Vodafone Pacific submits indicative bid for Optus
By Virginia Marsh in Sydney
Published: February 8 2001 14:17GMT | Last Updated: February 8 2001 14:49GMT
Vodafone Pacific ended months of speculation over its interest in Cable & Wireless Optus on Thursday, when it said it had lodged an indicative offer for Australia's second-largest carrier.
To ease competition concerns, the Sydney-based subsidiary of the UK mobile giant said that, if successful, it would sell parts of the enlarged business to Hutchison Telecommunications, a listed local subsidiary of Hutchison Whampoa, the Hong Kong conglomerate.
Vodafone Pacific, which pulled its flotation at the eleventh hour last year because of poor market conditions, also said its proposal was aimed at creating a new Australian-listed mobile group.
Telecom New Zealand and Singapore Telecom are also understood to have submitted indicative bids for Optus, in which Cable and Wireless of the UK holds a 53 per cent stake. The Australian group, which has a market capitalisation of about A$15bn (US$8.1bn), put itself up for sale last November.
Vodafone's proposal has been tailored to ease the regulatory hurdles that a takeover of Optus would face. Together the two groups hold 52 per cent of the local mobile market and Australia's tough competition authority has already indicated that it would not allow a straight merger of the two businesses.
Vodafone said it would sell at least 1m of the more than 5m customers of the enlarged entity to Hutchison, as well as distribution channels and network capacity. Hutchison would also have the option to use the Optus brand - at present it operates under the Orange name.
Together with its existing 75,000 customers, the proposal would give Hutchison about 10 per cent of the market and save it the expense of investing further in a 2G network.
Vodafone said its proposal would require simultaneous disposal of Optus's two other divisions - data and business, and consumer and multimedia - but that it had yet to line up buyers.
Cable and Wireless of the UK has indicated its interest in retaining data and business, in line with its global strategy, while several media groups, including the Packer family's Publishing and Broadcasting Ltd, have looked at the consumer operation.
The mobile business, with a 33 per cent market share, is by far Optus's most valuable asset. Most analysts value it at A$12bn-A$15bn out of a break-up valuation for the group of up to A$20bn.
Analysts had valued Vodafone Pacific at up to A$15bn before market conditions for telecoms and high tech stocks soured last year. Vodafone of the UK had been planning to float about 17 per cent of the group, which also includes operations in New Zealand and Fiji. |
