'Smaller impact' on Singtel's earnings after subsidiary Optus hit by cyberattack
The analyst sees earnings impact to reach 4% in 2023.
Singtel-owned Optus was hit by a cyberattack that possibly leaked customer information, including driver's licence or passport numbers.
But how will this cyber attack incident affect the earnings of Singtel? Apparently, not a lot, UOBKayHian due to existing policies.
According to the broker, Optus said affected customers whose passports details were stolen need not have their passports replaced.
Despite valid passports being safe to use for international travel, passports up to three years past expiry have been blocked by the federal government for online credit checks.
If customers seek to replace their passports, Optus will shoulder the costs under specific circumstances, "which applies to customers with valid/current passports and not expired passports."
With this, UOBKayHian said it could be positive for Singtel as the broker previously expected 70% of the 2.1 million customers affected to require a change in passports, which account for around 70% of the total expected reimbursement costs.
This will lead to passport replacement costs dropping, said UOBKayHian.
"With this new development, we expect total passport replacement costs to drop sharply by A$260m-310m to A$22m-34m for FY23, estimating that 100,000-120,000 (1.4m previously) customers would change their passports," read the brokerage report.
It sees earnings impacts to 4% in 2023 and 3% in 2024, which is lower than their estimates of 11% and 3%, respectively.
Despite the data breach, UOB Kay Hian maintained its "buy" call for Singtel as the downside risks of the cyberattack have already been priced.
"With a decent yield of 4.7% for FY23, Singtel remains an attractive play against elevated market volatility, underpinned by improving near- to medium-term fundamentals," it added.