Singapore Telecom moves closer to pan-Asian ambition

Singapore Telecom moves closer to pan-Asian ambition

SINGAPORE (AFP): Singapore Telecommunications (SingTel) is now within striking distance of its goal of becoming a pan-Asian carrier after securing the vital nod from Australia for its US$8 billion takeover of Cable and Wireless Optus.

"SingTel has got all the major approvals that it needs," Gillem Tulloch, a telecom analyst at Nomura Securities, told AFP.

"I would say that as a result of this acquisition, SingTel is one step closer to creating a pan-Asian network," he said.

With Optus under its control, SingTel's presence in the Asia- Pacific region would cover Australia, India, the Philippines, Thailand and Singapore, with a total customer base of more than 17 million mobile phone subscribers.

SingTel holds minority equity stakes in telecom companies in India, the Philippines and Thailand.

"No other company in Asia offers such diversified exposure. We envisage SingTel becoming a S$50 billion telecoms giant in terms of assets in the next 5-7 years, providing investors with one of the most rapid growth (rates) among the large Asian companies," SG Securities said in a report.

Australian Treasurer Peter Costello's approval earlier in the week of the Optus acquisition gave SingTel an immediate foothold in the lucrative Australian market.

There had been doubts about the deal amid Australian concerns that the Singapore government, which owns 78 percent of SingTel, would be able to access sensitive military information transmitted by a satellite to be launched jointly by Optus and the Australian defense forces next year.

SingTel has allayed fears expressed by the United States, a close military ally of Australia, and the Australian government has said it is satisfied with SingTel's undertakings to safeguard the security of sensitive commercial and military communications traffic.

Securing Australia's second largest telecom carrier gives SingTel a 33.3 percent share of the mobile market, placing it just behind market leader Telstra which has 45 percent. The mobile business segment is Optus' biggest revenue earner, accounting for 43 percent of total turnover.

For SingTel, having Optus means that more than 50 percent of revenues would now come from outside Singapore where its domestic dominance has been eroding gradually after the entry of new players, analysts said.

"It's a major milestone for SingTel because as you know SingTel's exposure is still very much a local telecommunications company despite the fact that it has been investing overseas," Yang Sy Jian, head of research at Kay Hian brokerage house, said in a televised interview.

Anglo-Dutch bank ING Barings called for a buy recommendation on SingTel on optimism the carrier is well on its way to become an Asian giant, and on its ability to defend its home turf.

"SingTel is ready for liberalization and increased competition in Singapore. It has executed strategies to defend and win back profitable business in a fully liberalized market," the bank said.