SingTel – BT

SingTel sale of Network i2i stake to yield Q2 gain of $72m

SINGAPORE Telecommunications yesterday said its second- quarter results will be boosted by a $72 million gain arising from the sale of an undersea cable stake to associate Bharti Airtel, India’s largest private phone company.

SingTel said the sale of its 49.99 per cent interest in Network i2i Ltd to Bharti will result in a gain of about $104 million, of which $72 million will be recognised in the second quarter ending Sept 30.

The balance of $32 million will be recognised on a straight-line basis over the remaining useful life of the cable system of about 10 years, SingTel said in a statement.

In January, SingTel said it would be selling its entire interest in Network i2i as the telco optimises its network infrastructure assets. Network i2i owns the undersea cable network between India and Singapore.

With the sale, SingTel, which owns a 30.5 per cent stake in Bharti, will still have indirect ownership of the undersea cable network.

Disposal proceeds amounted to US$66.7 million, comprising cash of US$55 million and assumption by Bharti of a US$11.7 million debt, due from SingTel to Network i2i, it said.

The consideration was arrived at on a willing-seller, willing-buyer basis based on a combination of replacement value and comparable benchmarks for a similar cable system.

As at July 31, the unaudited net asset value of the shares in Network i2i was (US$0.27) per share, said SingTel.

As part of the same transaction, SingTel’s wholly owned subsidiary SingTel i2i Pte Ltd has also entered into an agreement with Bharti to sell its entire 49 per cent interest in Bharti Aquanet Ltd for 159,150,931 rupees (S$5.95 million). The consideration was arrived at on a willing-seller, willing-buyer basis.

The valuation of the shares in Bharti Aquanet was based on an agreed internal rate of return calculated on the initial investment amount. As at July 31, the unaudited net asset value of the shares in Bharti Aquanet was 101.81 rupees per share. The gain on disposal of approximately $1.2 million will be recognised in the quarter ending Sept 30.

The giant telco owns a submarine cable network through its US$40 million investment in Sea-Me-We 4, or the South-east Asia-Middle East-Western Europe 4 fibre-optic cable network.

Sea-Me-We 4, which links 14 countries in Asia, Europe and the Middle East, was built to meet strong demand for Internet and data services from markets in Asia and the Middle East, as well as to enhance communication links between these markets and Europe and the US.

The US$500 million Sea-Me-We 4 cable network, the fourth in a series of cables connecting Asia, Europe and North Africa and completed last year, was built by a consortium of 16 telcos.

Spanning some 20,000 kilometres, it is capable of carrying telephone, Internet and various broadband data streams, besides offering ultra-fast connectivity for the rapidly growing international telecommunications traffic, according to SingTel’s 2005/06 annual report.

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