Optus Heading For A Big Write-Down
FN Arena News - September 11 2006
By Greg Peel
Merrill Lynch analysts calculate Optus' return on invested capital (ROIC) to be 6% and its weighted average cost of capital (WACC) to be 11%. In other words, Optus is bleeding.
SingTel has Optus valued on its books at S$18.2bn. Merrills suggests that valuation may soon have to be downgraded by some S$5-8bn.
Merrills had been maintaining a Hold recommendation for SingTel on the basis of its assets in Singapore and elsewhere, but last month downgraded to Sell when the analysts saw the Optus drain as being overwhelming.
optus is bleeding
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