SINGAPORE, March 18 (Reuters) - Singapore Telecommunications Ltd said it has hired Credit Suisse and Morgan Stanley to conduct a strategic review of its Australian unit Optus Satellite, a business that could be worth at least $1.6 billion.
The strategic review, according to bankers and analysts, could mean an outright sale or an initial public offering of a unit that sells TV, telephony and broadband services to more than 2 million subscribers, and had revenue of A$319 million ($332 million) for the financial year that ended March 31, 2012.
Sachin Gupta, an analyst at Nomura Securities, said the asset could be worth between A$1.5 billion and A$2 billion ($1.6-$2.1 billion) as the margin for the satellite business could be about 80 percent.
“This is not the first time SingTel has reviewed this we understand - given their extensive portfolio, they constantly review their assets and networks ... looking for ways to monetise,” Gupta said. “If the market or the buyer is willing to pay seven times or eight times EBITDA multiple, for these assets, then why not.”
Optus operates a fleet of five satellites, with another satellite, Optus 10, scheduled for launch in 2013, according to the statement from SingTel.
SingTel, which owns Australia’s Optus and stakes in several mobile operators in the region, has been struggling to increase its earnings because of slowing growth in Singaporean and Australian mobile phone subscriptions and problems at Indian associate Bharti Airtel.
Australia accounted for 65 percent of SingTel’s revenue in the financial year 2012.