Telstra joins Asia wireless push

Telstra CEO Ziggy Switkowski: "The beginning of a long-term commitment to Asia."

December 7, 2000
Web posted at: 4:38 PM HKT (0838 GMT)

By Nic Hopkins
CNN Interactive Writer

Hong Kong (CNN) -- Australia's Telstra and its Hong Kong-based ally Pacific Century CyberWorks are expected to lead the bidding early next year in the multi-billion dollar auction of a 30 per cent stake in Singaporean wireless company MobileOne.

The line-up of expected participants in the auction of the stake held by Hong Kong-based Great Eastern is also tipped to include Finland's Sonera, Norwegian phone company Telenor, UK-based Vodafone AirTouch and Korean Telecom.

Analysts believe the value of the stake, which is 51 percent owned by British telecommunications giant Cable & Wireless and 49 percent owned by PCCW's Cable & Wireless HKT, could exceed $S3 billion.

The company's other two shareholders are Singapore-based Keppel Telecommunications &Transportation and Singapore Press Holdings, with 35 percent each.

MobileOne is Singapore's second-ranked mobile company, with about 700,000 retail customers. It is hoping to sell shares to the public and list on a regional share market next year.

Financial advisers from Merrill Lynch have been appointed to oversee the auction, and MobileOne has hired the merchant bank ABN AMRO as its in-house adviser.

Telstra is branching out from the cutthroat domestic Australian market and recently made its largest offshore investment to date by taking a 60 per cent stake in PCCW's mobile phone business and 50 per cent of a start-up Internet infrastructure company with PCCW.

The third-largest telephone company in Asia, it has a strong balance sheet and free cash flow of more than $A6 billion a year with which to make acquisitions.

The telecom's chief executive officer, Ziggy Switkowski, told CNN.com at the International Telecommunications Union's Asia 2000 conference in Hong Kong: "For us this is the beginning of a long-term commitment to Asia.

"The alliance with PCCW allows us to form a view of which economies are going to be attractive to Telstra."

Other Asian telecom assets are likely to become available in the coming year amid expectations British Telecommunications (BT) will put up for sale all its interests in Asia to meet debt obligations at home and pay for third generation (3G) mobile licenses as they become available in Europe.

Among BT's assets are 20 percent of Hong Kong mobile operator SmarTone, 33 percent of Malaysia's Maxis and 24 per cent of LG Telecom in South Korea. The company also has a minority stake in Singapore's third-ranked mobile operator, StarHub.

Switkowski said Telstra had not yet decided where it would make its next move.

"We're still wrestling with the issues of whether to focus our energies north of Hong Kong, or in the gap in between Hong Kong and China," he said. "There are a lot of markets between Hong Kong and Australia that are very attractive to us as well but at a lower stage of development.

"These are things that we will sort through over the next few months," Switkowski said, adding that he would leave Hong Kong "quite impressed with the amount of momentum in China".

The MobileOne auction is hoped to be completed before Singapore's government puts four 3G licenses up for auction around April next year.

Telstra and PCCW are expected to be bidders in that sale, which could net up to $4 billion. More 3G spectrum will become available in Australia, New Zealand and Hong Kong in the coming year, and analysts believe Telstra could spend up to $A3 billion on licenses in each market.

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