SingTel, Optus deal to conclude by July - News

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This story was printed from ZDNet Australia.
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SingTel, Optus deal to conclude by July

By Irene Tham, Special to ZDNet Asia
March 27, 2001
URL: http://www.zdnet.com.au/news/soa/SingTel-Optus-deal-to-conclude-by-July/0,139023165,120211467,00.htm

Singapore Telecommunications has one last hurdle to cross before gaining control of the mobile business of Cable & Wireless Optus, Australia's second largest telco.

Parent company Cable & Wireless (C&W) now has to convince its other shareholders to sell the remaining 32.6 percent Optus stake to SingTel.

C&W previously owned a total of 52.5 percent in Optus. The remaining shares are held by the public as Optus is listed on the Australian Stock Exchange.

"Cable & Wireless has the obligation to pay SingTel US$100 million if they do not sell the remaining 32.6 percent to us," said SingTel Mobile CEO Lucas Chow in a media conference call last night.

Telecom NZ is also interested in buying Australia's No 2 phone company, while the UK's Vodafone Group quit the bidding Sunday, saying regulatory hurdles were too high.

For each Optus share, SingTel is offering three options:

1) 1.66 SingTel shares;
2) 0.8 SingTel shares and AU$2.25 in cash; or
3) 0.54 SingTel shares, AU$2.00 in cash and AU$0.45 in SingTel US-dollar denominated bonds

The first option values each Optus share at AU$4.57 based on SingTel's closing share price of S$2.42 last Friday (at an exchange rate of AU$1 to S$0.88).

It offers a 20.1 percent premium on Optus's price of AU$3.80 on March 9, the last trading day before SingTel submitted its final expression of interest.

The second option puts a value of AU$4.45 on each Optus share, a 17.1 percent premium. The last alternative values each Optus share at AU$3.94, a 3.6 percent premium.

The three options are extended to all Optus shareholders as SingTel is looking to acquire 100 percent of the Australian telco.

"The effective purchase price per share range of AU$3.94 to AU$4.23 implies an equity purchase price range of AU$14.9 billion to AU$16 billion," SingTel said in a statement.

Approval needed

The deal also requires approval from SingTel's shareholders, the Australian Foreign Investment Review Board, the Info-communications Authority of Singapore, the Singapore Exchange and the Australian Stock Exchange.

SingTel and Optus have been in talks for the past six months, said SingTel CEO Lee Hsien Yang. Lee was speaking to reporters via video conference from Australia.

At a press conference this morning, SingTel chairman Koh Boon Hwee said the acquisition is expected to be concluded in four months.

SingTel, he said, would seek an ASX listing if it acquires 100 percent stake in Optus (as the latter would have to be de-listed).

Commenting on the benefits of the deal, Koh said: "SingTel has identified substantial growth opportunities in (the combined) mobile business, from enhanced roaming and wireless enterprise solutions for corporates to content development."

Additionally, cost reduction in product development and procurement, particularly in the areas of new content and 3G network development can be realised, he added.

There are also opportunities to maximize its (mobile) partnership with the Virgin Group, which will become SingTel's partner in Australia, Singapore, Hong Kong, Taiwan and other markets in Asia, SingTel said in a statement.

The combined SingTel-Optus entity would boast a market capitalization of about US$24 billion, SingTel said.