SingTel Said to Start Optus Satellite Sale Seeking A$2 Billion

Singapore Telecommunications Ltd., Southeast Asia’s biggest phone company, started the sale of its Australian satellite unit and is seeking more than A$2 billion ($1.9 billion), three people with knowledge of the matter said.

SingTel approached potential buyers with information on the Optus Satellite unit today, two of the people said, asking not to be identified as the information is private. Bain Capital LLC, Carlyle Group LP and Blackstone Group LP are among private equity firms evaluating possible bids for Optus Satellite, three people familiar with the deliberations said.

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 the Singapore-based group 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 is selling the satellite division as it chases new sources of growth amid slowing sales in Australia and Singapore. Divesting the division, 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 hasn’t reported separate earnings figures for Optus Satellite since the 2001 takeover.

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.

Debt Package

“We are conducting a strategic review of our Optus Satelitte business and will make an appropriate announcement in the event of a material development arising from the review,” said Michele Batchelor, a spokeswoman for SingTel. Spokesmen for Bain, Carlyle and Blackstone declined to comment.

Credit Suisse Group AG and Morgan Stanley, hired by SingTel in March to study options for Optus Satellite, are offering prospective buyers a debt package that may help attract bids, people with knowledge of the matter said this month. The banks may lend more than six times Optus Satellite’s earnings before interest, tax, depreciation and amortization, according to these people.

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. and News Corp., and Australia’s Department of Defence.

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