By WINSTON CHAI
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AUSTRALIA'S New South Wales Supreme Court yesterday ruled in favour of Singapore Telecommunications' Australian subsidiary Optus in its licensing dispute with movie content provider TMNC (The Movie Network Channel).
TMNC, a supplier of movie channels to the Australian operator's pay-television unit Optus Vision, had taken the company to court, claiming that it was short-changed licensing fees and interest amounting to nearly half a billion Australian dollars.
TMNC represents four major movie studios - Warner Bros, Disney, MGM and Roadshow.
The outstanding amount came about because an escalation clause in its content supply contract with Optus Vision was triggered in 2002 and this led to an increase in monthly licensing fees, the firm claimed.
In its defence, Optus Vision said that TMNC had misinterpreted the clause and maintained that it has never been set off.
SingTel announced in a regulatory filing yesterday that the New South Wales Supreme Court had rejected TMNC's claims.
'Optus has always said it regarded this case as a play for cash and we have been vindicated by this morning's judgment,' Paul O'Sullivan, CEO of SingTel Optus, said in an e-mail response to BT.
With the case now put to rest, a larger victory is at stake for Optus later this month as it is one of four finalists in the race to secure the mammoth contract for building Australia's National Broadband Network (NBN).
The project to wire up the country for ultra-high-speed Internet access could cost around A$15 billion (S$15.5 billion) but it comes with a government subsidy of A$4.7 billion.
Australia's dominant telco Telstra has been excluded from the deal for not meeting government objectives, leaving Optus as the frontrunner. It is up against Melbourne-based Acacia, Canada's Axia NetMedia, as well as the Tasmanian Government and TransAct.
While it may be a boon for SingTel's overseas business in the long run, an Optus win could be bad news for shareholders, according to Kim Eng Research analyst Gregory Yap.
This is because it would require Optus to sink in billions into the effort and this could prompt SingTel to slash its dividend payout.
'As most of SingTel's cash flow already goes to paying dividends, it may have to raise debt but this could push net debt to Ebitda from 1x now to 1.5x, the highest in the sector. Cutting dividend payout of 45-60 per cent would reduce the debt needed,' he said in his client note.
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