Eutelsat SA (ETL) and SES SA are among companies that proceeded to a final round of bidding for Singapore Telecommunications Ltd.âs (ST) Australian satellite unit, people with knowledge of the matter said.
Private equity firms KKR & Co. (KKR:US), Bain Capital LLC, and Carlyle Group LP (CG:US) dropped out of bidding for Optus Satellite, the people said, asking not to be identified as the information is private. SingTel is seeking more than A$2 billion ($1.8 billion) for the business, they said.
Also advancing in the bidding is a group made up of TPG Capital, Blackstone Group LP (BX:US) and Malaysia’s Measat Global Bhd., the people said. Final offers are due next month and the short-listed bidders have been given access to more detailed financial information on the unit, one person said.
The sale of Optus Satellite would be the largest telecommunications deal in Australia in more than a decade, data compiled by Bloomberg show. With five spacecraft in orbit, the company provides television, radio, phone, Internet data and military signals to Australia, New Zealand and the Antarctic.
London-based Inmarsat Plc (ISAT), the largest provider of satellite services to the maritime industry, isn’t involved in bidding for Optus Satellite, spokesman Chris Mclaughlin said in an interview. The company had earlier studied the business, a person with knowledge of the matter said.
Michele Batchelor, a spokeswoman for SingTel, declined to comment on the sale process. Representatives for the bidders declined to comment or weren’t immediately available.
SingTel, as Southeast Asia’s biggest phone company is known, acquired the business as part of the $9.69 billion takeover of Optus, Australia’s second-largest phone company, in 2001. It said in March that it was considering options for the unit.
SingTel, facing slowing sales in Australia and Singapore, is seeking new sources of growth. Divesting Optus Satellite, 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 (MS:US), hasn’t reported separate earnings figures for Optus Satellite since the 2001 takeover of Optus.
TPG agreed in March to pay about A$880 million for Inghams Enterprises Pty Ltd., Australia’s largest poultry producer, after outbidding other buyout firms, people familiar with the matter said at the time. The Forth Worth, Texas-based firm teamed up with Carlyle in 2010 to buy Australian hospital operator Healthscope Ltd. for A$2.7 billion, including debt.
Blackstone, based in New York, in 2011 agreed to pay $9.4 billion for the U.S. shopping centers of Australia’s Centro Properties Group. That same year, it struck an A$208 million deal for Valad Property Group, the owner of Australian office buildings and industrial properties.
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 Luxembourg-based company’s second-fastest growing region in terms of sales, it said in January. Paris-based Eutelsat, which will outline its three-year strategic plan on July 30, said in May it was looking for acquisitions.
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.
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 in March.
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