SingTel inches closer to Optus acquisition

Singapore Telecommunications is closer to acquiring Australian telecommunication company Cable & Wireless Optus after it resolved some outstanding regulatory issues this week, SingTel said in a statement.

          Singapore Telecommunications (SingTel) is closer to acquiring Australian telecommunication company Cable & Wireless Optus (CWO) after it resolved some outstanding regulatory issues this week, SingTel said in a statement.

          These issues involved a share buy-back plan, central to SingTel's purchase offer, which normally would need to be approved by a meeting of CWO shareholders.

          The Australian Securities and Investments Commission and the Australian Stock Exchange have accepted written confirmation from CWO's parent company, Cable & Wireless, that CWO shareholders would approve the plan, and waived the requirement for a further shareholder meeting.

          SingTel has also received approval from Singaporean regulators at the Infocomm Development Authority to go ahead with the acquisition.

          A few hurdles still remain. These include:

          • approval by Australia's Foreign Investment Review Board (FIRB). Although CWO is 52.5% owned by UK-based Cable & Wireless, it is regarded as an Australian company and its acquisition is therefore subject to FIRB approval.
          • approval by the Australian and US governments concerning the use of communications satellites due to be launched by CWO next year. Apart from carrying normal traffic, the satellites are to be used by Australian defense organisations for military communications. The US military also maintains a significant listening presence in Australia, which will also use the CWO satellites for communications. The security implications of this are still under review, according to Australian ministers.
          "As part of the approval process, we have held discussions with the relevant government agencies in both Australia and the US on the Optus satellites," SingTel president and chief executive officer Lee Hsien Yang said in the statement. "These discussions have progressed well and SingTel does not believe that there are any issues which cannot be resolved."

          Singapore's government underlined its support for the takeover earlier this week when it surrendered rights attached to a special share it holds in SingTel.

          The special share rights gave the government a free hand to intervene in SingTel's affairs. It could block attempted takeovers, change the board of directors or prevent any corporate action which it believed ran counter to Singapore's security interests.

          The move to rebrand SingTel as a normal -- albeit still majority government-owned -- company has been made to allay fears expressed by potential foreign partners that allowing investment by SingTel was tantamount to handing control of telecommunications to the Singapore government.

          Last year, the issue of government control intimidated possible partners -- or their political overseers -- in Hong Kong and Malaysia, causing SingTel to miss out on two acquisitions, and stifling its expansion plans.

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More about Australian Securities ExchangeCWOForeign Investment Review BoardInfocomm Development AuthorityOptusSingapore Telecommunications

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