Singtel to sell 70% stake in Australian tower assets for $400m net gain; enters new regional tie-ups

Singtel announced a conditional agreement to sell a 70 per cent stake in Australia Tower Network.
Singtel announced a conditional agreement to sell a 70 per cent stake in Australia Tower Network.ST PHOTO: KUA CHEE SIONG

SINGAPORE (THE BUSINESS TIMES) - Singtel on Friday (Oct 1) announced a conditional agreement to sell a 70 per cent stake in Australia Tower Network (ATN), which operates telecommunications towers for Singtel's Australian telco subsidiary Optus, for A$1.9 billion (S$1.87 billion) in cash.

The transaction gives ATN, which owns 2,312 mobile network towers and rooftop sites, an enterprise value of A$2.3 billion, Singtel said. The buyer, AS Infra Tower, is unit of a superannuation fund in Australia.

The consideration of A$1.9 billion consists of A$900 million to be paid by AS Infra, A$500 million as a return of capital by ATN to Singtel, and A$500 million as repayment of outstanding loans by ATN to Optus.

These funds will go towards Singtel’s 5G roll-out, the expansion of its technology services arm NCS’ digital services business and other growth initiatives.

Singtel’s estimated net gain on the disposal is $400 million. The sale is expected to be completed by the end of October.

Separately, Singtel also announced its intentions to create a regional data centre business.

To that end, it has signed a memorandum of understanding with Thai power and infrastructure company Gulf Energy to build and develop data centres. Singtel also announced it is in advanced talks with its Indonesian partner Telkom to explore acquiring and building data centre assets in Indonesia and South-east Asia.

“From our telecom towers to our data centres, it is imperative that we restructure our assets and reorganise our business to better fund, improve and grow our digital infrastructure,” said Singtel group chief executive Yuen Kuan Moon.

“Not only will this secure our place in the digital economy, it will also allow us to help keep our communities supported and economies up and running.”

Mr Yuen also noted the “strong demand for an integrated network of data centres across different markets” from customers that are scaling their presence regionally.

“Our established track record, customer relationships and deep links with local partners in other markets, position us well to capture this new growth,” he added.

Singtel currently owns data centre assets with a combined capacity of more than 70 MW. These generate revenue of over $250 million, with margins on earnings before interest, taxes, depreciation and amortisation of over 60 per cent.

Last week, Singtel said it intends to exercise its full rights entitlement in a rights issue by its Indian regional associate Bharti Airtel, in which it owns a 14 per cent stake. That translates to a total consideration of 29.4 billion rupees (S$540 million) or US$405 million over a period of up to three years.

Singtel said it believes funds raised through the rights issue will equip Airtel to invest in 5G capabilities and ride the digital growth momentum in India.

The group noted that this is in line with its strategic reset announced in May to build out digital ecosystems in the region, through a multi-local strategy that could involve unlocking assets to reinvest in critical infrastructure that will power the digital economy.

 Singtel shares were down two cents or 0.8 per cent at $2.44 at the midday break.