Australia’s Tuas said on Friday it has ended a deal worth S$1.43 billion ($1.12 billion) to buy Keppel’s stake in mobile operator M1 via its unit Simba Telecom, days after the Singaporean regulator halted its review of the transaction.
The Infocomm Media Development Authority said on Monday it had found Simba may have used radio frequency bands that were not assigned to it to provide mobile services.
Shares of the Australian telecom firm were down 3.9% at A$2.40 as of 0539 GMT, after tumbling nearly 10% earlier in the session. The stock has lost 62.4% this week, its worst weekly performance on record, after the regulator’s statement triggered a 60% crash on Monday.
Keppel’s stock, in contrast, rose as much as 6.1% and was the top gainer on Singapore’s benchmark index, which was up 0.4%.
“The termination of the deal is a setback to say the least given that it removes a major growth catalyst for the company (Tuas) in the Singapore telecom market,” said Tim Waterer, chief market analyst at KCM Trade.
“The sharp initial sell-off shows how much value the market had priced into the deal, while the partial recovery suggests some investors are betting the company (Tuas) can still find alternative growth paths,” Waterer added.
Tuas said Simba is cooperating with the regulator, which is probing potential breaches of the Telecommunications Act and the conditions of its facilities-based operator licence.
In a separate statement, Keppel said the termination was not expected to have any immediate financial impact on the company.
Last year, the Singaporean firm said it would sell its 83.9% interest in M1 to Simba while retaining the non-telecoms operations for an enterprise value of S$1.43 billion, which would give the asset manager net cash of S$1 billion.
If the stake sale had gone through, a S$0.07 to S$0.11 per-share special dividend may have been distributed, Keppel CEO Loh Chin Hua said earlier this week.
Source: Reuters.com