Asian carriers in alliance, investment dance

Asian carriers in alliance, investment dance

Telecommunications companies in Asia have embarked on another round of attempted mergers, strategic alliances and equity investments as they gear up to face new markets and greater competition brought on by deregulation.

At the centre of the activity is Singapore Telecommunications (SingTel), which late last week sold most of its minority stake in Australia's third-largest telecommunications carrier, AAPT, for $US140 million. At the same time, the Singaporean carrier announced a broadening of its strategic cooperation with Australia's largest telco, Telstra, and Japan's Kokusai Denshin Denwa (KDD).

The UK's Cable & Wireless PLC, through its Australian operating company, Cable & Wireless Optus, entered the picture on Friday with a $A1.49 billion bid for the outstanding shares in AAPT, which was rejected this week by AAPT's board as being inadequate. AAPT Chairman Lee Casey then disclosed that his company is in discussions with a number of other international telecommunications companies regarding alliances, joint ventures or mergers.

The closer strategic cooperation deal between SingTel, Telstra and KDD will focus on providing services to the trio's global customers, including multinational corporations and businesses, according to Lim Shyong, SingTel's executive vice president of global business.

SingTel, KDD and Telstra intend to create a shared network based on ATM (Asynchronous Transfer Mode) or some other new broadband communications technology; collaborate on joint product development; look for operational efficiency from their existing cable capacity as well as new capacity when the SEA-ME-WE 3 submarine cable is ready for service in September 1999; and work with other carriers and alliances to market and expand the coverage of services, SingTel said in a statement.

SingTel remains interested in other acquisitions in the Asia-Pacific region, and the sale of its stake in AAPT was a rationalisation of its strategy in Australia, company chief executive officer Lee Hsien Yang said in a statement.

In SingTel's case, the need to form strategic alliances with other major regional players, and also to expand its operations in the region, is being driven by the spectre of ever-greater competition and deregulation in its small home market. The company recently engaged in a verbal price war with the international StarHub consortium, which will not begin telco operations in Singapore until next April, with SingTel saying it will never allow StarHub to undercut its prices.

Last week, local regulatory authority the Telecommunications Authority of Singapore was reported as saying it plans in future to allow majority foreign-owned companies to compete in Singapore's fixed-line and mobile phone markets, as well as in the country's Internet service provider arena.


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