SingTel looking to sell Optus Satellite assets to private equity

Singapore Telecommunications is looking to sell off the satellite communications arm of its wholly-owned Australian subsidiary Optus, seeking a sales price of at least $2 billion.

According to Reuters, SingTel hired Credit Suisse and Morgan Stanley to conduct a strategic review of the business unit earlier this month.

Bain Capital, Carlyle Group and Blackstone Group, along with French firm Eutelsat Communications, have all been listed as possible bidders

“We are conducting a strategic review of our Optus Satellite business and will make an appropriate announcement in the event of a material development arising from the review,” SingTel spokesperson Michele Batchelor told Bloomberg.

Earlier this month, SingTel Australian country chief officer Kevin Russell claimed that SingTel had not yet committed to a sale Optus’ satellite assets.

“I wouldn’t rule out anything. We are very open minded and will listen very carefully to what our options might be. In terms of the process, I can’t be more blunt in saying it is really embryonic,” Russell told The Australian Financial Review.

“It’s been built up into a very strong profitable business and we are reviewing our options, but it’s not linked to any broader balance sheet requirement. SingTel is in a very strong position in terms of its existing balance sheet and the cash flows from its existing businesses.”

Since then, SingTel has sent out information to potential bidders, with a first round bid deadline set for June 14.

There is speculation over whether the proceeds from any sale would be used to help fund Optus’ $1 billion 4G mobile rollout in Australia, or alternatively be returned to SingTel and its majority shareholder, Singapore’s state investment firm Temasek Holdings.

The Optus Satellite venture was originally known as Aussat, which was bundled with the original carrier licence for Optus and privatised by the federal government in 1991.

SingTel, in turn, acquired the venture as part of its takeover of Cable and Wireless Optus for $16 billion in 2001.