SingTel to Bid A$20 Bln for Cable & Wireless Optus, People Say
By Tansy Harcourt
Sydney, March 25 (Bloomberg) -- Singapore Telecommunications Ltd., Southeast Asia's largest phone company, plans to offer A$20 billion ($9.9 billion) for Cable & Wireless Optus Ltd. to gain a third of Australia's mobile phone market, bankers familiar with the plans said.
Telecom Corp. of New Zealand also wanted to buy Australia's No. 2 phone company, while the U.K.'s Vodafone Group Plc quit the bidding Sunday, saying regulatory hurdles were too high. SingTel is backed by Cable & Wireless Plc, which owns 53 percent of Optus, the investment bankers said.
SingTel, seeking to build a regional telecommunications network as competition in its home market intensifies, plans to bid A$2.25 in cash and 0.80 of a share for each Optus share, plus assume A$3 billion in debt, the people said. The offer values the Optus at A$4.43 per share or 11 percent more than Friday's closing share price.
``The SingTel bid will bring more confidence to the telecommunications market,'' said Paul Budde, managing director of Paul Budde Communication Pty. ``They are paying a premium'' for a business he values at A$13 billion.
Cash or Stock
Optus shareholders will be given the option of taking payment in a combination of cash and stock, all in stock or all in cash, the bankers familiar with the plans said.
SingTel spokesman Ivan Tan wouldn't comment and Optus spokesman Steve Wright wasn't available to comment. Cable & Wireless spokesman Peter Eustace declined to comment. The purchase would be the biggest made by SingTel, which is 78 percent owned by the Singapore government.
Vodafone, the world's largest cell phone company, dropped out of the bidding after estimating Optus needs more than A$10 billion in capital in the next five years.
``The transaction isn't able to meet our returns criteria,'' Brian Clark, chief executive of Vodafone Pacific, said in a telephone interview.
Clark said regulatory requirements to gain approval for the takeover made a bid less appealing. Vodafone already holds 19 percent of Australia's wireless market and would have controlled 52 percent under a straight takeover of Optus.
Sydney-based Macquarie Bank Ltd. is advising Telecom Corp. of New Zealand, which also said it was interested in buying Optus. Peter Yates, executive director, corporate finance group at the bank, said today he hadn't heard that Optus and Cable & Wireless had made a decision.
Key Market
SingTel's entry into Australia -- which the company has designated one of four key markets in Asia -- may mean it's willing to overpay for Optus, analysts said. SingTel shares have declined 8.7 percent since it turned in a second proposal to buy Optus two weeks ago.
With Optus, SingTel gains 3.4 million of Australia's 10.3 million mobile customers. SingTel has 6 million mobile customers in Singapore, Thailand and the Philippines.
The company also has stakes in Advanced Info Service Plc, Thailand's biggest cell phone company; Globe Telecom Inc., the No. 2 mobile phone operator in the Philippines; and Bharti Group, one of India's biggest closely held phone companies. SingTel also holds a stake in New Century InfoComm of Taiwan, one of four traditional phone companies in Taiwan.
Morgan Stanley Dean Witter & Co. is advising SingTel on its bid. J.P. Morgan Chase & Co. is advising Optus. Merrill Lynch & Co. is advising Cable & Wireless, while Goldman, Sachs & Co. is advising Vodafone |
