SingTel swoops to win Optus deal

The sum values CWO at $4.57 per share, a premium of 14.5 per cent over its $3.99 closing price on Friday trading on the Australian Stock Exchange (ASX).

The deal still has to be approved by various regulatory bodies, particularly Australia's Foreign Investment Review Board (FIRB), but is otherwise "a done deal" according to a CWO executive who gave a telephone interview on the condition of anonymity.

In a statement to the ASX, Chris Anderson, chief executive of Optus, said SingTel's proposal was a tremendous opportunity for the company, employees and customers.

"With this proposed transaction, Optus will grow from being a successful, highly competitive Australian entity to becoming part of a formidable regional player of stature, significance and strength," he said.

Lee Hsien Yang, SingTel's president and chief executive officer said SingTel's strategy is to take the Optus businesses and services forward and integrate them into SingTel's existing Asian network. SingTel will continue to operate CWO as a full-service provider in the Australian market,and there is clear strategic fit between SingTel's current portfolio and CWO's assets, Lee said in a SingTel statement.

The two companies are an extremely good fit with little geographic or business overlap, according to Bertrand Bidaud, a telecommunications analyst at Gartner Group, in Singapore.

"The deal makes a lot of sense," he said in a telephone interview. "The greater scale will bring advantages in terms of international connectivity and bandwidth. They will also be in a stronger position to deal with content providers and handset vendors. But there won't be much benefit in terms of cost saving."

Of the other two potential bidders, Vodafone Pacific formally withdrew its bid for CWO on Sunday. In a statement, the company said that it couldn't reach a suitable arrangement that would be in the best interests of its shareholders.

Telecom New Zealand has said it will examine the SingTel bid before replying.

"It (Telecom NZ's bid) has always been considered an outsider," the CWO executive said.

The deal will create a company with:

-- fiscal 2000 revenue of $US4.8 billion and pre-tax profit of $US1.1 billion

-- wide service coverage in Singapore, Australia, Hong Kong, India, Indonesia, the Philippines, Taiwan and Thailand.

-- 6.2 million mobile subscribers and 3.7 million fixed-line customers.

-- an extensive Asian data network and infrastructure assets such as the C2C and Southern Cross cables, CWO's national fibre-optic backbone and SingTel's Internet Exchange.

The deal has been carefully structured as a mixture of cash, shares and bonds to avoid burdening SingTel with too much debt.

Optus shareholders can choose to receive:

-- 1.66 SingTel shares (worth $4.57)

-- 0.8 SingTel shares plus $2.25 cash (worth $4.45)

-- 0.54 SingTel shares plus $2.00 cash plus $0.45 SingTel US-dollar-denominated bonds (worth $3.94)

SingTel said the cash element of the deal will be between S$7.25 billion and S$9.25 billion. In March 2000, SingTel had consolidated net assets of S$8.98 billion, according to its annual report.

If the deal is successful, SingTel will seek a listing on the ASX, the company said in its statement.

The principal agency that will have to approve the deal is Australia's Foreign Investment Review Board (FIRB). In the telecommunications sector, FIRB has said that proposals will be dealt with on a case-by-case basis and will normally be approved unless judged contrary to the national interest. SingTel is 78 percent-owned by the Singapore government, a fact that has previously proved an obstacle to its overseas expansion plans.

If the deal goes through, SingTel will in any case face some interesting new challenges on the business and cultural front, according to Bidaud.

"SingTel will be exposed to a very different culture where it will have to be much more transparent and open," he said. "Also, they will be the number two in Australia, not the incumbent, and will have to defend themselves against Telstra."

Any relief in the SingTel boardroom at finally signing a major regional deal after two false starts last year will be short-lived, according to Bidaud.

"It is a completely new ball game for SingTel, and they will have be very aggressive," he said. "But they are aware of the challenges."

Shares of SingTel fell 10.3 per cent to S$2.17 in morning trading on the Singapore Exchange. CWO fell 5.5 per cent on the ASX during the day to $3.76.

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

David Legard

PC World
Show Comments

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Tom Pope

Dynabook Portégé X30L-G

Ultimately this laptop has achieved everything I would hope for in a laptop for work, while fitting that into a form factor and weight that is remarkable.

Tom Sellers


This smart laptop was enjoyable to use and great to work on – creating content was super simple.

Lolita Wang


It really doesn’t get more “gaming laptop” than this.

Jack Jeffries


As the Maserati or BMW of laptops, it would fit perfectly in the hands of a professional needing firepower under the hood, sophistication and class on the surface, and gaming prowess (sports mode if you will) in between.

Taylor Carr


The MSI PS63 is an amazing laptop and I would definitely consider buying one in the future.

Christopher Low

Brother RJ-4230B

This small mobile printer is exactly what I need for invoicing and other jobs such as sending fellow tradesman details or step-by-step instructions that I can easily print off from my phone or the Web.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?