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Premature to discuss NetLink IPO: Singtel CEO

SINGAPORE — Singapore Telecommunications (Singtel) said yesterday it is exploring options to spin off its broadband unit NetLink Trust, but added that it is too early to talk about an initial public offering (IPO), as Singapore’s biggest listed company reported flat fourth-quarter net profit, with gains from rising mobile data usage offset by currency fluctuations.

SINGAPORE — Singapore Telecommunications (Singtel) said yesterday it is exploring options to spin off its broadband unit NetLink Trust, but added that it is too early to talk about an initial public offering (IPO), as Singapore’s biggest listed company reported flat fourth-quarter net profit, with gains from rising mobile data usage offset by currency fluctuations.

“It’s premature to talk about an IPO at this point. We have an undertaking with the regulators to sell down our interest in NetLink Trust to less than 25 per cent by April 2018. But it’s premature to talk about the impact of what that sell-down will be,” said Ms Chua Sock Koong, Singtel Group CEO yesterday.

“We would need to assess the various options of the sell-down, what the valuations will be like, how best to conduct it. We’ll keep the market posted,” she added.

NetLink Trust, which owns the fibre network that is the foundation of Singapore’s Next Generation Nationwide Broadband Network, is 100 per cent held by Singtel. Ms Chua’s comments came amid media reports on the potential of an IPO for the broadband unit.

Reuters reported yesterday that Singtel is considering listing its broadband unit on the local bourse in a deal that could raise about US$2 billion (S$2.7 billion) as it looks to slash its stake by over 75 per cent.

An IPO of that size, if successful, would be the largest fund-raising in more than six years in Singapore, after Hutchison Port Holdings Trust’s record US$5.5 billion offering in 2011.

Analysts at Nomura Research said last month an IPO for NetLink Trust could likely come in by next year.

“Based on our preliminary assumptions, we estimate its equity value to be around S$3 billion and its enterprise value of S$4-$4.5 billion. Key variables in this are residential take-up rates, future enterprise growth, access prices, and new/additional revenue sources,” they said.

For its fiscal fourth quarter ended March 31, Singtel reported net profit of S$946 million, up 0.8 per cent from the S$938.8 million reported in the same period last year.

Foreign currency movements reduced net profit by 3 per cent or S$27 million for the quarter.

Operating revenue in the period fell 6 per cent to S$4.09 billion, hit in part by lower handset sales in Singapore, said Singtel.

“Mobile data was the bright spot. Our regional markets are now making their respective transitions from mobile telephony to mobile Internet and harnessing the benefits of extensive investments in 3G and 4G networks and services,” said Ms Chua.

For the full year, net profit rose by 2 per cent to S$3.87 billion while operating revenue dipped 1.5 per cent to S$16.96 billion. Singtel’s board has recommended a final ordinary dividend per share of 10.7 cents, bringing the total ordinary dividend per share for the year to 17.5 cents, representing a payout of about S$2.79 billion.

After the results announcement yesterday, Singtel shares jumped 1.3 per cent to S$3.89, outperforming the 0.5 per cent rise in the benchmark Straits Times Index. Angela Teng

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