SingTel wins C&W Optus and looks for more Asian deals<\/p>\n
SINGAPORE (Reuters): Singapore Telecommunications, fresh from
\nwinning the battle for Australia's Cable & Wireless Optus for up
\nto A$17.2 billion (US$$8.4 billion), said on Monday it had an
\nappetite for more regional acquisitions.<\/p>\n
SingTel's victory in the long and arduous battle for Optus was
\nsealed on Sunday when rival Vodafone Plc withdrew its conditional
\noffer, saying the proposed transaction did not meet its return
\ncriteria.<\/p>\n
The purchase of Austrlia's number two telephone company -- the
\nlargest foreign acquisition by a Singapore firm -- would not
\ndeplete the coffers of cash-rich SingTel or stop it from pursuing
\nother regional assets, chairman Koh Boon Hwee said.<\/p>\n
\"SingTel will still have significant capacity for expansion in
\nthe region,\" Koh told a news conference. \"We are definitely not
\ngoing to stop if the opportunities present themselves.\"<\/p>\n
Koh said the slump in SingTel's share price, a reaction to the
\nprospect of the Optus deal resulting in a massive share overhang,
\nalso did not deter the company.<\/p>\n
\"The offer we have made for Optus...is a fair one. As far as
\nthe stockmarket is concerned, we don't deal with it on a day to
\nday basis,\" he said.<\/p>\n
Shares of SingTel, Asia's eighth-largest telecom player by
\nmarket value, fell by as much as 12 percent on Monday to a low of
\nS$2.13 in heavy volume of more than 91.7 million shares. The
\nstock was last seen at these levels in June 1998.<\/p>\n
Optus ended lower at A$3.80, down 19 cents.<\/p>\n
SingTel -- with net cash of US$3.3 billion at the end of March
\n2000 -- plans to fund its Optus bid through a combination of
\ncash, bonds and an issue of up to 3.1 billion new shares.<\/p>\n
Optus shareholders could opt for all shares, cash and shares,
\nor cash, shares and bonds as payment.<\/p>\n
Koh reiterated the group's ambition to be a leading Asian
\nplayer but declined to specify which countries it was looking at.<\/p>\n
SingTel officials have expressed confidence in buying more
\nAsian telecoms firms as European carriers like British Telecom,
\nDeutsche Telekom and KPN are pressed to sell regional assets to
\nrepair their balance sheets.<\/p>\n
The Australian Communications Minister Richard Alston said
\nthere were no impediments under federal telecommunications law to
\nthe bid by SingTel.<\/p>\n
Chief executive officer Lee Hsien Yang said the fall in
\nSingTel shares would not affect the Optus deal as Britain's Cable
\n& Wireless had already agreed to sell it a 19.9 percent stake in
\nOptus. C&W holds 52.5 percent of Optus.<\/p>\n
In addition, SingTel was comfortable with an equity price
\nrange of A$14.9 billion to A$16.0 billion for Optus.<\/p>\n
\"The share price is a relative share price exchange...with
\nsome cash in it,\" Lee said.<\/p>\n
\"To the extent there is some volatility in the market, the
\noffer will automatically adjust in value...inevitably there will
\nbe all kinds of noise in the market.\"<\/p>\n
Lee also said the group will hedge its currency requirements
\nfor the multi-billion dollar transaction.<\/p>\n
\"Obviously we would not want to comment on exactly when we
\nmight or might not enter into any hedging positions,\" he said.
\n\"We have a relatively long length of time to make sure our forex
\npositions are covered.\"<\/p>\n
The Singapore dollar, which had been under pressure from the
\nOptus deal, recovered from 1.7945 -- its lowest level since
\nAugust 1998 -- to around 1.7900 to the U.S. dollar on news
\nSingTel would fund part of the deal by issuing U.S. dollar
\ndenominated bonds.<\/p>\n
The Australian dollar, which traded up to US$0.5023 before the
\nannouncement, then fell to a record low of US$0.4888.<\/p>\n
\"It appears any initially positive Australian dollar
\nimplications will be offset by negative sterling and U.S. dollar
\nflows...due to a larger proportion of UK and U.S. owners swapping
\ntheir Australian dollar payments,\" Westpac currency strategist
\nAdam Myers said in Sydney.<\/p>\n
While Australian and Singaporean investors were less than
\nenthused by the deal, SingTel management saw long-term benefits.<\/p>\n
The Optus purchase will be earnings dilutive in the short
\nterm, mainly due to the annual goodwill write-off of S$400
\nmillion to S$500 million for the next 20 years.<\/p>\n
Lee said the acquisition should turn earnings accretive in
\nfour to five years and that SingTel's growth rate would be
\nsignificantly enhanced by Optus.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/singtel-wins-cw-optus-and-looks-for-more-asian-deals-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}