Global Telecommunication Infrastructure Trust

[Nick]

GTI Trust have lodged their preliminary prospectus with MAS -

http://masnet.mas.gov.sg/opera/sdrprosp....20033CE0A/$File/01%203%28a%29%28i%29%205%20Jul%202012%20Preliminary%20Prospectus.pdf [Preliminary Prospectus]

GTI Trust will be the first publicly traded global telecommunications infrastructure-related business trust. It will provide Unitholders with an opportunity to invest directly in the growth of global data and internet traffic. GTI Trust’s sponsor is RGBV, a company incorporated in the Netherlands and a wholly owned subsidiary of RCOM, which is one of India’s largest telecommunications service companies providing wireless, wire line, longdistance, voice, data, video and internet communication services. RCOM is a part of the Reliance Group. The Reliance Group is one of India’s largest business groups and has a significant presence in the telecommunications, financial services, entertainment, energy and infrastructure sectors.

[pianist]

what e underlying 'assets'?

[greengiraffe]

Any thoughts from buddies on what looks like a global telecom infrastructure play - unleverage high yield listing that seems to have a fair share of skeptics.

http://masnet.mas.gov.sg/opera/sdrprosp....O?OpenView

GTI is a business trust sponsored by Indian's no 2 mobile operator Reliance Communications.

Understands that Reliance is floating GTI in a bid to reduce its own gearing. GTI will be debt free post listings.

KEY INVESTMENT HIGHLIGHTS:

(1) Presence in key markets and strong regional connectivity - The GTI Global Network is present in key markets globally and provides connectivity across six of the eight major global data traffic routes. Along its routes, it has developed strong regional connectivity with 47 landing stations in 27 countries.

(2) High entry barriers - high cost and long lead time to build subsea cable systems; complex and lengthy regulatory and commercial processes; and limited availability of rights of way.

(3) Wholly-owned subsea cable systems which provide key advantages over consortium owned subsea cable systems - allows it to operate in a more flexible manner and to provide high quality services compared to most competitors who typically own shares in consortia which operate subsea cable systems.

(4) Advanced design features providing the ability to offer high quality end-to-end solutions and services - The GTI Global Network provides seamless connectivity over long distances with express routes ensuring low latency and local routes providing access to intermediate markets.

(5) Significant spare capacity and remaining useful life – On most of its six major global data traffic routes, the GTI Global Network’s subsea cable systems are capable of accommodating significant demand growth due to their high design capacity at 40G and installed capacity. Its subsea cable systems commenced service on different dates and each of them had a stated estimated useful life of 25 years as at those dates.

(6) Strong relationships with a diverse customer base - For the financial year ended March 31, 2012, the GTI Group’s top 20 customers, excluding Reliance Communications and its subsidiaries, accounted for 32.0% of its service income and no customer accounted for more than 4.4% of its service income.

(7) Sound financial position - For the financial years ended March 31, 2010, 2011 and 2012, the GTI Group’s IFRS EBITDA accounted for 53.7%, 51.8% and 53.0%, respectively, of the GTI Group’s IFRS Income, and Billed EBITDA accounted for 48.3%, 39.2% and 53.7%, respectively, of the GTI Group’s Billed Income.

DBS BANK: Joint Global Coordinator, Bookrunner, Lead Manager and Underwriter with Deutsche Bank, Standard Chartered and ICBC

OFFERING SIZE:
Base offering size: US$700m to US$1,000m (based on 642,202,000 units to 757,576,000 units)
Greenshoe: Up to 15% of base offering - US$105m to US$150m (based on 96,330,000 units to 113,636,000 units)


INDICATIVE PRICE RANGE: US$1.09 – US$1.32 per unit

DISTRIBUTION YIELD : 9.5% - 11.5% (FYE 31 March 2013) ; 10.1% - 12.2% (FYE 31 March 2014)

MARKET CAPITALISATION (BASED ON OFFERING PRICE RANGE): US$1,268m – US$1,535m (based on 1,163,080,000 units)

SPONSOR STAKE: Approx 35 - 45% (assuming greenshoe not exercised) / Approx 25 - 37% (assuming greenshoe fully exercised)

LOCK-UP: Sponsor – 100% of holdings for first 6 months from listing date; - 50% of holdings for next 6 months; Trustee Manager – 12 months from listing date

USE OF PROCEEDS: The proceeds from the Offering will be used principally towards the partial settlement of the consideration for the Trust Acquisition on the listing date

[yeokiwi]

Some extractions from the Risk factors that are worth considering...

The prices that the GTI Group has been able to charge for capacity services and other related network services
have been declining in many markets around the world in the last decade and continued to decline in the financial
year 2012, and such prices may continue to decline in the future.

It does contradict with some of its investment merits..haha


If the GTI Group fails to maintain co-operative relationships with landing parties, the GTI Global
Network’s operations may be impaired.
The GTI Group currently has contracts with landing parties in Sudan and Iran.


The infrastructures span many countries or rather, many countries that are relatively volatile.
The unique risks that this trust face probably will account for the higher dividend yield as compared with other business trust (Cityspring, HPH)

[freedom]

I haven't read much about it yet. but from its historical financial statements, it has been making loss year after year. If not for the trust structure, can the company pay a dividend to its shareholders?

plus, the trust is paying a premium for loss-making assets, is it right?

[greengiraffe]

I manage to find a listed comparison - level 3 communication listed on NYSE.

Level 3 merged with Global Crossing (a ST Telemedia company) in 3Q11.

However, level 3 is highly geared while GTI is debtfree post listings.

The accounting losses are due to the high fixed costs nature of the business - sub sea fibre optics. Hence EV/EBITDA is a better yardstick.

http://www.bloomberg.com/quote/LVLT:US

Level 3 trades on 12.3x while GTI is coming thru at 9.7 - 11.7x FY13. In addition, GTI proposes to pay dividends.

Moreover telecoms stocks are shining in the midst of global uncertainties, GTI may just turn out to be another HKT Trust replay - now HK$6 vs IPO of HK$4.5 late last yr

[sgd]

Level 3 isn't that the company that buffet bailed out sometime after 9-11

I remember some commentary that buffet and L3 ceo knew each other when they were younger and somehow the wife ...... dotted line ........ to somewhere ......

oh wells somebody can google it

[Drizzt]

there are currency risks involved as well isnt it?

[Nick]

Reliance Comm unit extends Singapore IPO timeline: sources

http://kfc1973-stock.blogspot.sg/2012/07...apore.html [Article]

[greengiraffe]

ICRA downgrades Reliance Communications rating due to Rs 37,000 crore debt

http://telecomlead.com/inner-page-detail...block=News

Desperate parent, bargains for offspring?