Singapore’s telecom co Singtel to delist from ASX

Singapore Telecommunications Ltd (Singtel), has announce the intent to delist from the Australian Securities Exchange, due to what it described in official statements as “low trading interest”. Singtel shares have been listed on the ASX as CHESS Depositary Interests (CDIs). This has enabled foreign companies to trade on the Australian market since 2001.

A CDI is described by official ASX statements as “…a unit of beneficial ownership in an underlying financial product which is quoted on the ASX market. A CDI confers a beneficial interest in the underlying financial product to which it relates.” However, recent years have seen a significant decline in the volume of Singtel’s CDIs. This is concurrent with low daily trading volume and liquidity.

Singtel CDIs are forecast to be removed from the official ASX list in mid-2015, specifically on 5 June 2015, after Singtel requested approval from ASX Ltd to delist. In an official statement, Singtel said that the delisting would not affect its business unit and operations in Australia, which contributed 30 per cent of the company’s earnings before interest, taxes, depreciation and amortisation in FY2014.

The delisting of Singtel from the ASX is happening amidst Singtel-Optus winning an extension on a major technology contract worth A$324.3 million with the Australian Taxation Office (ATO) until June 2018. This is despite the ATO conducting an ongoing investigation into its tax payments with relation to the acquisition of Optus in 2001. The contract is for the provision of all call centre, voice and data communications on behalf of the ATO.

Singtel’s major asset in the Australian market is Optus, the second largest telco in Australia. Wholly owned by the Singtel Group but managed as a separate entity, Optus is a telecommunications conglomerate that was acquired by Singtel in 2001. Early in its history, this trade sale faced threats of derailment due to allegations of security threats. It was believed by critics of the deal that the acquisition of Optus compromised Australian security and intelligence interests.

Nick Grimm, an Australian Broadcasting Corporation (ABC) current affairs journalist, commented then that the “…corporate takeover plans by the Singapore government-controlled telecommunications company, SingTel, that would see it swallow up Australia’s second largest telco, cable & wireless company, Optus. With the deal, goes ownership of Australia’s main defence satellite, the channel through which many of our most sensitive military communications are sent.”