Singapore Telecommunications (Singtel) announced on May 14, that it expects to include net exceptional losses of $839 million and $1.21 billion for the 2HFY2021 and FY2021 ended March respectively.

While the figures are subject to finalisation, this includes the non-cash impairment charges of US$438 million ($589 million) and US$250 million against its investments in Amobee and Trustwave respectively for the 2HFY2021.

The exceptional charges booked comes as both businesses’ ability to scale have been affected by the Covid-19 pandemic as well as the fast-moving digital marketing and cyber security industries.

“As a result of this, both companies will require a longer cycle to achieve their business plans,” says Singtel in a statement on May 14.

Singtel has thus embarked on a strategic review of both businesses to ensure that the assets are “positioned for growth”.

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“We need to focus our strategic agenda. Both businesses have come under increasing pressure in the last two years due to industry and operational challenges. The Covid-19 pandemic has also impacted performance, with enterprises and advertisers tightening their belts as economies went into lockdown,” says group CEO Yuen Kuan Moon.

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“Amobee saw an almost year-long contraction in advertising spend by some of the largest agencies and advertisers in North America. Against this backdrop, there is a clear need to review these major investments to identify ways to increase the probability of successful execution.

“This review could involve the restructuring of product or business segments, a full or partial divestment or business combinations with other industry players. We are open to all types of strategic partnerships and deals including inviting investors who have complementary capabilities and can enhance the value of the businesses. Cyber security remains core to our group strategy and ICT offerings, and the review will be geared to ensure we capture the growth in Asia Pacific,” Yuen adds.

In addition, Optus, Singtel’s wholly-owned subsidiary, will make non-cash impairments and write-downs of A$197 million ($204 million) in the 2HFY2021, mainly for its legacy fixed access networks.

This comes as customer migration to the National Broadband Network (NBN) in Australia has been largely completed.

Optus says it is undertaking a programme to review its staff compensation and will record an exceptional charge of A$98 million in the 2HFY2021.

In its strategic review, Singtel adds that its learnings from its digital investments include co-investing with its partners and being willing to take “significant minority positions”.

The group also hopes to “pivot and scale rapidly” in response to industry shifts, as well as focus on digital opportunities in Asia while leveraging their customer base.

The strategy will be announced alongside Singtel’s 2HFY2021 and FY2021 results announcement before the start of trading on May 27.

Shares in Singtel closed 1 cent lower or 0.4% down at $2.41 on May 12.