Singapore Telecommunications (Singtel) is said to be in advanced discussions to fully divest its Australian arm Optus, to Toronto-headquartered private equity giant Brookfield for A$16 billion ($14 billion), according to Australian Financial Review (AFR). However, Singtel issued an announcement on March 13 to say that there is "no impending deal to offload Optus for the said sum".
"Optus remains an integral and strategic part of the Singtel and we are committed to Australia for the long term. Our current focus has been on improving network resilience and conducting a CEO search," says Singtel in its announcement, adding that the group regularly conducts strategic reviews of its portfolio to optimise the value of its assets and businesses and will explore all options to maximise shareholder value.
Optus is Australia’s second-largest telecommunications group and has been owned by Singtel since 2001. Singtel previously acquired Optus for $11 billion.
Should a deal be signed, it is expected to value Optus at between A$16 billion and A$18 billion. Brookfield was said to bring in a consortium partner, with sources suggesting Canada’s CPP Investment Board as a logical candidate.
In the past few years, Optus has seen its earnings going on a downtrend, which in return affects Singtel’s numbers. It has also been under the spotlight for a network blackout that happened in 2023 and a major data hack that occured in 2022.
AFR had previously in January reported that Singtel was in talks to divest Optus. However, Singtel refuted the report then. It released a statement saying: "Singtel views its stake in Singtel Optus as strategic and believes in the long-term outlook of the Optus business."
See also: Singtel marks out regional data centre ambition while dishing out better dividends
In 2021, Singtel announced a strategic reset, where it would illuminate value through capital recycling. Most recently, the group had partially divested its a stake in its associate Bharti Airtel. It sold 0.8% of its direct stake for $0.95 billion.
While a significant progress has been made from the group's strategic reset, there is still much to do, shared Singtel's group CFO Arthur Lang previously during the group's 1HFY2024 ended September 2023 media briefing.
In the second phase of unlocking value from its assets, a further $4 billion worth of assets is expected to be monetised over the next two to three years. Singtel has also implemented a programme to drive a 15% reduction in core costs over the next three years, which will save $600 million in costs over the next two-and-a-half years in Singapore and Australia.
As at 3.50pm, Singtel has called for a trading halt, with its share price jumping some 3.77% for the day to $2.48.
