Optus Satellite bidding said to be entering 2nd round

SINGAPORE - The Optus Satellite sale train - valued at about A$2 billion (S$2.3 billion) - continues to chug along, with bidding moving to the second round and two private equity firms dropping out, according to Bloomberg.

According to unnamed sources, KKR & Co and Carlyle Group have dropped out of the bidding for SingTel's Australian satellite unit, Bloomberg said on Wednesday.

Hanging in there, however, are industry operators - Eutelsat, SES and Inmarsat.

At the same time, a group comprising TPG Capital, Blackstone Group and Malaysia's Measat Global have also made it into the second round.

SingTel declined to comment on this latest development.

Its last statement on the matter was in March, which said that the group was placing Optus Satellite under "strategic review".

This round comes on the back of one which reportedly happened on June 14 and will be followed by a third and final round, said to be happening next month when final offers from two or three select bidders are submitted.

This deal is set to be the largest telecommunications deal in Australia in more than a decade, according to data compiled by Bloomberg.

The price tag of A$2 billion has been floated by SingTel, according to Bloomberg, and also by Nomura Equity Research's Sachin Gupta, who priced Optus Satellite at A$1.5-2 billion.

Based on what the market says is an Ebitda (earnings before interest, tax, depreciation and amortisation) of A$225 million for 2012, a A$2 billion price implies a valuation multiple of almost 10. According to market watchers, previous deals in the satellite industry have fetched valuation multiples of 8-12 on Ebitda.

The takings will come in handy for SingTel, which is planning $2 billion in digital business acquisitions over the next three years.

Even so, the shifting political landscape in Australia might have some interesting implications for the deal. Of Optus Satellite's five operational satellites, one of them - Optus C1 - carries military communications for the Australian Department of Defence, alongside commercial broadcast signals.

With Australia facing an election on Sept 14, a potential change in government implies some uncertainty about military business, industry people have told The Business Times.

The Optus C1, one of the oldest in the fleet, was launched in 2003 with a geostationary life of 15 years, and a life extension of five years - typical for satellites. Most of the other satellites in its fleet were launched from 2006-2009. The C1 will therefore be among the first of Optus's satellites that will have to be replaced.

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