Bloomberg News

SingTel Said to Get Bids From Eutelsat, SES, KKR for Optus Unit

June 17, 2013

Eutelsat SA (ETL), SES SA and KKR & Co. made offers for Singapore Telecommunications Ltd.’s (ST) Australian satellite unit, said three people with knowledge of the matter.

The bidders, which also include buyout firm Carlyle Group LP (CG:US), made offers for the Optus Satellite division last week, said the people, asking not to be identified as the information is private. SingTel is seeking more than A$2 billion ($1.9 billion) for the business, people familiar with the matter said last month.

With five spacecraft in orbit, Optus Satellite provides television, radio, phone, Internet data and military signals to Australia, New Zealand and parts of the Antarctic, according to the website of its parent company, Optus. SingTel, as Southeast Asia’s biggest phone company is known, acquired the satellite unit as part of its $9.69 billion takeover of Optus, Australia’s second-largest phone company, in 2001.

SingTel, based in Singapore, began the sale of the satellite division last month as it chases new sources of growth amid slowing sales in Australia and Singapore. Divesting the unit, which had revenue of A$319 million in the year ended March 2012, would help finance the S$2 billion ($1.6 billion) of acquisitions that SingTel is planning. The company, which is being advised by Credit Suisse Group AG and Morgan Stanley, hasn’t reported separate earnings figures for Optus Satellite since the 2001 takeover.

At A$2 billion, the deal would be the largest acquisition of a telecommunications asset in Australia since SingTel’s purchase of Optus, according to data compiled by Bloomberg.

Operating Margins

Typical operating margins at satellite telecommunications companies are 80 percent of sales, and the carriers are typically valued at six times to eight times earnings, Sachin Gupta, an analyst at Nomura Holdings Inc. in Singapore, said in March. That would put a price tag of as much as A$2.04 billion on the Optus business based on its sales, he estimated.

Michele Batchelor, a spokeswoman for SingTel, declined to comment, as did SES spokesman Yves Feltes and Eutelsat’s Vanessa O’Connor. Representatives for Carlyle and KKR declined to comment or weren’t immediately available. Reuters reported on the bidders earlier, citing an unidentified person.

KKR, the private-equity firm run by Henry Kravis and George Roberts, last month sold its remaining 12 percent stake in Australia’s largest free-to-air broadcaster Seven West Media Ltd. for A$261 million. The New York-based firm last year considered a sale of its mining services and logistics unit BIS Industries Ltd. and held unsuccessful talks to buy apparel maker Pacific Brands Ltd.

Eutelsat ‘Vigilant’

Carlyle is seeking to sell its stake in Australian equipment rental company Coates Hire Ltd., which it owns together with Seven Group Holdings Ltd. The Washington-based buyout firm and TPG Capital bought Australian hospital operator Healthscope Ltd. for A$2.7 billion, including debt, in 2010.

Eutelsat, which will outline its three-year strategic plan on July 30, said in May it was looking for acquisitions.

“We’re in an industry where there are not many, so it is our duty to be vigilant,” Chief Executive Officer Michel de Rosen said on a May 8 conference call with analysts. The company isn’t considering a “transformational” deal, he said.

SES (SESG), the world’s largest publicly traded satellite operator, in May forecast full-year revenue growth of 6.5 percent to 7.5 percent. Asia-Pacific is the company’s second-fastest growing region in terms of sales, it said in January.

Optus Satellite broadcasts signals to more than two million Australian households and companies and will launch a sixth satellite this year, according to SingTel. Its customers include state-owned Australian Broadcasting Corp., the Foxtel joint venture between Telstra Corp. (TLS) and News Corp., and Australia’s Department of Defence.

Optus Satellite’s C1 orbiter carries communications for Australia’s military, including secure messages and imagery that’s sent to troops, according to a 2003 statement by the country’s defense minister.

To contact the reporters on this story: Brett Foley in Melbourne at bfoley8@bloomberg.net; Joyce Koh in Singapore at jkoh38@bloomberg.net; Matthew Campbell in London at mcampbell39@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net


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