Singtel raises $1.4B from Australian tower sale

Yuen Kuan Moon, Singtel's CEO, has been talking a lot lately about the "tailwinds of digitalisation" in the wake of COVID-19.

He's also repeatedly voiced the need for a strategic and infrastructure "reset" at the operator, including greater investment in 5G network rollouts and services.

Figure 1: Over and out: Singtel has sold off their Australian tower investments in favor of 5G and data centers.
(Source: Pixabay)

Singtel, which, outside its home turf in Singapore owns operators in Southeast Asia, Australia and India, has now added a bit of substance to these ambitions in the shape of what it calls "two major moves."

Towering ambition

One of them is a partial sale of Australia Tower Network (ATN), a wholly owned subsidiary which operates Optus's passive tower infrastructure in Australia. By selling 70% in ATN to AustralianSuper, Australia's largest superannuation fund, Singtel raises around AUD1.9 billion ($1.38 billion).

The proceeds, said the operator, will go towards funding 5G rollout, data centers and – somewhat more vaguely – "new growth."

The transaction, involving 2,312 mobile network towers and rooftop sites, values ATN at an enterprise value of approximately AUD2.3 billion ($1.67 billion). Singtel seemed to think it got a good deal, representing a FY21 pro-forma EV/EBITDA transaction multiple of 38x (or 28x following completion of the build-to-suit program).

"We are pleased that the value of Optus's towers has been duly recognised, reflecting the high quality of our assets and positive outlook for telco infrastructure," said Yuen. "This transaction also supports our larger infrastructure strategy to unlock value through an asset-right approach which will free up capital to reallocate and reinvest in key growth areas."

Under the terms of the deal, Optus (a fully owned subsidiary of Singtel) will have continued access to the towers through a long-term lease agreement with ATN. Optus will be the anchor tenant on 565 new build-to-suit towers to be built over the next three years, which will "form an integral part of its 5G network."

"This transaction also supports our larger infrastructure strategy to unlock value through an asset-right approach, which will free up capital to reallocate and reinvest in key growth areas," added Yuen

Data center push

As a next step in its "infrastructure growth strategy," Singtel is extending beyond Singapore – where it claims to be one of the largest data center operators – by forming a regional data center platform with an initial focus on ASEAN (Association of Southeast Asian Nations). The operator has signed an MOU with Gulf Energy, a power and infrastructure company in Thailand, to build and develop data centers across the country.

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Singtel is also said to be in "advanced talks" with long-standing partner Telkom Indonesia to explore acquiring and building data center assets across the archipelago and the wider region.

Singapore, Thailand and Indonesia – noted Singtel – jointly make up more than 70% of the data center market in ASEAN.

"From our telecom towers to our data centres, it is imperative that we restructure our assets and re-organise our business to better fund, improve and grow our digital infrastructure," said Yuen.

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— Ken Wieland, contributing editor, special to Light Reading