SINGAPORE (May 11): NetLink Trust, the fibre broadband network provider backed by Singapore’s biggest phone company, started briefing analysts this week ahead of an initial public offering that could raise at least $2 billion, people with knowledge of the matter said.

The arm of Singapore Telecommunications began meeting research analysts to explain its business model, which will later be followed by meetings with potential investors, according to the people. NetLink Trust, which announced Monday the government has cut most of its prices, has been discussing a potential annual dividend yield of about 4% to 5%, the people said, asking not to be identified because the information is private.

Terms of the offering haven’t been set yet, and details such as the potential yield and deal size could change, the people said. NetLink Trust is targeting to complete the IPO by July, the people said. 

The firm said Monday it accepted price revisions for its services, in the first change to monthly recurring fees since Singapore introduced its fiber network infrastructure in 2009. Prices have been cut for residential connections, where it gets more than half its revenue, as well as non-building connections like lamp posts and bus stops. Charges for companies have been increased under the new structure, which will be in effect from 2018 through 2022.

At $2 billion, the NetLink Trust IPO would be the biggest in Singapore since Hutchison Port Holdings Trust’s March 2011 offering, according to data compiled by Bloomberg. First-time share sales in the city-state have raised $225 million so far this year, the data show.

A representative for NetLink Trust declined to comment, while representatives for Singtel didn’t immediately respond to emailed queries.

High-Speed Access

NetLink Trust, led by Chief Executive Officer Tong Yew Heng, gets a one-time installation charge and recurring monthly fee for each end-user connection. It also books revenue from providing services for its other infrastructure including ducts and manholes. The firm posted revenue of $258 million for the financial year ended March 2016 and earnings before interest, taxes, depreciation and amortization of $183 million, its website shows.

The fiber network owned by NetLink Trust forms the foundation of the ultra-high-speed internet access delivered throughout Singapore. Its network consisted of about 76,000 kilometers (47,000 miles) of fiber cable as of the end of March, as well as 16,200 kilometers of ducts, 62,000 manholes and ten central offices, according to Monday’s statement.

“We believe the price revisions can ultimately benefit consumers and further drive fiber penetration in residential homes,” NetLink Trust’s Tong said in the statement. “Enterprises are also expected to switch to fiber network services, and NetLink Trust is poised to leverage on our nationwide network coverage to capture future growth in the non-residential segment.”

Singtel said in February it hired Morgan Stanley, UBS Group AG and DBS Group Holdings Ltd. as advisers for an IPO of NetLink Trust. Government regulators have given Singtel an April 2018 deadline to cut its NetLink Trust stake to less than 25%.