Telstra, PCCW in $2.7bn bonanza
By Geoff Elliott
09dec00
TELSTRA and Richard Li's Pacific Century CyberWorks plan to tap Australian and international investors for at least $US1.51 billion ($2.7 billion) in three separate stock market listings likely within 12 months.
The initial public offers of a maximum of 10 per cent of the three companies value the Telstra and PCCW alliance at $US15.1 billion.
Under the shareholders agreements seen by The Weekend Australian, Telstra and PCCW have placed the most value on the new Internet Protocol Backbone Co (IPBC) at $US10 billion.
The Regional Wireless Co, an Asia-Pacific-wide mobile phone company, is valued at $US3.1 billion and a global portfolio of ready-to-go commercial offices for companies wanting fast internet access is valued at $US2 billion.
The documents say both partners will fast-track the floats as soon as the joint venture agreements and transfer of assets take place, which could be as soon as this Friday. But both partners allow for slippage in the deadlines. The next deadline for agreements is March 31, 2001, followed by June 30, 2001. If that final deadline is not met the deal lapses.
"The founders will work together in good faith towards floating the company through an IPO as soon as practicable," the documents reveal on each of the potential floats.
And documents reveal Telstra and PCCW may still kick in more assets into IPBC, including Telstra's interests in Bermuda-based Japan-Australia Cable Holdings, a new cable being built between the two countries, and Telstra's interest in satellite company Inmarsat.
That also applied to RWC, into which Telstra may also sell the joint venture Mobitel, Sri Lanka's second largest mobile phone company and a joint venture with Sri Lanka Telecom.
The documents indicate Telstra and PCCW are hunting for a third partner to take a maximum 20 per cent stake in RWC. PCCW is commissioned to "endeavour to find a third party suitable to Telstra".
Under the agreements Telstra and PCCW have also deemed that RWC will take at least a 30 per cent stake in targeted mobile companies in the region, such as Singapore's M1, in which PCCW already has an interest.
That was seen as the minimum stake required to "influence mobile management and operational performance of the operator".
"Opportunities will also evaluated for investment in other operators in Thailand, Indonesia, Malaysia, the Philippines and Taiwan," the documents reveal.
The new capital to be raised for IPBC must be at least $US1 billion, the shareholder agreements state, with net proceeds of least $US850 million.
And already the two companies are confident enough to cite a big valuation in the International Data Centre (IDC) business.
Data centres are the big new thing for telco companies that plan to convert commercial buildings into fast internet hubs to attract bandwidth hungry companies.
The IDC float must raise at least $US200 million, the shareholder agreements reveal, and if there was no IPO within 18 months the expectations for the capital raised would be $US170 million.
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