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SingTel bids $8.6 bn for Optus

C&W Optus headquarters in Sydney  

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Unlikely to be opposed

Added scale and diversity

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SYDNEY, Australia (CNN) -- Singapore's largest company Singapore Telecommunications has offered $8.6 billion (Australian $17.2 billion) for Australian communications company Cable & Wireless Optus Ltd.

C&W Optus, Australia's number 2 telecoms company, has welcomed the offer which comes a day after major rival Vodafone Pacific pulled out of the race for the Optus assets. Vodafone faced major regulatory hurdles related to competition issues with its offer for Optus.

C&W Optus has been on the market in one form or another for about a year since UK-based parent Cable and Wireless decided to rationalize and consolidate its global operations and sell off its controlling stake in the Australian offshoot.

SingTel has provided three different options for Optus shareholders comprising 1.66 SingTel shares for every one Optus share, or 0.8 SingTel shares and Australian $2.25 cash per share for each share, or 0.54 SingTel shares, Australian $2 per share cash and $0.45 U.S. bonds per share.

The bid is subject to approval by C&W Optus shareholders and by Australia's Foreign Investment Review Board. If successful, it will be the second largest corporate deal in Australian history following last week's $28 billion merger of Australian resources giant BHP with British metals group Billiton.

SingTel will seek a general listing on the Australian Stock Exchange once the bid is completed.

Unlikely to be opposed

SingTel has been knocked back in recent expansion opportunities in Hong Kong and Malaysia for chiefly political reasons. SingTel is majority owned and controlled by the Singapore Government, but it has indicated that it will decrease its influence in the near future.

It is unlikely that the Australian Government will oppose the SingTel takeover as the company is already majority owned by a non-Australian company. Australia's Howard Government is also favorably disposed towards Singapore and is currently negotiating a bilateral free trade agreement with the island State.

In a statement to the Australian Stock Exchange this morning, SingTel said the offer gave Optus shareholders an opportunity to participate in a dynamic, Pan-Asia Pacific telecommunications company.

Added scale and diversity

It said shareholders would benefit from the added scale and diversified and higher growth in revenue streams and increased market presence.

By adding Optus, SingTel will have businesses in Asian regional markets including Singapore, Australia, Hong Kong, India, Indonesia, the Philippines, Taiwan and Thailand.

The expanded company will have 6.2 million mobile subscribers and 3.7 million fixed-line customers.

The company predicts fiscal year 2000 revenues of 4.8 billion (Singapore $8.5 billion, Australian $9.6 billion) and earnings before interest, tax, depreciation and amortization of 2.3 billion (S$4 billion, A$4.6 billion).

SingTel said it intended to continue to operate Optus as a full service telecommunications provider in the Australian marketplace.

Cable and Wireless Optus
Singapore Telecom
Australian Stock Exchange

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