AWSJ: Regional Wireless, Maxis Vie For Singapore's MobileOne
Updated: Sunday, May 27, 2001 04:48 PM ET
Staff Reporters
HONG KONG -- Dueling to become the first telecommunications company with majority stakes in two Asian mobile operators, Hong Kong-based Regional Wireless Co. and Maxis Communications Bhd. of Malaysia are both expected to place bids of at least US$1.2 billion today to acquire the No. 2 operator in Singapore, MobileOne Ltd.
Shareholders of MobileOne - considered a small but bright jewel in the industry - set today as the deadline to submit bids to buy all of their shares. While surprise bids from other companies are possible, investment bankers involved in the proceedings expect a two-horse race.
U.K.-based Vodafone Group PLC, the world's largest mobile operator, has prepared an offer but is unlikely to follow through with an actual bid, a person close to the company said. Spokesmen for Vodafone and its adviser on the potential bid, Goldman Sachs, declined to comment.
Regional Wireless, created in February, is a mobile-phone joint venture owned 60% by Australian Telstra Corp. and 40% by Pacific Century CyberWorks Ltd., the telecom and Internet group headed by Hong Kong billionaire Richard Li. Despite its ambitious name, the joint venture's operations are so far limited to Hong Kong. Mr. Li announced Friday that Regional Wireless would make an offer for MobileOne.
PCCW already owns a 14.7% stake in the Singapore company, putting it in the unusual position of being both a potential buyer and seller in the deal. Mr. Li declined to reveal the size of the offer or details about how it would be financed. Industry observers say the bid would test PCCW's financial wherewithal to make the joint venture a regional player.
Maxis, whose mobile business also is confined to its home market, will pitch a US$1.2 billion bid for MobileOne, an executive with the company said. Investment bankers expect the bid by Regional Wireless to be at least as high.
A profitable company with about 850,000 subscribers, MobileOne represents a potential stepping stone into other countries in Southeast Asia and an attractive market to roll out advanced wireless Internet and video services. While its potential for growth is limited - the island-state's population is about four million - the company has an enviable base of affluent customers hungry for value-added services such as short messaging and high-speed Internet. The network already owns a license to build advance third-generation, or 3G, networks, and Singapore is expected to become one of the first Asian markets outside Japan to offer such services.
"That all adds up to making MobileOne an attractive test case for 3G services before they get marketed in Hong Kong," said a regional telecom analyst, referring to the advantage of the acquisition for Regional Wireless.
A takeover also presents lucrative opportunities for Maxis, which is controlled by Malaysian broadcasting businessman Ananda Krishnan. Malaysia and Singapore are neighbors and have close trade ties; a combined mobile company could draw businessmen who frequently shuttle between the two by offering special service packages, such as roaming coverage.
MobileOne, which in the past has expressed interest in going public, said its pretax profit was S$79 million (US, news, msgs$43.9 million) in 2000. Its two main shareholders are both Singaporean: Keppel Telecommunications & Transportation Ltd. and Singapore Press Holdings Ltd., each own 35%. British Cable & Wireless PLC has a 15.3% share. Singapore has two other mobile providers: market leader Singapore Telecommunications Ltd., with around 1.5 million mobile users, and StarHub Mobile Ltd. with 260,000.
While some Asian mobile operators hold significant minority stakes in other local carriers in the region, regulatory barriers and political sensitivities have prevented carriers from taking outright control of other operators. But Singapore began dismantling protectionist barriers in the late 1990s, and a takeover by a foreign company - especially a Malaysian one - would mark a milestone in the city-state's commitment to market openness. Malaysia has blocked takeovers by Singaporean telecom firms twice in the last four years.
Assuming MobileOne's shareholders are happy with the bids, it could take weeks to strike a final deal to sell the company, investment bankers said.
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Leslie Lopez in Kuala Lumpur contributed to this article.
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