Optus Satellite may be spun off
SingTel and its Australian subsidiary, Optus, are restructuring in a flat market for mobile subscriber growth. The strategic review follows Optus' recent announcement of a business transformation program. The company said it wanted to conduct a review to "optimise value for shareholders".
Analysts and bankers say the strategic review could mean an outright sale or a public listing of a unit that offers free-to-air and pay TV, mobile telephony and broadband services to 2 million Australian customers.
Optus Satellite had revenue of $319 million for the financial year to March 31, 2012.
Sachin Gupta, an analyst at Nomura Securities, valued Optus' satellite asset at about $1.5 billion to $2 billion and he estimated the margin for the business could be 80 per cent.
"It's not the first time SingTel has reviewed this, we understand. Given its extensive portfolio, it constantly reviews its assets and networks, looking for ways to monetise," Mr Gupta said. "If the the buyer is willing to pay seven or eight times the earnings before interest tax, depreciation and amortisation multiple for these assets, then why not?"
Optus is the only Australian-based telco to own and operate a fleet of satellites. It is due to launch another new satellite - Optus 10 - this year.
It is believed that Optus has a fleet of relatively new satellites, most of them having been launched in the second half of 2010. Its oldest satellite, B1, was launched in 1994. Satellites last 12 to 15 years.
Optus Satellite customers include broadcasters and government agencies such as the ABC, Foxtel, SBS, Southern Cross, WIN, NBN Co, and the NSW Department of Education. Optus also provides satellite services to the Australian Defence Force.
Australia is the largest business unit in SingTel group and accounts for more than half its revenue.
Frequently Asked Questions about this Article…
SingTel has hired financial advisers to review its Australian satellite business, Optus Satellite, to "optimise value for shareholders." The strategic review—coming as Optus undergoes a business transformation and faces a flat mobile subscriber market—could lead to a sale or public listing, which matters to investors because it could change how the asset is valued and monetised within the SingTel group.
Yes. Analysts and bankers quoted in the article say the strategic review could result in an outright sale or a public listing of Optus Satellite. Market commentary suggests buyers might pay strong multiples for the business, making either outcome feasible.
Optus Satellite reported revenue of $319 million for the financial year to March 31, 2012. Nomura Securities analyst Sachin Gupta estimated the satellite asset could be worth roughly $1.5 billion to $2 billion and suggested the business margin might be as high as about 80%.
Optus Satellite's customers include broadcasters and government agencies such as the ABC, Foxtel, SBS, Southern Cross, WIN, NBN Co, the NSW Department of Education, and it also provides satellite services to the Australian Defence Force.
Optus is the only Australian-based telco that owns and operates a fleet of satellites. Most of its fleet is relatively new, with many satellites launched in the second half of 2010; the oldest, B1, was launched in 1994. Satellites typically last 12 to 15 years, and the company was due to launch another new satellite, Optus 10, in the year referenced by the article.
A sale or IPO could unlock value by monetising an asset within SingTel's portfolio. Because Australia is the largest business unit in the SingTel group and accounts for more than half its revenue, changes to Optus Satellite's structure or ownership could have material implications for how the group reports and realises value from its Australian operations.
According to the article, SingTel and its Australian subsidiary Optus are restructuring amid a flat market for mobile subscriber growth and following Optus' announcement of a business transformation program. The company regularly reviews its extensive portfolio and networks to find ways to monetise assets and optimise shareholder value.
Investors should watch for official announcements about the strategic review's outcome (for example, selection of advisers, indications of a sale process, or plans for a public listing), any details on valuation or transaction terms, and operational news such as the Optus 10 launch—because these developments could affect Optus Satellite's revenue profile and SingTel's broader financial picture.
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