to definition of “adjusted gross revenue” (AGR) for the Indian telco industry. Singtel share of the provision amounted to a whopping pre-tax $1.93 billion. The explosive loss would surely cause confidence in Singtel share price to be shaken.

Apart from the Airtel’s exception item, operating revenue also fell to $4.15 billion in 2QFY2020 from $4.2 billion in 2QFY2019. This is definitely one of the worst Singtel quarterly results, if not the worst, I have ever seen. In view of this, expect plenty of volatility for Singtel share price in the coming weeks.

Singtel share price faces destiny

Could Airtel really be the last straw that broke the camel’s back? I don’t know. This is because in 2018, I wrote an article, “Will Singtel share price be rocked by commercial disputes?” In that article, I shared that Singtel’s overseas adventure came at a price as the telco and its platoon of subsidiaries engaged in various commercial disputes with foreign government authorities.

Collectively, the commercial disputes involved liabilities amounting to billions. Of course, most of the subsidiaries are not 100% owned by Singtel, so the share of Singtel will be proportionate. Aside from Airtel, most of the contingent liabilities come from Thailand’s AIS.

For sure, it is not all gloom and doom for Singtel share price. Singapore Mobile segment [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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