FYI: NetLink NBN Trust’s IPO: A Brief Walk Through History
Taken from: https://www.fool.sg/2017/06/30/netlink-nbn-trusts-ipo-a-brief-walk-through-history/
NetLink NBN Trust’s IPO: A Brief Walk Through History
Chin Hui Leong | June 30, 2017 | More on: B2F CC3 T39 Z74
Singapore Telecommunication Limited’s (SGX: Z74) associate, NetLink Trust, has filed its preliminary prospectus to list on the Singapore stock exchange as NetLink NBN Trust.
NetLink Trust is a business trust that was established under IMDA’s (Info-communications Media Development Authority of Singapore) effective open access requirements for Singapore’s NextGen NBN initiative. Singtel’s stake in NetLink Trust can be considered to be unconventional. The unusual arrangement and the trust’s IPO can be traced back its history.
With that in mind, let’s take a quick look at the trust’s history.
A long, long time ago …
The history of NetLink NBN Trust can be traced back to a consortium called OpenNet.
OpenNet was owned by Singtel, Axia NetMedia Corporation, Singapore Press Holdings (SGX: T39), and SP Telecommunications. Singtel and Axia had a 30% stake each while SPH had a 25% stake. The remaining 15% was with SP Telecommunications.
In late 2008, OpenNet was designated as the “Network Company” after winning a competitive tender to design, build and maintain passive infrastructure in Singapore. In conjunction with the tender, Singtel committed to transfer infrastructure such as manholes, ducts and exchange buildings to OpenNet. Allen Lew, who was Singtel’s CEO Singapore back then, said:
“… passive network assets like ducts and manholes will no longer be a telco’s competitive advantage as every service provider has equal access to the infrastructure.”
With that, OpenNet would be tasked in building a ultra-high-speed broadband network that would connect all physical addresses in Singapore and its connecting islands.
This valuable access will be sold to service providers and telcos.
Along came Netlink Trust (and controversy!)
In 2011, NetLink Trust was established. Singtel had full ownership of NetLink Trust and transferred its underground ducts, manholes and central offices into the trust. These infrastructure assets were used to support OpenNet’s fiber network deployment.
But it was a strategic move in 2013 that had Singtel’s rivals up in arms.
In 2013, NetLink Trust proposed to acquire OpenNet (through its trustee CityNet). Seven opposing companies, including Singtel’s rivals M1 Ltd (SGX: B2F) and StarHub Ltd (SGX: CC3), released a strongly worded statement against the acquisition. The group said:
“We must respectfully dismiss any suggestion that CityNet will be a ‘neutral’ or ‘independent’ entity that will serve the best interests of the industry. On the contrary, under the Act, CityNet is obliged to put SingTel’s interests ahead of its own.”
In its defense, CityNet said:
“There are safeguards in place to prevent SingTel from having control over NetLink Trust. CityNet’s independence is also preserved by a majority-independent board and a professional management team.”
Singtel also added its voice, saying:
“NetLink Trust and CityNet operate within a strict regulatory framework that ensures open access to the Next Gen NBN fibre network and regulated pricing to all industry operators.”
Ultimately, the Infocomm Development Authority of Singapore (IDA) approved the deal, but it came with caveats to address concerns raised by Singtel’s competitors.
For one, Singtel will relinquish its role as OpenNet’s key subcontractor and transfer all relevant personnel into OpenNet. NetLink Trust will also receive all assets under OpenNet. Most crucially, Singtel is also mandated to divest more than 75% of its holdings by April 2018.
And that brings us to the present day with the NetLink Trust IPO.
As you can see, the roots of NetLink Trust’s IPO can be traced back to OpenNet and the controversy behind NetLink Trust’s acquisition of OpenNet. In the trust’s preliminary IPO filing, Singtel indicated that it will be maintaining a 24.99% stake in NetLink NBN Trust after the IPO.
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We are currently having book building exercise for NetLink NBN Trust ("NLT") IPO. The Company preliminary prospectus web-link are attached at the bottom of this email for your information please.
For those interested to participate in this exercise, please email the required information stated below to me
1. TR code:
2. Client code:
3. Client name:
4. Indicative demand [ units ] :
5. Offering price: S$0.80 to S$0.93 per unit
1) Book building exercise is scheduled to close on the 7 July 2017 (Friday), at 12 pm.
2) To avoid duplicate order, please email your order once only.
3) IOI must be reflective of the clients' true demand. No withdrawals or amendments to the IOIs will be permitted after the book is closed.
4) 1% brokerage plus GST is chargeable for allocable demand.
5) Allocation result will be communicated via email after the prospectus is registered with MAS.
ISSUER : NetLink NBN Trust (“NLT”)
TRUSTEE-MANAGER: NetLink NBN Management Pte. Ltd.
SINGTEL STAKE POST IPO: 24.99% before exercise of over-allotment option
LISTING : Mainboard of SGX-ST
LISTING CURRENCY: SGD
KEY INVESTMENT HIGHLIGHTS:
More detailed information on NLT business description can be found in the preliminary prospectus lodged with MAS dated 27 June 2017
· Critical infrastructure enabling Singapore’s Next Gen NBN
· Resilient business model with transparent, predictable and regulated revenue stream
· Sole nationwide provider of residential fibre network in Singapore, an attractive market with high demand for fibre broadband services
· Well positioned to benefit from growth in the non-residential segment as the independent nationwide network provider
· Well positioned to capitalise on growth in connected services including Singapore’s Smart Nation initiatives
· Extensive nationwide network affording natural barrier to entry
· Highly scalable operations and credit strength support unitholder returns
· Experienced management team with proven track record
· Joint Global Coordinators and Issue Managers: DBS, Morgan Stanley and UBS
· Joint Bookrunners and Underwriters: DBS, Morgan Stanley, UBS, BAML, Citi, HSBC, OCBC and UOB
OFFERING PRICE RANGE: S$0.80 – S$0.93 per Unit
BASE OFFERING SIZE OF 2,898,000,001 units (appx $2,318.4m to $2,695.1m):
· Public offer of up to [S$250m]
· Over-allotment option (OA) of up to approx. S$100m: approx. 107.5m units to 125m units
TOTAL UNITS OUTSTANDING, POST OFFERING (ASSUME FULL OA OPTION EXERCISED): 3,971.5m units to 3,989m units
FORECAST DISTRIBUTION YIELD
· FP2018E: 4.73% to 5.50% (annualized);
· FY2019E: 4.99% to 5.80%
All distributions are exempt from Singapore tax for all investors
MARKET CAPITALISATION (BASED ON OFFERING PRICE RANGE): S$3,091.2m – S$3,593.5m
LOCK-UP: 6 months (from Listing Date) lock-up for the Trustee-Manager, Singtel and HoldCo
USE OF PROCEEDS:
· Settlement of the cash component of the aggregate consideration payable to Singtel for the acquisition of 100% units of NetLink Trust (NLT) by the Trust;
· Repayment of the principal amount of S$1,100,000,000 due and owing under the facility agreement with Singtel;
· Funding the consideration for the purchase by the Trust Group of approximately 27,000 lead-in ducts from Singtel;
· Funding the consideration for (a) the purchase by the Trust of the shares of NLT Trustee and (b) the purchase by Unitholders of beneficial interests in the Trustee-Manager;
· Payment of the equity issue expenses and other costs
· If the over-allotment option is exercised in full, the additional proceeds may be used for capital expenditure and general corporate purposes
· Books open: 27 June, 2017 upon MAS lodgment
· Books close: 12pm, 07 July, 2017 or subject to notification by the Bookrunners
· Pricing & allocation: 10 July, 2017
· MAS registration: 10 July, 2017
· Singapore Public Offer: 10 – 17 July, 2017
· Listing: 19 July, 2017 at [3PM]
SELLING RESTRICTIONS: Regulation S, Cat 1.
END PLACEE BROKERAGE: 1.0% & applicable GST payable by all investors in the Placement Tranche
MULTIPLE APPLICATIONS: Multiple applications are allowed between the Placement and Public Offer Tranches