Singtel (SGX: Z74) shares are down 5% today. The cause of the fall in Z74 shares is that there was a telecoms outage in the company’s Australian network. At which point there’s a certain decision to be made. Do we think that this was just one of those things? In which case a 5% price change would seem excessive to us. Complex systems do, after all, fail sometimes. Nothing at all is a 100% uptime, everything has an acceptable - that is, a design - failure rate. So, maybe that’s it?
Or, perhaps, the failure is something to do with Singtel’s management of the system. For it’s entirely possible - also entirely possible - that a lack of maintenance, or bad planning at the start, could lead to a failure rate greater than that judged to be acceptable one. If that’s true then that casts doubt on all of Singtel’s operations - if management have allowed slipshod work in one part of the network then why would we assume that it doesn’t exist elsewhere?
So, it’s the cause of this that matters: “SINGAPORE – Singtel has restored its 5G services, almost four hours after hundreds of users reported problems with the local telco’s mobile services on Tuesday morning. In an update on Facebook at about 1.30pm, the telco said: “Intermittent access to mobile data services for affected 5G customers has been fully restored. “We apologise for the inconvenience caused, and thank you for your patience.””
Which is unfortunate, for that’s in Singapore.
Singtel share price from Google Finance
The bigger issue is in Australia: “Australia’s Optus restores phone, internet, banking services after outage affects 10 million nationwide The mystery glitch crashed electronic payment systems, disrupted phone lines used by ambulances and police, and affected more than 10 million Australians. Optus, a subsidiary of Singapore telecommunications company Singtel, said it was unable to pinpoint what had caused the fault” “We don’t know” is not a happy response. It was this that caused the share price fall: “Singapore Telecommunications' shares fell sharply early Wednesday after its Australian unit Optus said it has been hit by a large-scale outage.”
There is obviously a possible comparison with DBS and their recent outages. But we do think that this is the core of the valuation issue. One outage, in one place - say Australia - isn’t a market valuation changing event, that’s just one of those things. But two? That starts to bring engineering management into question, doesn’t it. This 5% might not be the end of it that is.