Will Singtel cough up for the NBN or not?

This is the $10 billion question.

Will Singtel Communications, majority owned by the Singapore Government, cough up the money to finance the Optus Networks Investments (ONI) bid for Australia’s National Broadband Network or not?

Optus Networks Investments (ONI) is a subsidiary of Singtel Communications.

More than a week after the bids were lodged, Singtel still has not come clean on whether or not it will fund the $10 billion hole in the Optus bid.

It should stop hiding behind the “gag” which in, no way, prevents it from telling the market and the public about such critical facts as “where the money is coming from”.

There have been absolutely no disclosures by Singtel to its shareholders through the Australian Stock Exchange (ASX).

If Singtel is actually committed to coughing up the finances for the Optus NBN bid, then clearly it has an obligation to disclose this material fact to the ASX.

As it has not disclosed, and assuming that Singtel is playing by the rules, then one can only conclude that it has made no financial commitment to the bid.

This leaves a $10 billion funding hole in the $15 billion Optus bid, with the Federal Government making clear it will not contribute any more than a $4.7 billion.

With Singtel having made no disclosure to the ASX, it is incumbent upon Optus CEO, Paul O’Sullivan, to clarify the commitment yesterday by his Director of Government and Corporate Affairs, Maha Krishnapillai, that Singtel might fund the entire bid.

Mr Krishnapillai made clear at a CEDA lunch that the Singapore Government owned Singtel would provide whatever finances were required to fund the bid.

Is Mr Krishnapillai off on a frolic of his own or has Singtel failed to disclose a very major financial commitment to its shareholders? It has to be one or the other.

Market scepticism about the Singtel Optus NBN financing farce is growing by the day.

Yesterday respected analyst, Mark McDonnell, from BBY released a report making clear that Optus does not have the “demonstrated financial capacity” for its NBN bid.

In his report, Mr McDonnell makes clear that unlike Telstra, Optus does not have the free cash flow sufficient to fund the proposed NBN network and that Singtel has shown a marked reluctance to fund a significant equity contribution to the NBN.

Respected, ABN Amro analyst, Ian Martin, goes further in a report released last week in which he downgrades Singtel, and says that he “cannot see (Singtel) actually taking the risk of winning this (NBN) bid, even if it is only contributing a part of the funding.”

The NBN is Australia’s largest and most complex infrastructure project. It is a very serious business that requires a very serious and credible financial commitment.

Australia’s high-speed broadband future is simply too important to be “gamed” by companies whose real investment priorities clearly lie elsewhere.