UPDATE 1-Eutelsat, KKR said to place bids for SingTel's Australia unit

Mon Jun 17, 2013 1:12am EDT

* Auction pits strategic buyers against buyout firms

* Deal would rank 3rd in Australia M&A this year

* Other suitors include Blackstone, Carlyle, Inmarsat and SES

By Stephen Aldred and Jackie Range

HONG KONG/SYDNEY, June 17 (Reuters) - France's Eutelsat Communications SA and U.S. private equity firm KKR & Co are among the suitors to place first-round bids for Singapore Telecommunications Ltd's Australian satellite unit, a person with direct knowledge of the matter said.

SingTel, Southeast Asia's largest telecom operator, values the satellite business of its Australian unit Optus at more than A$2 billion ($1.9 billion), and has put it on sale as it battles tepid growth in its key markets of Singapore and Australia.

Britain's Inmarsat, Blackstone Group and Carlyle Group are among the other suitors to submit bids ahead of the Friday deadline, the person told Reuters.

The deal pits strategic bidders against buyout firms in Australia's third-biggest M&A deal this year, according to Thomson Reuters data.

SingTel, controlled by Singapore state investor Temasek Holdings, sent financial information to bidders in May after announcing a strategic review of the business in March. Optus sells TV, telephony and broadband services to more than 2 million subscribers in Australia and New Zealand.

In terms of Australia M&A activity this year, the deal ranks behind the acquisition of Port Botany and Port Kembla by Industry Funds Management, and the sale of stakes in Australia power companies to State Grid Corp of China, according to Thomson Reuters data.

Funds raised from the sale would help SingTel plough cash into faster-growing businesses.

Other bidders to express interest include, Asia Satellite Telecommunications Holdings Ltd, Intelsat, Sky Perfect Jsat Holdings Inc, Australia's NewSat Ltd and SES, the source said.

Blackstone, Carlyle, KKR, Intelsat, SES and SingTel declined comment. Eutelsat, Inmarsat, AsiaSat, JSat and NewSat did not reply to emails seeking comments. The source declined to be identified as the sale process is confidential.

The suitors are attracted to the steady cashflow generated by the business as well as the low capital expenditure required, sources previously told Reuters.

Companies with satellite operating or communications businesses, like Eutelsat and Inmarsat, are expected to make a stronger case as buyers, because synergies with their existing operations mean they can pay more.

However, private equity bids could receive a boost from debt funding from the United States made available by SingTel advisers Credit Suisse Group and Morgan Stanley . The two banks are providing a loan of around A$1.7 billion that buyers can use for the acquisition.

Optus Satellite operates five satellites, with another, Optus 10, scheduled for launch in 2013. SingTel acquired the satellite arm when it bought Optus in 2001 for $14 billion.