After months of speculation Singapore Telecommunications (SingTel) looks sure to buy Cable & Wireless Optus, Australia's second biggest telecommunications company and parent company of pay TV platform Optus Television.
Optus has welcomed SingTel's offer of $2.3 (A$4.57) per share, which values Optus's equity at over $8.5 billion (A$17 billion), but it is yet to get the approval of shareholders and regulatory authorities. The company revealed the bid after alternative buyer Vodafone withdrew from the running and chief executive Lee Hsien Yang arrived in the country with SingTel's bid. Lee is the son of former Singapore prime minister Lee Kuan Yew.
In a statement, Optus said the sale would create a major Asia-Pacific telecommunications company, with proforma revenues of almost $5 billion (A$10 billion) for the year to March 2000, a combined market capitalisation of about $24.6 billion (A$49 billion), and a strong presence throughout the region.
"Optus will grow from being a successful, highly competitive Australian entity to becoming part of a formidable regional player of stature, significance and strength," said chief executive Chris Anderson. Optus has been on the blocks since completing a strategic review in September. At about the same it revealed that profits for the half year to September increased 43% to $77.2m (A$154m).
UK-based Cable and Wireless, a 52.5% shareholder, is not expected to remain a shareholder in the new company. The takeover is the second-biggest in Australian history and will leave the two biggest telecommunications companies owned by governments. The Australian Government owns just over 50% of Telstra and SingTel is nearly 80% owned by Singapore's Government.
Meanwhile, and apparently entirely coincidentally, staff were told today that Optus Television director Mike Lattin was no longer required following a management restructure. He has been with the company for four years. Unlike rival Foxtel, whose core business is pay TV, Optus TV has always been seen as part of a bundle of services including Internet and telephony. Lattin's departure is part of a review by Adrian Chamberlain, managing director of the consumer and multi-media division, of which Optus Television is a part.
Overall, it is to early to judge the effect of the sale on the pay TV arm, which includes three Movie Network channels which take product from The Walt Disney Company, MGM/UA, DreamWorks SKG, New Line, Turner Pictures, local player Village Roadshow and others.