Singapore Telecommunications has announced it is confident of getting official approval for its takeover of Cable & Wireless Optus, including US permission to export sensitive military technology.
SingTel's $17 billion bid for C&W Optus is complicated by a planned satellite joint venture between Optus and the Australian Defence Force (ADF), which uses US technology.
The bid must pass the usual Australian regulatory hurdles, including the Foreign Investment Review Board (FIRB), and get approval from Treasurer Peter Costello.
But it must also seek a US export licence for technology allowing the $500 million Optus C1 satellite to send, receive and encrypt sensitive military communications.
The defence department is also weighing up the security implications of the deal, given the Singapore government's 78 per cent stake in SingTel.
SingTel and Optus executives recently went to Washington for talks with US authorities and SingTel president Lee Hsien Yang said he was confident of getting all the necessary approvals.
"Detailed discussions and interaction with the relevant government agencies in Australia are well advanced, and we are confident we can put in place arrangements that meet the security and other issues raised by those agencies," he said.
"We have held discussions with the relevant government agencies in both Australia and the US on the Optus satellites. These discussions have progressed well and SingTel does not believe that there are any issues which cannot be resolved."
It has also been announced that the Australian Stock Exchange has approved the listing and quoting of SingTel shares, and the Australian Securities and Investments Commission is allowing it to skip a shareholder meeting.
But approval from Treasurer Peter Costello could be harder to win, given the treasurer last month blocked Shell's bid for Woodside, although Optus is already majority foreign-owned.
A spokesman for Defence Minister Peter Reith could not confirm whether SingTel needed the US licence guarantees before submitting its application to FIRB.
He said it was hypothetical to speculate on what would happen to the sale if the carrier did not have those guarantees.
He said Defence was still considering the implications of the deal for Australian security.
The US embassy in Canberra could not immediately say whether different criteria would apply to requests from Singapore and Australia to export military technology.
The $500 million C1 satellite, which has a 15-year lifespan, is scheduled for launch early in 2002.
When it announced the deal in 1999, Optus said the Department of Defence would use half of the satellite's capacity for high bandwidth, and long-range communications to support the ADF.
The remaining half would be used for civilian commercial business.