2 reasons why analysts doubt NetLink stake sell-off's 4-year extension

The devil is in the details, they say.

According to Maybank Kim Eng, it takes the view of StarHub, M1 and other Internet Service Providers who would likely still not see the proposed sale of OpenNet to NetLink Trust as a development that will benefit the industry significantly, especially the granting of permission for SingTel to sell down its stake in NetLink Trust by four years.

Maybank's biggest concern is in the four-year time extension given to SingTel to sell down its stake in NetLink Trust. Notwithstanding the safeguards that will be put in place, the devil is still in the details, despite the following changes.

Here's more:

One, despite the boards of NetLink Trust and CityNet being majority independent, they can only perform an oversight function and cannot be everywhere at once.

After all, the operations itself will still be run by ex-SingTel people (namely, former SingTel staff involved in installing the cables and more importantly, scheduling the installation of fibre) who will have to deal with SingTel people on the business side.

Two, we do give a nod to the fact that IDA also introduced the "monitoring" board that, hopefully, will be able to keep things in check. Unfortunately, IDA also said that it will be staffed by government people instead of industry people.

This probably looked feasible on paper but in our view, this board is still unlikely to be able to look into every contract closely.

Nevertheless, we do reserve our judgement on this one until more details are revealed on how the board will be structured. Ideally, this monitoring board should also be staffed by StarHub and M1 people in addition to the government.

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