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Moody's: Temasek's 2.5% Stake Sale Can Be Accommodated in SingTel's Ratings
Published on:
Moody's Investors Service says that Singapore Telecommunications's (SingTel) Aa3 senior unsecured ratings are unaffected by the sale of 2.5% stake in the company by Temasek Holdings. The rating outlook is stable.
In a block trade, Temasek has sold 400 million shares in SingTel to raise S$1.3 billion (US$1 billion). This divestment is part of Temasek's broader strategy for rebalancing its portfolio, and reduces Temasek's shareholding in SingTel from 54.4% to about 51.9%.
This is the first time Temasek has divested stake in SingTel since 2006.
"The transaction is rating neutral as Temasek retains majority control of the company, and we expect this position to remain unchanged at least for the next few years. SingTel remains Temasek's largest portfolio investment, and contributes substantially to Temasek's cash flow through high dividends," says Nidhi Dhruv, a Moody's Analyst and also Lead Analyst for SingTel.
"Furthermore, given SingTel's status as Singapore's largest telecom company, we expect support to be forthcoming from Temasek in an event of financial distress. SingTel's Aa3 rating continues to benefit from a two-notch uplift due to our expectation of such support from Temasek, which in turn is wholly-owned by the Singapore government," adds Dhruv.
SingTel is the leading integrated communications services provider in Singapore, and, through its wholly owned subsidiary SingTel Optus Pty Limited, is the second largest integrated telecommunications operator in Australia. SingTel also has a number of investments in cellular operators throughout the region which give it a regional footprint in 26 markets and access to 462 million mobile subscribers as of 30 June 2012.
Tags: [temasek holdings] [singtel] [Singapore]
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