Shares in Singapore Telecommunications Z74 (Singtel) slid 3.15% to $2.46 as at 9.50am on Apr 3.
It seems that negotiations for Singtel to divest a 20% stake in its Australian business, Optus, is off, according to The Australian. It is understood that talks between Singtel and Brookfield have ended for now, as they were unable to agree on terms, including the price.
In response, Singtel is advising shareholders and potential investors to "exercise caution in their review of any media reports relating to Optus in the absence of any definitive announcements when dealing with the shares of the company."
It reiterates that it regularly conducts strategic reviews of its portfolio including Optus to optimise the value of its assets and businesses and will explore all options to maximise shareholder value.
Singtel maintains that "there is no impending deal to divest Optus which remains a strategic and integral part of the Singtel Group."
See more: Singtel denies impending sale of Optus
See also: Optus and NCS bring better 1HFY2025 for Singtel; raises ebit guidance and interim dividend
To recap, there were talks on Mar 13 that Singtel was interested in offloading Optus. Shortly after the market chatter, Singtel released an announcement saying that there was no intention to divest Optus for A$16 billion ($14 billion).
“Optus remains an integral and strategic part of the Singtel and we are committed to Australia for the long term,” said the group in its announcement. Singtel said it was focused on improving network resilience and conducting a chief executive search since the departure of Optus CEO Kelly Bayer Rosmarin, but regularly conducted strategic reviews of its portfolio to optimise the value of its assets and shareholder value.
Although it was confirmed that Brookfield will not be making a full acquisition, it was believed that the Toronto-headquartered private equity giant had been looking to acquire a 20% interest in Optus for a sum of about A$3.2 billion to A$3.6 billion, with investment bank JPMorgan acting as Singtel’s advisor.
While the deal is off, the market has also speculated that an initial public offering or some sort of sell down of Optus by Singtel may not be out of the question in the near term.
This is especially as Singtel looks to unlock value from its assets and reports from Morgan Stanley in 2022 assessed that this was a possible IPO plan for Australia.
This was before it became subject to a cyberattack and was considered as a way to fund its capital spending requirements with the introduction of new technology.
Singtel may be keeping a stronghold on Optus, but rival TPG Telecom is looking for a partial buyer of its business. Perhaps this could be another target for Brookfield since the deal with Singtel is off.
