Singapore Telecommunications Ltd. (ST), southeast Asia’s largest phone company, said it was reviewing its Optus Satellite unit in Australia, which Nomura Holdings Inc. said may be worth A$2 billion ($2 billion) if sold.
SingTel, as the carrier is known, hired Credit Suisse Group AG and Morgan Stanley as advisers, the Singapore-based company said in a regulatory statement. The business had revenue of A$319 million last financial year, it said.
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, said Sachin Gupta, an analyst at Nomura in Singapore. That would put a price tag of as much A$2.04 billion on the Optus business based on its sales, he said.
“It’s one of their more profitable businesses,” Gupta said by phone today. “SingTel continuously reviews ways of monetizing these assets at the right time and the right price.”
Takeovers of satellite companies globally over the past five years have taken place at median multiples of 2.8 times revenue and 6.1 times earnings before interest, tax, depreciation and amortization, according to data compiled by Bloomberg.
Comment on the value of the business is premature, Michele Batchelor, a spokeswoman for SingTel, said by phone from Singapore. “We’re just reviewing it,” she said. “Possibly nothing could actually happen.”
The Optus Satellite unit has five satellites in orbit with a sixth to be launched this year, SingTel said today.
The business signed a five-year, A$200 million deal in 2011 to provide satellite support to NBN Co., a government-owned company that’s building a A$37.4 billion national broadband network in Australia, according to a July 2011 presentation.
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