Singapore Telecommunications (SingTel) has established a trust for infrastructure assets used by national fibre network operator OpenNet. SingTel will sell namely ducts and manholes used by OpenNet, as well seven exchange buildings, and SingTel’s business of providing duct and manhole services in relation to the assets, to CityNet Infrastructure Management in its capacity as trustee-manager of NetLink Trust, for an aggregate consideration of approximately SGD 1.89 billion. SingTel is the initial and sole unitholder of NetLink Trust. The agreements are conditional on, among other things, the relevant regulatory approvals being obtained. It is expected that the completion of the conditional sale agreements will take place in September 2011. In addition, SingTel has entered into leasing agreements with CityNet for the use of the infrastructure assets.
The agreements are:
- A 25-year duct and manhole services agreement relating to SingTel’s existing copper and fibre cables situated within the NetLink Trust ducts. The fees payable by SingTel under this agreement are approximately SGD 20 million per annum.
- A duct and manhole services agreement relating to OpenNet’s fibre cables situated within the NetLink Trust ducts. Under this agreement, SingTel will pay a fixed charge, as well as a variable charge comprising 70 percent of the variable charge that SingTel receives from OpenNet. The fixed charge is estimated at SGD 5 million and 15 million for the financial years ending 31 March 2012 and 2013. With effect from the financial year ending 31 March 2014, the fixed charge is expected to be SGD 20 million per annum.
- Long-term property lease agreements in relation to the lease of space by SingTel in the seven exchange buildings which form part of the assets. The amount payable by SingTel under these agreements is approximately SGD 12 million per annum.
- Long-term property lease agreements in relation to the lease of approximately 120 square metres of space each in two exchange buildings by CityNet in its capacity as trustee-manager of NetLink Trust.
SingTel retains a 100 percent economic interest over the business and assets of NetLink Trust as the sole unitholder of NetLink Trust. NetLink Trust will be accounted for in the financial statements of SingTel as an associated company.
