Business as usual for Optus, Singtel says
- 21 April, 2015 12:03
The decision to delist Singtel from the ASX shouldn't be taken as sign of a decreased commitment to the Australian market, the parent company of Optus has stressed.
The Singaporean telco announced earlier today that it had begun the process of delisting from the ASX. Singtel will remain listed on its home exchange, the SGX.
"It is important to make two points very clear," Singtel Group chief corporate officer Jeann Low said during a media briefing this morning.
"Firstly, this decision does not impact Singtel's commitment to its Australian business: Optus remains a very important and critical asset for the Singtel Group, and we will continue to grow the business in Australia.
"Since 2001 we have invested over $13 billion into the communications network infrastructure in Australia. Through Optus, we employ more than 9000 people and have generated economic activity for many more Australians and enterprises.
"Secondly, Singtel shares will continue to be listed on our home exchange, SGX, where it has the second largest market capitalisation and sees active trading on a daily basis."
Singtel securities appear on the ASX as so-called CHESS Depositary Interests, which can allow overseas-based companies to trade on the exchange. Low said holders of Singtel CDIs will be able to convert their CDIs to Singtel shares listed on the SGX or sell them for cash.
"In the last few years, market interest in Singtel CDIs has diminished," Low said.
"Like many of their international counterparts, most of the large Australian institutions prefer to invest directly in Singtel on the SGX, where it is much more liquid. This is very much the norm for cross-border investment.
"In the last three years specifically, the level of CDI holdings has fallen to below 200 million shares. In fact, as at end March 2015, CDIs account for less than one per cent of Singtel's issued shares."
The low level of holdings and liquidity on the ASX have impacted Singtel's weighting on the S&P/ASX 200 index, Low said.
"Our weighting is approximately 0.03 per cent as at 31 March 2015. These trends have persisted for some time and are unlikely to improve as they reflect institutional investors' preference to hold shares on the home exchange. As a result, investors face increasing likelihood that Singtel's index weighting on the ASX will be further reduced over time."
"After careful consideration, we have come to the view that there is little practical value or benefit from maintaining Singtel's listing on the ASX," Low said.
"We also believe that our reputation, visibility, business opportunities and commitment in Australia, as well as our ability to raise capital, will not be affected by the delisting.
All require regulatory approval for the move has been obtained, with the company just waiting on ASX approval to delist.
"On that point, the ASX has already advised us that it will be likely to agree to the removal of CDIs from the official list of the ASX, subject to several procedural conditions being satisfied," Low said.
"Singtel has agreed to comply with all those conditions. We will promptly update the market when we receive the formal approval from the ASX."