C&W Optus on the block
afr.com.au
By Christine Lacy
The Australian telecommunications landscape is to be reshaped, as Cable & Wireless Optus is reviewing its three business units before a possible break-up of the $30 billion telecommunications group.
Under pressure from its 53 per cent British parent, Cable & Wireless plc, the review includes potential floats, spin-offs and alliances of the divisions.
Several international carriers are expected to emerge as major players, with frontrunners in a sale of the $15 billion mobile business likely to include Japanese wireless giant NTT DoCoMo and Hong Kong conglomerate Hutchison Whampoa.
The review, which was first mooted at board level about two months ago, comes amid consolidation of the telecommunications industry internationally, with companies seeking partners to help fund the massive growth expected over the next decade.
The company's share price surged on the announcement, which confirmed repeated reports that a break-up was on the UK parent's agenda despite denials by the Australian management.
The shares ended 23¢ higher at $4.10, with more than $86 million worth of stock traded. Optus generates annual turnover of
$4.1 billion, but analysts have said that on an enterprise valuation, the group could fetch $30 billion on a break-up.
They said the review came as the telecommunications sector was being rerated and valuations were off their peak of earlier this year when Optus failed to secure an equity partner for its consumer and multimedia businesses.
In a statement to the Stock Exchange, Optus said it was conducting a "review of structural and strategic options for all of its operating units. The company now believes it is appropriate to examine which structures for the three business units will optimise their already impressive growth prospects and create the greatest value for shareholders," the statement said.
It is understood that advisers Ord Minnett and Goldman Sachs, which advised on attempts to take in an equity partner on the Optus cable, will also act on behalf of the company's Australian management.
Merrill Lynch, which acted for the British parent in the sale of its stake in Hong Kong Telecom, will advise Cable&Wireless on the rationalisation of its interests in Australian assets.
C&W internationally, under chief executive Mr Graham Wallace, has indicated its intention to exit assets that don't sit within its strategy to focus on the corporate market for data services. It said yesterday that "it remained deeply committed to those markets in Australia".
Optus chief executive Mr Chris Anderson and his chief financial officer, Mr Norman Gillespie, will conduct the review before presenting recommendations to the Optus board, which will decide on what to do with the group assets.
Options include an equity partner in the company's mobile and cable businesses. Potential floats also can not be ruled out, with all options for the assets under consideration.
The company has already received several expressions of interest on its mobiles business, with Telecom New Zealand believed to be very interested in participating in any rationalisation of Optus.
The company has received at least three firm offers for a stake in the it cable network, including one from Microsoft and Mr Kerry Packer's ecorp. Mr Kerry Stokes' Seven Network and British media group Granada are also interested, while Mr Richard Li's Pacific Century CyberWorks was also an early contender to deal with the asset.
Mr Anderson yesterday met the company's institutional shareholders to discuss the review. |
