Singapore Telecommunications (Singtel) has announced on Oct 1 the sale of a 70% stake in Australia Tower Network (ATN), a wholly-owned subsidiary of Optus. The deal is expected to raise net cash proceeds of A$1.9 billion ($1.86 billion).
ATN operates Optus’ passive telecommunications tower infrastructure. The 70% stake in the company will be sold to AustralianSuper, Australia’s largest superannuation fund. Singtel will continue to hold a 30% stake in ATN.
Under the terms of the deal, Optus will have continued access to the towers through a long-term lease agreement with ATN. Optus will be the anchor tenant on 565 new build-to-suit towers to be built over the next three years which will form an integral part of its 5G network.
The deal values ATN at an enterprise value of approximately A$2.3 billion, representing an FY2021 pro-forma EV/EBITDA transaction multiple of 38 times, or 28 times following completion of the build-to-suit programme.
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Proceeds from the sale will be used to fund the rollout of 5G and other growth initiatives, including expanding the B2B digital services business in Singapore and Australia through NCS. The company also says the value unlocked through capital recycling will position the group to deliver sustainable dividends.
Completion is expected in October, subject to the fulfilment of certain conditions precedent.
Singtel also announced the creation of a regional data centre business that will see it expanding beyond Singapore. The company has signed a memorandum of understanding (MOU) with Thailand’s Gulf Energy to build and develop data centres across Thailand. Singtel says it is also in advanced talks with Telkom Indonesia to explore acquiring and building data centres in Indonesia and the region.
The regional data centre business will form part of a regional digital infrastructure platform to capture new growth opportunities in Asia. “The rise of digital technology and its accelerated adoption on the back of Covid-19 has had major implications for the physical infrastructure that facilitate and support this overwhelming demand for data connectivity we are witnessing,” says Singtel’s Group CEO Yuen Kuan Moon.
“From our telecom towers to our data centres, it is imperative that we restructure our assets and re-organise our business to better fund, improve and grow our digital infrastructure. 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,” Yuen adds.
Singtel’s regional data centre strategy is premised on offering a differentiated value proposition to customers – one that is carrier neutral, while providing access to bundled services that draw on Singtel’s ecosystem such as best-in-class connectivity, cyber security and hybrid cloud services.
Singtel will also be launching an initiative to invite companies in the ecosystem to ideate and co-create solutions to build the greenest data centres in the region.
Shares in Singtel closed down 1 cent or 0.41% lower at $2.46 on Sept 30.
Photo: Bloomberg
