STARHUB announced intentions to purchase a majority 50.1 percent share in MyRepublic’s Singapore broadband business for an initial price of S$70.8 million, subject to a number of modifications.
On the condition that financial performance indicators are satisfied, a deferred payment of S$92 million will be payable. This brings StarHub’s investment in the jointly held business – MyRepublic Broadband – to S$162.8 million. StarHub’s internal financial reserves will be used to fund the transaction.
In addition, upon conclusion of the transaction, StarHub would provide a loan of S$74.2 million to a MyRepublic entity called MyRepublic Holdings. This money will be utilized to pay down MyRepublic Holdings’ debt. The broadband companies that will be transferred to MyRepublic Broadband are currently held by MyRepublic Holdings.
MyRepublic will keep the remaining 49.9% interest in MyRepublic Broadband, while StarHub retains the option to buy it out in the future.
The current senior management team, which includes MyRepublic co-founder and CEO Malcolm Rodrigues, is anticipated to continue in place. Mr Rodrigues, a former executive at StarHub, established MyRepublic in 2011.
The proposed deal, according to StarHub, will consolidate and enhance its position in the Singapore broadband market, increasing its market footprint to 40% and guiding long-term company growth.
According to StarHub, MyRepublic Broadband is profitable and expanding, with a 6% share of Singapore’s broadband market.
MyRepublic’s broadband business earned S$18.6 million before interest, taxes, depreciation, and amortisation in the fiscal year ended June 2021. This number is based on pro forma management accounts and will be audited. The total revenue was S$63.9 million. The net profit attributable to the share purchased by StarHub is S$5.2 million.
Assuming the deal was completed on December 31, 2020, StarHub’s profits per share for the fiscal year ending December 31, 2020 would have increased to 8.99 Singapore cents from 8.66 Singapore cents.
StarHub stated that with the purchase, MyRepublic’s broadband customers would get access to expanded products from its consumer and enterprise business sectors. This will encompass StarHub’s broadband, over-the-top content, and cloud gaming goods and services.
According to the telecom, the collaboration will also generate mutually advantageous prospects through scale and synergies in terms of combined go-to-market options, future wholesale products, and cost savings.
“We are excited to collaborate with MyRepublic to increase innovation and provide greater value to more clients in Singapore. Covid-19 has demonstrated the importance of high-quality broadband services to our society, and we plan to scale up and provide better and faster services to our consumers while realizing high-quality profits accretion “Nikhil Eapen, CEO of StarHub, said
On Tuesday, StarHub shares finished S$0.02, or 1.6 percent higher, at S$1.24.
This article was first sighted on The Business Times