Following months of rumours about a potential sale or IPO of Optus Satellite Business, Singapore Telecommunications (SingTel) has now announced that it is committed to growing its Australian satellite unit.
In a stock exchange announcement today,…
Following months of rumours about a potential sale or IPO of Optus Satellite Business, Singapore Telecommunications (SingTel) has now announced that it is committed to growing its Australian satellite unit.
In a stock exchange announcement today, SingTel said it has completed its strategic review of Optus Satellite, initiated in March, and has decided to continue “growing and investing in the satellite business”.
No further details were disclosed and a SingTel spokesperson declined to elaborate on the situation. Optus Satellite was not immediately available for comment.
Late last week, it was reported that SingTel may decide to list the Australian business after final bids from Intelsat and a Measat consortium came below the A$2bn (US$1.8bn) reserve price.
SatelliteFinance understands that one of the bids came at about A$1.7bn (US$1.5bn).
Other companies had been rumoured to be interested in the asset but reportedly decided to walk away from a deal because of doubts over Optus Satellite’s earnings potential.
SingTel, South East Asia’s largest telco, was expected to decide this week whether to ask the bidders to improve their bids or move ahead with a listing, added the report.
Credit Suisse and Morgan Stanley, which were hired to review Optus Satellite’s options, allegedly put together staple financing package worth A$1.7bn (US$1.64bn) to help a deal go through.
Optus Satellite is controlled by Australia’s second-largest telco Optus, itself 100%-owned by SingTel. The satellite operator has five spacecraft and will soon operate Optus 10, scheduled for launch later this year.
It is currently providing interim services for Australia’s National Broadband Network Company (NBN Co), until the PPP tasked with providing universal broadband across the country launches its own Ka-band birds in 2015.
It remains unclear whether SingTel will seek to continue to operate Optus Satellite in its current form or spin off the company as Korean counterpart KT Corp did with its satellite business a few months ago.
An analyst familiar with the company’s strategy said that SingTel might indeed decide to spinoff Optus Satellite next year. An IPO is also a possibility but “not in present conditions”, he said, as the Australian dollar has dropped about 15% over the last four months.
“There are also few issues that need to be addressed first”, the analyst added, referring to declining revenues at Optus Satellite. SingTel has not reported separate earnings for the unit since acquiring its owner Optus in 2001.
In December, KT Corp announced that it would spin off its satellite assets into a new company called KT Sat. The unit would comprise the parent group’s lease business of satellite repeaters and devices, as well as its satellite services assets.
The main purpose of the spinoff was to foster growth through streamlining its management, KT said at the time. However, well-placed sources suggested it might the precursor to a sale of the satellite assets in 2013.
