Low volumes, demand prompt Singtel to seek exit from Aussie bourse

SINGAPORE — After more than 13 years on the Australian Securities Exchange (ASX), Singapore Telecommunications (Singtel) said yesterday it had applied to delist its dually-listed shares Down Under due to low trading volumes, thin liquidity and scant demand among investors.

Singtel said the share delisting would not affect its Optus operations and is not a prelude to its hiving off its wholly-owned subsidiary or floating it on the exchange. Singtel said it has invested over A$13 billion (S$13.6 billion) in building infrastructure and improving communications services in Australia and remains committed to growing its business in the country.

Optus contributed 30 per cent of Singtel’s earnings before interest, taxes, depreciation and amortisation in financial year 2014.

Analysts said the move to pull out of ASX does not affect Singtel’s operations in Australia.

Mr Ajay Sunder, vice-president for ICT Practice at Frost & Sullivan, said the decision depends more on Singtel’s fund-raising plans. Companies choose the exchanges they want to list on based on the amount of funds they want to raise, the volume of trade they are expecting, and the state of the financial markets, he added.

“It doesn’t make much difference to its business expansion or the overall strategy,” he said.

As part of its 2001 acquisition of Optus, now Australia’s second-largest telco after Telstra, Singtel has since been listed on the ASX in the form of CHESS Depositary Interests (CDIs), which allow foreign companies to trade on the local market. Each Singtel CDI on the ASX is equivalent to one Singtel share on the Singapore Exchange (SGX).

While Singtel, Singapore’s largest and most widely-held company, boasts a market capitalisation of about S$70 billion in its home market, its Australian listing amounts to less than 0.9 per cent of that amount, or the equivalent of S$600 million.

In recent years, the number of the company’s CDIs has declined significantly, while daily trading volume and liquidity are very low, Singtel said.

“During the 12 months to March 31, the number of Singtel CDIs traded on the ASX accounted for only 6 per cent of all Singtel shares traded. This reflects institutional investors’ preference to hold and trade Singtel shares on its home exchange, the SGX,” the company said.

“With little demand to drive liquidity in its CDIs, Singtel’s weighting in the S&P ASX200 index has been reduced to approximately 0.03 per cent as at March 31, 2015. This further diminishes the broader market appeal of Singtel CDIs.

The Singtel board has determined that there are minimal shareholder benefits from maintaining Singtel’s listing on the ASX. The delisting will also have the effect of reducing the costs arising from dual listing requirements,” it said.

Subject to ASX approval, Singtel CDIs are expected to be suspended at the close of trading on May 29 and delisted on June 5. All other regulatory and government approvals, including Foreign Investment Review Board considerations, have been obtained.

Holders of Singtel CDIs have five options — sell the CDIs on the ASX ahead of the delisting; convert the CDIs into SGX-listed Singtel shares and remain a shareholder or sell them in the Singapore market; participate in a voluntary sale facility; or do nothing, after which the CDIs will be compulsorily sold.

At the close of market yesterday, Singtel shares fell 1.4 per cent to S$4.35 each on the SGX while Singtel CDIs shed 1 per cent to A$4.17 in Sydney. AGENCIES, with additional reporting by Xue Jianyue