SingTel set to launch SingPost IPO Monday: Sources

SingTel set to launch SingPost IPO Monday: Sources

Dow Jones
Singapore

Singapore Telecommunications Ltd. will on Monday launch the
initial public offering (IPO) for its postal arm, a move that
will help Southeast Asia's largest phone company cut its S$10
billion debt, sources said on Sunday.

Singapore Post Ltd.'s share sale would be Asia's biggest IPO
this year and could be attractive to investors looking for steady
yields in a turbulent market.

SingTel is likely to set a ceiling price for SingPost of
around S$0.57 or S$0.58 a share, which would value the postal
company around S$1.1 billion, or 11 times earnings.

"There's no need for telecom companies to have postal
companies anymore. It's good for SingTel to do the IPO to help
them reduce debt," said Tien Xuan Doe, an analyst at Morley Fund
Management, which manages US$2.6 billion in funds in Asia.

While it isn't known yet how much of its postal unit SingTel
intends to sell, sources say SingTel could sell anywhere between
30 percent and 60 percent of SingPost, which would raise between
S$331 million and S$661 million in gross proceeds.

The final price will be set once the offer closes, and any
difference between that and the ceiling price will be refunded to
investors, according to preliminary filings by SingPost.

The proceeds from the offer will be used to reduce some of the
debt SingTel has amassed in recent years through acquisitions in
the Asia-Pacific region, including the high-profile acquisition
of Optus, Australia's second-biggest telecom operator.

The expected launch comes after UBS Warburg and DBS Bank Ltd.,
who are managing the share sale, submitted preliminary filings
for the offer at the end of last month.

Roadshows are expected to kick off shortly, after which it is
hoped SingPost will be listed on the mainboard of the Singapore
Exchange around the end of April, sources said.

SingPost has been busy paving the way for the share offer in
recent weeks, including raising funds through a bond sale, and is
also waiting for the industry regulator to approve the raising of
postal tariffs for the first time in eight years.

SingPost has 63 post offices around the island of 4 million
people, and has delivered steady earnings of around S$100 million
over the past three years.

"SingPost is a stable business. As long as they pay a good
dividend I don't see why it won't be a good IPO," Doe said.

Investors will be offered a volume discount, although details
such as how much an investor needs to buy and how big the
discount will be have yet to be determined.