SingTel, HKT Reportedly Close Their Merger

HONG KONG (01/28/2000) - Singapore Telecommunications Ltd. (SingTel) and Cable & Wireless HKT Ltd. today reportedly reached agreement on the terms of a merger that would create a large regional communications carrier.

News reports quoted the Business Times of Singapore as saying the merger is a "done deal."Beyond confirming that they are in talks, however, the tight-lipped SingTel and HKT have not officially commented on the progress of the merger deal. (See "HK, Singapore Carriers in Merger Talks," Jan. 26)Singapore Government-backed Temasek Holdings, which owns 76 percent of SingTel, reportedly would hold a 38 percent stake in the merged company. U.K.-based Cable & Wireless PLC, 54 percent owner of HKT, would own 27 percent of the company, according to news reports.

If approved, the merger could bring a new level of competition to Asian telecommunications market, driving down prices and drawing in giants from outside the region, such as AT&T, according to analysts.

The deal also would make the government of Singapore the largest shareholder in Hong Kong's incumbent carrier. However, a representative of Hong Kong's telecom regulator has said the new ownership, by itself, would not be a barrier to operating licenses.

The merger of SingTel and HKT, if approved, will be a signal that would bring global competitors into the Asian market, one telecommunications analyst said today.

"Once everyone sees this, all the other global players will definitely come in and be very aggressive," said Sandra Ng, an analyst at International Data Corp.

Asia-Pacific, in Singapore.

Her comments echoed those of other industry observers, who say that consolidation similar to that occurring in other parts of the globe is also inevitable in Asia. In relative terms, telecommunications service rates are much higher in this region than in other areas, and ripe for competition, Ng said.

"From a consumer or market perspective, it will be great," Ng said. With increased competition will also come more innovative services in the region.

The merged SingTel-HKT is likely to become a regional powerhouse in rolling out new services, and eventually compete globally, she added.

Another Hong Kong carrier also may come under foreign ownership soon. New World Telephone has entered into an exclusive sale agreement with Australian carrier Davnet Ltd. and the two companies are negotiating a deal that Davnet hopes to finish within eight weeks, according to news reports today.

Davnet could use New World's fixed phone network to offer broadband data services. The Australian company earlier this week announced a deal with Hong Kong's Hutchison Telecom in which it will offer broadband services over Hutchison's fiber network to 500 buildings, according to news reports.

Davnet and New World officials could not be reached for comment.

HKT, in Hong Kong, can be reached on the Web at http://www.cwhkt.com. SingTel, in Singapore, can be reached online at http://www.singtel.com.

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