Singtel share price stuck in quicksand

Lifetime MembershipSingtel share price is stuck in quicksand! One year ago, Singtel’s Optus had suffered a devastating cyber-attack in which 1.2 million of its customers personal data were leaked. Subsequently, another unit of Singtel, Dialog suffered cyberattack that compromised personal data of its employees and clients. The biggest irony is that in 2015, Singtel had splashed out US$810 million to acquire Trustwave which is supposedly a leading cybersecurity company. Yet Singtel stood powerless in the face of the brutal cyber-attacks.

To be fair to the current CEO, Kuan Moon Yuen, Trustwave is a flop acquired by the previous CEO, Chua Sock Koong. So it would not be reasonable to attribute the blame to the current CEO. Nonetheless, the cyber-attacks vindicated Trustwave is not only a white elephant, but also a toxic asset that had caused Singtel to bleed hundreds of millions annually. For FY20/21, the losses incurred by Trustwave amounted to $166 million while FY21/22 saw losses amounting to $145 million. For FY22/23, the losses from Trustwave stood at $133 million.

Singtel share price

Under the leadership of Chua Sock Koong, Singtel share price had plunged to a low of October 2020. The crisis of confidence in Singtel share price subsequently saw the retirement of the CEO. During her tenure, the Group Digital Life (GDL) unit had been racking up millions of losses every year since 2013. Over the years, the accumulated losses amounted to more than $1 billion. Trustwave, the cybersecurity business, added on to Singtel woes as it was one of the loss-making units too.

Given the perennial inability of Singtel’s management to turnaround the loss-making Trustwave, it is no surprising that the telco confirmed the sale of Trustwave on 2 October 2023. What raised eyebrows was that Trustwave was sold for a mere US$205 million.  Even if you factored in the US$80 million received from the sale of the payment card business in October 2021, the transaction represented a value destruction of US$525 million.

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The sale reflected how badly Singtel wanted to cut its losses and quickly move on from Trustwave. It is still early days but I believe the sale should have significant positive impact on Singtel share price in the long-term as the current CEO continues to dispose legacy assets and re-invent the telco businesses in new pivots. In the short run, expect plenty of headwinds for Singtel share price due to the bad vibes from the cyber-attacks.

Indeed, the Optus cyber-attack was an unnecessary distraction for Singtel as the telco faces a potential damaging Australian class suit. Year-to-date, Singtel share price has been in sluggish form, falling by about 7%.

On 28 August 2023, Singtel revealed that “Singtel Optus has been notified by the Office of the Australian Information Commissioner (“OAIC”) that the Commissioner has decided to accept a representative complaint made by the law firm, Johnson Winter Slattery, on behalf of an individual, and to commence an investigation into that complaint”.

Last year, several analysts had predicted that the Optus cybersecurity attack could cost Singtel about US$500 million, to which Singtel had rubbished as “speculative”. However, I do not think that the Australian government would let Singtel off the hook so easily. After all, the incident had caused a spate of scams in Australia, leading to the government to set up a new cybersecurity body and revamp its rules in which the Minister for Home Affairs and Cyber Security has blasted as “bloody useless”. Looking at the uproar among the victims and the tone from the government officials, I would be amazed that the total costs would amount to just $142 million (this was the provision made by Singtel before the notification of the lawsuit).BullionStarIn April 2023, I wrote in this blog that the reason as to why Singtel share price had not collapsed might be attributed to the fact that most investors should be holding out for the special dividend and final dividend. Indeed, following the ex-dividends, Singtel share price had plunged from $2.66 on 31 July 2023 to a low of $2.32 on 22 August 2023.

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in Singtel before. Whether Singtel share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

Singtel share price in strategic reset

Previously, I had predicted Singtel share price to recover to $3 mark in 2023 on the back of regional economic activities resumption from the pandemic. However, the highest point for Singtel share price in 2023 was $2.66. Given the persistent interest rate climate, my target for Singtel share price in 2024 is [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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