SingTel says Optus bid is on track

SingTel boss Lee Hsien Yang says all security issues can be resolved

In this story: Issues 'can be resolved' Export licenses critical Bid not well received RELATED SITES

By CNN's Grant Holloway

SYDNEY, Australia -- Singapore Telecommunications is confident it will win export licenses from the United States necessary for it to complete its $9 billion (Australian $17 billion) bid for Australian communications company Cable & Wireless Optus.

Optus will next year launch a $250 million communications satellite as a joint venture with Australia's Department of Defense which will carry military as well as civilian traffic.

SingTel said in a statement released Wednesday it remained committed to resolving issues raised by Australia's Foreign Investment Review Board concerning the bid.

SingTel chief executive officer Lee Hsien Yang said detailed discussions with relevant Australian agencies were well advanced.

Issues 'can be resolved'

"We are confident we can put in place those arrangements which meet the security and other issues raised by those agencies," he said.

He said the issue of the Optus satellite had been discussed with the U.S. and Australia and "SingTel does not believe that there are any issues which cannot be resolved".

The Optus satellite will use sophisticated U.S. technology which U.S. Defense officials may not want controlled by a Singaporean company, hence the need for export licenses to be granted.

SingTel is majority owned by the Singapore government and Lee is son of Singapore's Senior Minister and elder statesman Lee Kuan Yew. In addition, the Singapore army's Chief of Staff is a board member.

Export licenses critical

Australia's Minister for Defense Peter Reith confirmed Tuesday that Australia was unlikely to allow the bid to proceed if its close military ally the U.S. did not grant the licenses.

"Part of the process for SingTel will be to get a guarantee that those export licenses will be granted, and it will be one of the conditions placed on the sale," a spokesperson for Reith told Melbourne's The Age newspaper.

Shares in Optus and SingTel rebounded Wednesday despite the license issue. In mid-afternoon trading Optus shares were changing hands 11c firmer at (Australian) $3.41 and SingTel scrip improved 5c to (Singaporean) $1.75.

SingTel also said that it would be able to make its bidder's statement available to Optus shareholders by May 21, having received necessary waivers and modifications from Australian financial regulatory authorities.

Bid not well received

SingTel's bid for Optus, launched in late March this year, has not been well received by financial markets who have marked down the share prices of both companies. Prior to the bid Optus shares were trading as high as (Australian) $4 a share and SingTel was fetching (Singaporean) $2.40.

The bid is a complex one, offering three options. These are a scrip-for-scrip deal; a scrip plus cash offer; or a scrip, plus cash plus bond offer.

There is not, however, a full cash-only offer on the table.

Cable & Wireless Optus
Singapore Telecommunications

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