SingTel to float post offices for DS628M
Singapore Telecommunications will float its Singaporean postal operations as early as next month, with plans to raise $S684 million ($627.5 million).
This is the first big news from the owner of Telstra rival, Optus, since it announced a review of its Yellow Pages and Singapore Post business last August.
Telstra let the cat out of the bag last month when it confirmed that its directory group, Sensis, was in negotiations to buy SingTel's Yellow Pages division.
SingTel said it planned to sell 60 per cent of the postal business, with 1.1.4 billion shares on offer at a price that could reach S60c each. Final pricing will not be set until May 7, with shares expected to start trading on May 14, the company said.
The deal fits in with SingTel's plan to focus on its core telephony business and reduce its $S10 billion of debt.
"The divestment of SingPost makes sense as it allows SingTel to meet its promise to sell non-core assets and cut debt," said Chris Wong of Aberdeen Asset Management in Singapore.
Telstra offered no comment about the progress of negotiations with SingTel when it announced its third-quarter results last week, but the Australian telecom could be looking to repeat the magic of its own directory business, Sensis.
The division had been a rare "unqualified" success story for Telstra, admitted the company's chief executive, Ziggy Switkowski.
Revenues at Sensis increased 7.6 per cent for the year to March 31, 2003, with revenues of $944 million, compared with underlying revenue growth of 2.6 per cent for Telstra's overall business.
Some analysts have estimated that the price tag for SingTel's directory's business would be 6 to 7 times earnings, which they said would be in line with current market pricing.
This equates with a minimum valuation of $S128 million for the business, compared with a reported range of $S200 million to $S400 million.
SingTel's proposed float of the postal business places a value of $S1.1 billion on the division, around 10 to 11 times earnings for the 2002 year.
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SingTel to dispose of postal division
By Sumathi Bala in Singapore
Financial Times; Apr 22, 2003
South-east Asia's largest telecommunications operator, Singapore Telecommunications, aims to raise up to S$684m (US$387m) through an initial public offering of 1.14bn shares in its wholly-owned postal arm, Singapore Post.
The IPO, priced at a maximum of S$0.60 cents per share, will be launched today and closes on May 6. Singtel will set aside shares for international placement with investors.
The offer price will be determined after a book-building exercise on May 7 by the joint global co-ordinators DBS Bank and UBS Warburg.
Lee Hsien Yang, Singtel president and chief executive, said the sale was part of its ongoing strategy of divesting non-core businesses to focus on its telecoms business. Singtel will retain a 40 per cent stake in SingPost after the IPO.
SingPost said its directors planned to recommend a net annual dividend of S$80m for the year ending last month, and the same amount for the current year. This gives a yield of about 7 per cent per share. "We will return excess cash to shareholders. We have no major capital expenditure in the near term," said Lim Ho Kee, SingPost chairman.
Global roadshows, initially scheduled to take place this week, had to be cancelled due to the overseas travel restrictions resulting from the Sars outbreak. Pre-marketing for the IPO, which ended last week, was done over the phone or through tele-conferences.
The long-awaited IPO launch follows SingPost's recent S$300m bond issue, which was two times oversubscribed.
For the nine months to December 2002, SingPost said its net profit rose to S$82.5m from S$81.9m a year earlier, while operating revenue slipped to S$281.9m from S$286.7m previously. SingPost is valued at about US$1bn to US$1.2bn.
