SingTel completes C&W Optus takeover

Singapore Telecommunications Ltd. (SingTel) has completed its S$17 billion (US$8.65 billion) takeover of Australian carrier Cable & Wireless Optus Ltd. (CWO) by securing 93 percent of CWO's share capital, SingTel said in a statement Thursday.

CWO's former parent Cable & Wireless PLC has accepted SingTel's offer for its 52.3 percent stake in CWO, and now that SingTel has over 90 percent of the shares, it can proceed with compulsory acquisition of the outstanding shares, according to the statement.

The acquisition has taken five months to complete, as various aspects of the deal needed the approval of the Australian Defense Department, the U.S. State Department and Australia's Foreign Investment Review Board. The deal was also vigorously opposed by some Australian businessmen, who felt that giving control of an important Australian carrier to Singapore government-owned SingTel was not in Australia's best interests.

SingTel will now list its shares on the Australian Stock Exchange (ASX) to give Australian investors the chance to participate in the new company, SingTel has said.

The combined SingTel/Optus is still smaller in revenue terms than Australia's dominant carrier Telstra Corp. Ltd. Telstra reported Wednesday full-year revenue of A$23.09 billion (US$12.23 billion). Combined annual revenue for SingTel/Optus is estimated at US$5.41 billion for the most recent financial year, although the combined profit of US$1.55 billion is only slightly less than Telstra's US$2.15 billion.

Telstra dominates all sectors of the telecommunication market in Australia, although CWO has grabbed 33 percent of the mobile market against Telstra's 45.5 percent, according to recent surveys. That is unlikely to be a growth area for the new venture, as Australia's mobile market is almost saturated with a penetration rate of 60 percent of the country's 19 million population.

The two rivals will clash in markets all round Asia, as Telstra earlier this year formed three regional joint ventures with Hong Kong's Pacific Century Cyberworks Ltd. (PCCW) in the wireless, Internet backbone and data center businesses. The two companies are reported to be interested in buying Mobile One Asia Pte. Ltd. (M1), Singapore's second-largest mobile phone operator.

Apart from its small domestic market, SingTel has operations in the Philippines, Thailand and India, where it offers fixed line and mobile telephone services, Internet access and corporate data services. Its acquisition of Optus is easily its biggest foray overseas to date. SingTel will retain the Optus brand name for its products and services in Australia.

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More about Australian Defense DepartmentAustralian Securities ExchangeCable & WirelessCWOC&W OptusForeign Investment Review BoardMobile One AsiaOptusPacific Century CyberWorksPCCWSingapore GovernmentSingapore TelecommunicationsSingtelTelstra Corporation

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