SingTel a security threat: Stokes
Date: 07/06/2001
By Anne Davies
Mr Kerry Stokes's Seven Network has thrown a potential spanner into the $14 billion takeover of Cable & Wireless Optus by SingTel by lodging a submission with the Foreign Investment Review Board opposing the deal.
The Seven submission, which was sent this week to FIRB, the Treasurer, Mr Costello, and the Minister for Communications, Senator Alston, warns that the SingTel bid poses a serious threat to national security because it would result in a carrier controlled by a foreign government exercising control over essential communications infrastructure.
SingTel has already moved to overcome concerns that Optus satellite infrastructure is used for highly sensitive intelligence communications.
It is understood the Stokes submission argues that the strategic importance of Optus's infrastructure - including its broadband cable and satellite assets - and the company's 4 million customers, requires FIRB to intervene.
It says that ownership by a company essentially controlled by a foreign government is likely to impair competition and could breach the Australian Government's responsibility to protect the national interest.
The submission notes that both Malaysia and China have recently rejected SingTel bids for substantial stakes in their countries' telecommunications carriers on the grounds that it was not acceptable to have a foreign government in control of such infrastructure.
Seven also argues that a market structure where both major carriers are owned by government corporations will impair competition in the communications market.
Mr Stokes has been a fierce opponent of foreign ownership of Australian media and put the case for Australian ownership during the prestigious Boyer Lectures on the ABC three years ago.
On a commercial level, he has been locked in a fierce legal battle with Telstra and Foxtel over access for his two C7 pay TV sports channels. While he has won in court, he is still to gain practical access.
Optus, on the other hand, has been carrying C7, which features the AFL in winter, for several years . But the future of C7 is not assured as it will no longer have the AFL rights after this season. They will move to News Ltd, one of the shareholders in Foxtel.
Mr Stokes' B Digital mobile business also resells the Optus network.
An Optus spokesman said last night it was aware of Mr Stokes' move, but that it was a matter for SingTel.
Optus is already 51 per cent foreign-owned and controlled, by the UK-based Cable & Wireless. The FIRB policy on foreign investment in telecommunications companies generally supports foreign control, but in the SingTel case an issue arises whether SingTel is a normal foreign corporation or a foreign government entity.
A spokesman for SingTel could not be contacted but sources close to the deal said they were unconcerned about Mr Stokes's intervention and doubted it would affect regulatory approvals.
"Kerry Stokes just has a bee in his bonnet about this issue," one said.
The Department of Defence and other security agencies have also raised concerns about the SingTel takeover because Optus satellite infrastructure is used for highly sensitive intelligence communications.
SingTel has offered to place the satellite assets in a separate company and has expressed confidence that it can overcome any concerns.
It is unclear whether the Defence Department has made a formal submission to FIRB.
Optus closed at $3.66, down 4c yesterday.
Story Picture: Mr Stokes...concerned by the ownership of SingTel.
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