SingTel Latest HK Venture Not Part Of Plan To Move There
By GREN MANUEL
HONG KONG -- Moves by Singapore Telecommunications Ltd. (P.SGT) that have left it the largest shareholder in a leading electronic-commerce operator in Hong Kong aren't part of a grand plan to move into the city, according to SingTel President and Chief Executive Officer Lee Hsien Yang.
SingTel has invested more than US$2.9 billion in 100 joint ventures in more than 20 countries as part of an aggressive overseas expansion, but its activities in Hong Kong remain very limited after its failure last year to buy Cable & Wireless HKT Ltd. (HKT), the city's former telephone monopoly.
Speaking in an interview in Hong Kong, Lee said "if it makes sense, we will do business here". However, he said any investments in Hong Kong wouldn't be driven by grand strategy.
"We do it [invest] not because of anything else than it being a sound business project," he said.
Last Wednesday SingTel announced that SESAMi.com Pte., a business-to-business e-commerce unit that it controls, would enter a 50:50 merger with Asia2B.com Ltd., a similar business owned by a Who's Who of Hong Kong conglomerates.
The move will bring the venture, in which SingTel will have the largest stake of 44.5%, head-to-head with the e-commerce ambitions of Hong Kong billionaire Li Ka-shing, who isn't a member of the Asia2B group and who has been ramping up his own e-commerce offerings.
However Lee said Li Ka-shing wasn't the target of the new venture. "It is looking at a much wider world. There's no reason for us to aim at Li Ka-shing."
Lot Of Competitors Won't Survive
We see a lot of other competitors out there but we think the merger puts us well ahead of the pack. Our focus is on the growth opportunities and not looking around for potential competitors," said Lee. Of B2B companies in Asia, he said: "There a lot of players out there and a lot of them will not exist a year from today," adding that B2B e-commerce wasn't a natural monopoly.
"I think there will be more than one winner in the game," he said.
The merger between SESAMi and Asia2B.com Ltd. will create a merged group which is already doing US$320 million of transactions a month, Lee said, which puts it far ahead of other regional competitors.
"I suppose our view is that the industry needs to consolidate and it is much better to be a small part of a much larger and stronger entity than to try and control it and have everything to yourself. Partners and scale are important in this game today," Lee said.
Mark Cochrane, an analyst with Gartner Group in Hong Kong, said the deal made sense for SingTel's SESAMi as it gained access to Asia2B's high-profile shareholders and a quick entry to the Hong Kong market.
SingTel's attempt to buy Cable & Wireless HKT Ltd. was thwarted by Mr. Li Ka-shing's son Richard, whose Pacific Century CyberWorks Ltd. (PCW) won the battle in August.
But Lee said the e-commerce merger was hardly a substitute for the Cable & Wireless deal as it was on a much smaller scale. The merged e-commerce company, to be known as SESAMi Inc., has a paid-up share capital of just US$72 million, he said, and SingTel's share represented a very small part of its assets.
Since beating SingTel for Cable & Wireless HKT in August, Pacific Century CyberWorks has seen its share price fall 75%. Asked if he was now pleased that he had lost the battle for Cable & Wireless HK, Lee said "You know, with 20/20 hindsight it's always easy to look back. And I think we are looking forward rather than looking backwards."
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02/02/01 12-10G
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