Following the highly anticipated public listing of Netlink NBN Trust, which raised about 2.35 billion Singapore dollars ($1.72 billion), Southeast Asia’s largest telecommunications company may be on the hunt for acquisitions.
The broadband arm of Singapore Telecommunications (Singtel), which said it took in a sizable haul from the public debut, was the newly created public trust.
“We will realize a gain on the disposal of the shares in excess of about S$1.8 billion,” Singtel Group CEO Chua Sock Koong, told reporters on the sidelines of the listing ceremony at the Singapore Exchange.
The largest float on the Singapore Exchange in six years and Singapore’s largest business trust listing to date was the successful debut of the fiber-infrastructure business.
“We will use that to pay down debt, investments in our existing business, investments in growth initiatives, and we’re looking at other capital management initiatives”, Chua said on the proceeds from the IPO.
While Singtel said it’s evaluating its options to act in the best interest of stakeholders, those initiatives may include deleveraging the telco’s balance sheet or issuing a special dividend.
“We’ve always believed in having a strong investment-grade rating for the company. We like to have the financial flexibility to take advantage of investment opportunities when they come about.”
The company has “always been looking at investments that would enhance our growth outlook”, Chua said as for potential acquisitions.
“It could be in the digital space, it could be adding on to stakes in our existing associates,” she said. “We’ve always been financially very disciplined. We would like to do deals that are accretive to our shareholders. In the case of adding to our associate stakes, it’s a lot easier, but of course it is dependent on investment opportunities being available on terms that we are comfortable with.”
The telco “would be looking at investments that would allow us to expand our product range, that would allow us to expand our market reach” in the digital space, Chua added.
Following the IPO, fulfilling its undertaking to Singapore’s regulator to divest its 100-percent stake to less than 25 percent before April 2018, Singtel now owns 24.99 percent of NetLink NBN Trust.
“We review our investments on a regular basis,” Chua said while not giving a timeline on an investment decision.
“NetLink Trust is a great company. It’s got steady cash flows, it’s got a great business model and we are a big customer. We will consider our investment decisions, taking all of that into consideration.”
Before returning to its offer price of S$0.810 on its first day of trade, NetLink Trust made its debut at S$0.815 per unit.
With strong support from both institutional and retail investors, the initial public offering of 2.9 billion units was oversubscribed.
“The NetLink Group’s future growth is driven by a clear strategy to tap opportunities in the residential, non-residential and non-building address point segments, underscored by the continued growth in data consumption,” Netlink NBN Trust CEO Tong Yew Heng said in a statement.
The group is expected to pay an annualized distribution yield of 5.43 percent in 2018 and 5.73 percent in 2019.
(Adapted from CNBC)