Singtel denies A$16 billion Optus sale, but speculation persists

"There is no impending deal to offload Optus for the said sum, as reported," Singtel said in a statement to the Singapore Stock Exchange, referring to a piece published in the Australian Financial Review.

"Optus remains an integral and strategic part of the Singtel Group and we are committed to Australia for the long term," the operator group said.

While at first glance that looks like a firm denial, the inclusion of the phrase "for the said sum" gives pause for thought, even when coupled with the telco's subsequent – and arguably rote – comment about its commitment to the Australian market.

"Our current focus has been on improving network resilience and conducting a CEO search," Singtel added. "That said, we regularly conduct strategic reviews of our portfolio to optimise the value of our assets and businesses and will explore all options to maximise shareholder value."

It’s hard to argue that a multi-billion-dollar deal for Optus – the AFR's sources say talks are well advanced and any transaction would value the Australian unit at A$16 billion-A$18 billion (US$12 billion-US$13.5 billion – would be a boon for shareholders. Optus's financial performance has left something to be desired of late and it is still feeling the effects of its high-profile network outage last autumn.

As the AFR pointed out, in its financial third quarter to the end of December, Singtel posted a 12.5% decline in net profit to $S465 million, attributing the slide to a "higher net exceptional loss mainly from Optus and Airtel." Singtel sold a 0.8% stake in India's Bharti Airtel for S$0.95 billion just last week, incidentally.

The paper also noted a disclosure from Singtel in which it admitted that the Optus network outage had cost the company A$61 million. And rival Telstra claims it picked up tens of thousands of customers from Optus as a result. The outage also cost Optus CEO Kelly Bayer Rosmarin her job; the company is currently in the hands of finance chief Michael Venter while it hunts for a permanent replacement.

To say it has been a tough time for Optus is something of an understatement. And the market is clearly positive on the idea of Singtel jumping ship. Singtel's shares rocketed as news of the AFR report filtered through, before the exchange halted trading, awaiting Singtel's clarification on the story.

This is not the first time this year that Singtel has been linked with some sort of disposal in Australia; the AFR and Bloomberg both reported in January that the telco was looking to offload Optus's enterprise business, triggering a much stronger denial from Singtel than this latest report drew. It's starting to look like no smoke without fire.

The AFR's sources claim that talks between Singtel and Canada's Brookfield are at an advanced stage. They expect Brookfield to bring in a partner, suggesting the Canada Pension Plan Investment Board (CPP Investments), which last week brokered a €2 billion deal for 17.5% of TIM's NetCo business, as a logical choice.

With talk of an Australia sale refusing to die and Singtel choosing the words of its denial very carefully, we can probably expect to hear more on Optus's future before too long.