Find out how Starhub's $220m bond will be useful by 1H13

The 10-year bond can be utilized for the impending spectrum auction which could cost S$138m.

According to CIMB, StarHub announced that it has priced its S$220m 10-year bond at 3.08%. This is part of its S$1bn multicurrencyMTN programme. The closing date is 8 Sep 12. Proceeds will be used to finance capex and for debt refinancing.

Here's more from CIMB:

We think this is a step towards a special dividend or increasing its dividend payout. It reinforces our view thatStarHub is ripe for capital management given its multi-year low net debt/EBITDA of 0.5x and strongFCFE. StarHub’s FY12-14 FCFE/share is S$0.22-0.29, based on our estimates and comfortably above itsdividend policy of S$0.20/share.

The bond issuance will be useful given the impending spectrum auction, probably in 1H13. The regulator plans toauction off 1800MHz, 2.3GHz, and 2.5GHz spectrum for 4G service, which could cost S$138m if the auction proceeds, based on our estimates. However, telcos could walk away with the spectrum at the yet-to-be-announced reserve price if there is plenty of spectrum to go around.

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