Netlink Trust to Acquire OpenNet
This article first appeared in The Straits Times, an SPH publication, on 25 August 2013, Sunday.
Customers can look forward to faster rollouts and connections to Singapore's ultra-fast fibre broadband network, whose builder OpenNet has been plagued by delay woes.
This is the stated goal of NetLink Trust, which is seeking to buy OpenNet from its existing shareholders - SingTel, SP Telecommunications, Singapore Press Holdings and Canada's Axia NetMedia.
NetLink Trust is the business trust which owns the ducts and manholes through which the optical fibre cables pass to reach homes and buildings.
On Thursday, NetLink Trust entered into an agreement with the four shareholders to buy OpenNet for $126 million.
Under the agreement, SingTel will also cease its role as the subcontractor hired by OpenNet to lay the fibre cables and connect customers to the network.
This means that one entity will in future have control over all the various steps involved in connecting users to the network - from building the fibre and owning the manholes and ducts along which it travels, to deploying the manpower needed to roll it out to buildings and homes.
This is why consumers can expect "more operational efficiencies" and "one point of accountability" if the deal goes through, said Mr Yap Chee Keong, chairman of CityNet, the trustee-manager of NetLink Trust.
These "improved efficiencies" will filter down to customers who want to connect their homes or offices to the ultra-fast network, Mr Yap told reporters on Thursday.
The transaction is subject to regulatory approval by the Infocomm Development Authority (IDA).
IDA said on Thursday that it is reviewing the transaction but expects OpenNet to continue to meet its service standards requirements in the meantime.
The regulator also said it will ensure that OpenNet remains a "neutral wholesaler".
This is critical because NetLink Trust is still currently owned by SingTel, which competes with other service providers like StarHub and M1 at the retail level to sell fibre broadband connections to home and business customers.
SingTel was previously required to divest its majority stake in NetLink Trust by April next year, but it is now seeking IDA's approval to move the deadline to April 2018.
On Thursday, Mr Leong Keng Thai, IDA deputy chief executive and director-general of Telecoms and Post, pledged that "consumers will continue to enjoy many choices of service providers at competitive prices".
Some customers are still facing delays in hooking up to the Government-funded network.
Under new quality of service (QoS) standards introduced by the IDA last August, OpenNet must connect 98 per cent of residential sign-ups within three working days of receiving their orders each month. The rest of the requests have to be fulfilled within seven working days.
For business users, OpenNet must connect 80 per cent of new sign-ups within four weeks of the order date, and the remaining 20 per cent within eight weeks.
Last year, OpenNet submitted an appeal to the Ministry of Communications and Information (MCI) against IDA's decision to impose these standards.
MCI told The Straits Times on Thursday that its minister has decided to reject OpenNet's appeal and uphold IDA's decision.
"In assessing the appeal, the minister sought views from both parties concerned, i.e. OpenNet and IDA," it said. "The QoS framework has been in effect from Jan 1, 2013."
Still, StarHub noted on Thursday that the fibre broadband orders of 70 per cent of its business customers are not being fulfilled on time.
Said Ms Jeannie Ong, StarHub's chief marketing officer: "We welcome any steps to improve OpenNet's poor performance on service provisioning record in respect of non-residential customers."
The IDA said it will conduct a public consultation on the sale within seven days of it receiving all the information related to the transaction.
Meanwhile, SPH said that it will get $31.5 million from the deal. It added that the transaction is not expected to have a material effect on the net tangible assets or earnings per share of the group for the financial year ending Aug 31, 2013.