I am writing this in a response to an article from DBS which caught everyone's attention regarding the likelihood that Singtel may cut its dividend for the first time in 20 years from FY2021 onwards.
If you have not read the article, you can read it
In the article, the analyst drew from the thesis that Singtel might have to cut its "unsustainable" dividend payout to 13 ~ 15 cents/share mainly due to the increasing capex requirement from the 5G spectrum roll-out, the declining mobile users and deteriorating regional associates performances, which is mainly attributed to Bharti and Telkomsel (slowing growth).
While the general thesis may sound reasonable at glance, I think the dividend cut from the current 17.5 to 13 ~ 15 cents from FY2021 onwards may be overly bearish.
6 reasons why.
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