Hot stock: Singtel shares fall nearly 2% on heavy trading as investors weigh Optus lawsuit

SHARES of telco giant Singtel saw heavy trading on Friday (Nov 1) after court proceedings against its subsidiary Optus Mobile in Australia commenced on Oct 31.

The counter hit a low of S$2.90 at 9 am after the market opened, falling 0.3 per cent or S$0.01 amid heavy trading. This marked the lowest price recorded since August 2024.

As at 1.24 pm, Singtel was the most actively traded counter by both value and volume. The counter recovered slightly to trade at S$3.07, down 1.9 per cent or S$0.06, with 45.7 million shares having changed hands.

Two married deals were recorded in early trade, according to ShareInvestor data.

The heavy trading of Singtel shares comes after the Australian Competition and Consumer Commission (ACCC) filed court proceedings against Optus Mobile over allegations of inappropriate sales conduct.

The commission is pursuing penalties, consumer redress, a compliance programme and costs from Optus. Singtel said in a Thursday bourse announcement that while it could not “determine the quantum of penalties, if any”, it has taken disciplinary action against staff who engaged in misconduct.

The case involves claims of inappropriate sales practices, including the use of debt collectors to pursue customers despite knowing their contracts were fraudulent.

The commission’s press statement said that Optus allegedly sold mobile phones and plans to vulnerable customers, including those with cognitive impairments and learning disabilities.

The court proceedings against Optus may lead to penalties even though Singtel’s leverage ratio of less than two times provides a buffer, said Bloomberg Intelligence credit analyst Sharon Chen.

She added that alleged improper sales conduct could hurt Optus’ reputation and might result in subscriber losses. 

Nevertheless, the impact may “not be as severe as a data breach and network outage in previous years, with 429 consumers affected”. 

In a similar case, Australian telco Telstra was fined A$50 million (S$43.5 million) in 2021 for comparable charges affecting 108 users.

The case could, however, damage parent Singtel’s ESG profile as it “reignites reputation concerns”, noted Bloomberg Intelligence analysts Chris Muckensturm and Marvin Lo. Concurrently, a need to revamp its commission structure and potential penalties may hurt margins. 

“Disciplinary actions won’t be enough to avert an impact on its earnings recovery, with changes to remuneration likely required,” they said.

Singtel will be announcing its financial results for the half year ended Sep 30, 2024, on Nov 13, it said in a statement.