Singtel - OCBC Investment 2016-04-06: Optus restructuring business, eyes job cuts

Singtel - OCBC Investment 2016-04-06: Optus restructuring business, eyes job cuts SINGTEL Singapore Telecommunications Z74.SI 

Singtel: Optus restructuring business, eyes job cuts 

  • Optus, Singtel’s Australian unit, is looking to revamp its consumer and enterprise divisions, and to make an unspecified number of job cuts, which the Sydney Morning Herald reported that it could be as many as 480 positions; however, Optus had earlier denied a report in The Australian that it could cut as many as 1000 jobs under a three-year cost-cutting program. 
  • According to Optus, these changes, which are crucial for the company’s “transformation strategy”, will see the creation of a new holistic customer service model, as well as see Optus Business, and the Wholesale and Satellite divisions rationalize roles and optimize resources in response to the increasingly competitive trading environment. 
  • So far, the company has not disclosed the savings or the cost of the restructuring; but we note that Singtel incurred an exceptional loss of S$67m in 3QFY13, of which S$38m were provision for Optus’ ex-gratia payment. 
  • We will continue to monitor the situation but do not expect the one-off restructuring cost to have any impact on our estimates. 
  • Maintain BUY with S$3.96 fair value.



Carey Wong OCBC Securities | http://www.ocbcresearch.com/ 2016-04-06
OCBC Securities SGX Stock Analyst Report BUY Maintain BUY 3.96 Same 3.96


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