Singapore Telecommunications Ltd. (SingTel) and KDD Corp. of Japan will form a US$350 million joint venture and enter into a strategic partnership to provide a common services platform for corporate customers in Asia and around the world. The joint services offering will include ATM (asynchronous transfer mode), frame relay, international leased circuits and services based on IP (Internet protocol), the companies said in a statement issued yesterday.
The equally-owned joint venture company will develop an integrated ATM broadband backbone in the Asia-Pacific region with connectivity to North America and Europe. The backbone's initial nodes will be located in Singapore, Tokyo and Hong Kong, the companies said.
SingTel and KDD have also agreed to undertake a share swap. Under the agreement, KDD will issue 4,011,800 new shares, or approximately 5 percent of its enlarged share capital, to SingTel. At the same time, SingTel will issue to KDD 221,310,898 new shares, representing 1.43 percent of the enlarged SingTel share capital, the companies said.
The strengthening of the already close relationship between the two companies will ensure that both continue to play leading roles in the region even as the telecommunications industry continues to consolidate, said SingTel Chief Executive Officer Lee Hsien Yang in a statement.
Both companies have been seeking international tie-ups to help them cope with the newly deregulated telecommunications environment in Asia. They were formerly partners in the 19-member WorldPartners telecom alliance led by AT&T Corp., which is scheduled to be dissolved by the end of the year.
In September, KDD was reported to be in talks with Qwest Communications International Inc., but those negotiations reportedly came to nothing. KDD, which formerly held the international telephone monopoly in Japan, has recently come under pressure from competitors such as Nippon Telephone & Telegraph Corp. (NTT), which has begun moving into the international market. [See "TELECOM 99: KDD: Desperately Seeking Partner," Oct. 14.]SingTel faces its first basic services competitor on its home turf in April next year, when the StarHub Pte. Ltd. consortium, which includes NTT and British Telecommunications PLC among its partners, opens for business in Singapore.
SingTel can be contacted at +65-838-3682 or on the Web at http://www.singtel.com/. KDD, in Tokyo, can be reached at http://www.kdd.co.jp/.