Singapore's StarHub, SCV to merge

The StarHub-SCV merger will give Singapore a second nationwide network

By CNN's Geoff Hiscock, Asia business editor

SINGAPORE (CNN) -- Singapore's No. 3 mobile phone operator StarHub will merge with cable television company Singapore Cable Vision to create a stronger competitor to rivals SingTel and MobilOne.

The merger will give Singapore a second nationwide telecommunications network, based on StarHub's fixed and mobile services, and the $300 million broadband network that SCV built in 1999.

The industry regulator, the Infocomm Development Authority of Singapore, said on Thursday it approved the merger plan as meeting StarHub's network obligations.

StarHub received about $600 million (S$1.1 billion) compensation last year from the Singapore government for the early opening of the market to greater competition. But a condition of this was StarHub's rollout of a national telephone network to compete with the long-established frontrunner, SingTel.

While no financial details of the merger have been released, industry analysts say the joint entity is valued at about $2 billion.

Mobile subscribers exceed 300,000

StarHub, which has about 300,000 mobile subscribers and 265,000 Internet subscribers, has annual revenue of about $140 million.

SCV has 265,000 cable TV subscribers and 56,000 subscribers for its Internet cable modem service. Its annual revenue is about $55 million.

StarHub and SCV said once the merger is completed, its five shareholders will be Singapore Technologies Telemedia, Media Corporation of Singapore (MCS), Singapore Press Holdings (SPH), British Telecom and Japan's NTT Communications.

StarHub is now owned 60 percent by ST Telemedia, 22 percent by NTT Communications and 18 percent by BT. SCV is owned 41.3 percent by MCS, 32 percent by ST Telemedia and 26.7 percent by SPH.

Potential to become a 'world class powerhouse'

In a statement released to the Singapore Stock Exchange, StarHub chief executive Terry Clontz said the merger would allow StarHub to accelerate its plan for national coverage to residential communities in Singapore.

SCV's chief executive Yong Lum Sung said the joint entity had the potential to develop into a "world class communications powerhouse".

But the reality is that SingTel dominates Singapore's fixed-line and mobile markets with 98 percent of fixed line and 57 percent of cellular services.

Its chief rival in the mobile market is MobilOne, with around 700,000 customers. MobilOne itself is in the middle of an ownership change that could see it acquired by either the Telstra-PCCW joint venture Regional Wireless Co, or Malaysia's Maxis.

However, StarHub's merger with SCV will allow it to upgrade the broadband network to full data and voice-over IP.

StarHub, MobilOne and SingTel each are paying $55 million (S$100 million) bid for third-generation mobile licenses after a bid process conducted in April by the Infocomm Development Authority.