Sorry shareholders, SingTel's Netlink Trust sale is postponed

Dashing hopes for possible special dividend.

According to Barclays Research, the expected asset monetization from SingTel's stake divestiture of its effective interest in the Singapore national broadband project would have driven material cash proceeds and consequently special dividend hopes.

But SingTel’s announcement this evening has potentially moved the deadline for this divestiture from April 2014 to April 2018, according to the research firm. SingTel has proposed to cease its role as the key subcontractor to OpenNet for the installation and maintenance of the NGNBN fibre network; and reduce its stake in NetLink Trust to less than 25% by 22 April 2018. The extension from the original deadline is to allow time for NetLink Trust to integrate the operations of the NGNBN fibre network and assets.

"We note the strategic review of the Optus satellite business was also called off recently. Net/net, the positive catalyst that we expected in special dividend hopes from asset divestments now likely stands eliminated. The fundamental growth and yield thesis stays: we see 3-year (FY13-16E) earnings CAGR at 10%; and a 70% payout delivers a yield of 4.9% for FY14E, rising to 5.8% in two years as earnings grow," it said.

Barclays notes that the deal is contingent to various regulatory approvals. Axia indicates that IDA will hold a public consultation as part of the approval process. The Agreement expires on November 30, 2013, unless otherwise extended by the agreement of the Vendors and the Purchaser.