Singapore Telecommunications Limited (Singtel) experienced a turbulent day on Wednesday as its shares plummeted following a widespread network outage that severely impacted its Australian subsidiary, Optus. The outage, which affected around 10 million Australian customers, sent the stock down by as much as 5.2 percent, reaching a low of $2.35 at 10 a.m. This abrupt decline marked a 13-cent drop from Tuesday’s closing price of $2.48. While the shares did recover somewhat to close at $2.36, they still saw a significant 4.84 percent decrease by the end of the day. This stock market turmoil came amidst a whirlwind of trading activity, with over 62 million shares exchanged, making Singtel the second most heavily traded stock of the day.
The root cause of this unexpected decline in share value was the extensive network outage experienced by Optus, which is the second-largest telecommunications provider in Australia, serving approximately 40 percent of the country’s population. The disruption, which was first reported at around 4 a.m. Australian time, left millions of customers without vital mobile and broadband services. The incident followed a cyber attack that hit Optus in 2022, exposing sensitive customer information, including home addresses and passport numbers. These consecutive blows to the company’s reputation and operations shook investor confidence in Singtel.
In response to media inquiries, a spokesperson for Singtel acknowledged the gravity of the situation, stating, “This is a very unfortunate incident that we take very seriously.” They further recognized the profound impact of network outages on customers, describing them as “extremely disruptive.” Singtel’s response to the outage was swift, as Optus engineers worked tirelessly to restore services progressively. The company is also conducting an investigation into the technical network fault to identify the root cause and prevent any future occurrences. Singtel emphasized its commitment to network resilience and investment, highlighting the importance of connectivity to their customers.
Investors were clearly rattled by the recent events, leading to a significant drop in Singtel’s stock price. This comes at a time when the company is preparing to release its financial results for the half-year ending on September 30. The telecommunications giant had already faced challenges earlier in the year when it reported a 23.1 percent drop in first-quarter net profit, primarily attributed to its associate company Bharti Airtel. Bharti Airtel recorded foreign exchange losses due to the devaluation of the Nigerian naira against the US dollar.
The combination of the network outage, the aftermath of the 2022 cyber attack, and prior financial setbacks have created a challenging environment for Singtel. The company’s ability to recover and rebuild trust with both customers and investors will be crucial as it navigates through these turbulent times. The forthcoming financial results announcement will shed light on how Singtel has fared in the wake of these recent challenges and what strategies it plans to implement to regain its footing in the telecommunications industry.
(Source: Sue-Ann Tan | The Straits Times | Sherry Qin | Morningstar)
