Singtel shoots down talks of an Optus sale

Singtel has denied Wednesday speculations that it is in advanced discussions to divest its ownership of Optus for $16 billion Australian dollars (US$10.6 billion) to private equity firm Brookfield Asset Management as reported by the Australian Financial Review (AFR).

"There is no impending deal to offload Optus for the said sum, as reported. Optus remains an integral and strategic part of the Singtel Group and we are committed to Australia for the long term," the Singapore telco operator said in a stock exchange filing.

Singtel said its current focus is on improving network resilience and conducting a CEO search.

"That said, we regularly conduct strategic reviews of our portfolio to optimize the value of our assets and businesses and will explore all options to maximize shareholder value," the company added.

News outlets reported that Singtel's shares jumped nearly 4% on Wednesday after the AFR report before the company requested a trading halt.

"Shareholders of Singtel and potential investors are advised to exercise caution in their review of any media reports relating to Optus ahead of any definitive announcements when dealing with the shares of the company," Singtel said in its statement.

This is the second time the telco operator quelled talks about the potential sale of Optus, which it has owned since 2001. In January, tongues started wagging when AFR first reported that Singtel was weighing options for its wholly owned subsidiary.

Related:Optus loses networks head four months after outage

But even as Singtel attempted to stop the speculation in its tracks, Reuters found an unnamed source with direct knowledge on the matter independently corroborating that the telco operator is looking to sell a significant stake in Optus to Toronto-based Brookfield – and that, indeed, the two parties are in advanced discussions.

Difficult two years

Optus has been plagued by missteps in the last two years – a network blackout in November 2023 affected 10 million customers across Australia and a massive data breach found in September 2022 compromised the personal data of 10 million customers.

The fallout from the network outage cost Singtel Group $40 million and saw two senior executives leave the company in the aftermath. CEO Kelly Bayer Rosmarin left two weeks after the incident in November while Lambo Kanagaratnam, managing director of networks, made his exit five days ago.

Optus received another black eye earlier this month when it was slapped with an AU$1.5 million (US$1 million) fine by the Australian Communications and Media Authority over breach of public safety rule.

Related:Singtel reduces stake in India's Bharti Airtel with $709M deal

Capital recycling effort

However, even if the speculation proved true, Optus' current troubles may not be the only reason for Singtel to part with its significant share of the company.

Last week, Singtel announced the sale of a 0.8% stake in India's Bharti Airtel for 950 million Singapore dollars (US$709 million) to US-based investment firm GQG Partners.

Since its strategic reset in 2021, Singtel has been engaged in a capital recycling effort to unlock value from its assets. It expects to gain an estimated SG$700 million ($522.1 million) from the Bharti Airtel stake sale, which it will use to fund the growth of its data center and IT services businesses.

To date, the company has brought in a total of SG$8 billion ($6 billion) in recycled capital since its strategic reset in 2021.