SingTel Scrubs Optus Satellite Sale, Mulls IPO as Alternative
Singapore, August 14, 2013 — Singapore Telecommunications Ltd. has decided not to sell its Optus Satellite division after reportedly failing to get an offer more than US$ 1.8 billion that the company was targeting.
In a statement, SingTel said that after a strategic review of its Optus Satellite business in March this year, the company is now committed to growing and investing in the satellite business.
Optus is the only telecommunication company to own and operate a fleet of satellites in Australia and has been providing premium satellite services across Australia and New Zealand for over 25 years.
Optus Satellite delivers free-to-air and pay TV, mobile telephony and broadband services to over 2 million Australian households and multi-national companies. Optus operates a fleet of five satellites, with another satellite, Optus 10, scheduled for launch in 2014.
Although there was considerable interest from players to buy Optus Satellite, reports say, Singtel received offers below its $1.8 billion it was targeting. According to reports, top offer for Optus reached only $1.7 billion, prompting the company to consider an initial public offering of its Australian satellite unit.
Among the suitors were Intelsat SA, Measat Global Bhd, and private-equity firms KKR & Co. (KKR) and Bain Capital LLC. But they reportedly exited the bidding process on concerns the price tag isn’t justified by Optus Satellite’s earnings potential.
But some analysts say Optus Satellite generates around $230 million in annual EBITDA, which would have fetched a possible sale price of around $2 billion.
SingTel, as Southeast Asia’s biggest phone company is known, bought the business as part of the $9.69 billion takeover of Optus, Australia’s second-largest phone company, in 2001.
Yesterday, SingTel announced its net profit rose 7 percent to S$1.01 billion (US$796.42 million) from a year ago, lifted by stronger EBITDA and higher contributions from the regional mobile associates.
For the three months ended 30 June 2013, SingTel Group said operating revenue fell 5 percent to S$4.29 billion (US$3.38 billion), reflecting a more cautious business environment and a slowdown in the Australian mobile market. The weaker Australian Dollar also weighed on the Group’s revenue. On a constant currency basis, operating revenue declined 3 percent.
EBITDA rose 4 percent to S$1.30 billion (US$1.02 billion), as expenses fell 9 percent. Selling and administrative expenses, the largest expense category, declined 11 percent.
Underlying net profit, excluding exceptional items, rose 6 percent to S$897 million (US$707.28 million) and would have increased 8 percent excluding the impact of foreign currency movements, SingTel said.
In March, SingTel said it was considering a number of options for Optus Satellite. It hasn’t reported separate earnings figures for the unit since the 2001 takeover of Optus.
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