StarHub to acquire control of MyRepublic's broadband unit

STARHUB CC3 : CC3 0%on Wednesday announced plans to acquire a majority 50.1 per cent stake in MyRepublic's broadband business in Singapore for an initial consideration of S$70.8 million, subject to several adjustments.

A deferred consideration of S$92 million will be payable on the condition that financial performance metrics be met. That would take StarHub's investment for its stake in the jointly owned entity - MyRepublic Broadband - to S$162.8 million. The acquisition will be funded using StarHub's internal cash resources.

In addition, StarHub is extending a loan of S$74.2 million to a MyRepublic unit called MyRepublic Holdings upon completion of the deal. This will be used for the repayment of MyRepublic Holdings' debt. MyRepublic Holdings presently holds the broadband businesses that are to be transferred to MyRepublic Broadband.

MyRepublic will retain the remaining 49.9 per cent stake in MyRepublic Broadband, although StarHub has an option to acquire this stake in the future.

The current senior management team, including MyRepublic's co-founder and chief executive Malcolm Rodrigues, is expected to remain intact. Mr Rodrigues, a former StarHub executive, founded MyRepublic in 2011.

StarHub said the proposed transaction will consolidate and strengthen its position in the Singapore broadband market, expanding its market presence to 40 per cent and steering long-term business growth.

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MyRepublic Broadband is profitable and growing, StarHub said, and currently has a 6 per cent share of Singapore's broadband market.

For the financial year ended June 2021, the broadband business of MyRepublic recorded earnings before interest, taxes, depreciation and amortisation of S$18.6 million. This figure is based on pro forma management accounts, and is subject to an audit. Revenue was S$63.9 million. The net profit attributtable to the stake that StarHub is buying is S$5.2 million.

Assuming the transaction had been completed on Dec 31, 2020, StarHub's earnings per share for FY2020 ended December would have risen to 8.99 Singapore cents from 8.66 Singapore cents.

With the acquisition, StarHub said MyRepublic's broadband customer base will stand to gain access to enhanced offerings from its consumer and enterprise business segments. This will include StarHub's products and services offering connectivity, over-the-top content and cloud gaming.

The partnership would also create mutually beneficial opportunities through scale and synergies in terms of joint go-to-market opportunities, future wholesale offerings and cost savings, said the telco.

"We are delighted to partner MyRepublic to step up innovation and bring more value to more customers in Singapore. Covid-19 has shown just how important quality broadband services are to our society, and we intend to scale up and deliver better and faster services to our customers, while realising high-quality earnings accretion," said StarHub chief executive Nikhil Eapen.

Shares of StarHub closed S$0.02 or 1.6 per cent higher at S$1.24 on Tuesday.

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