Mixed channel response to SingTel bid

Mixed channel response to SingTel bid

Cable & Wireless Optus' channel partners in the data centre/Web hosting markets have given a mixed response to the potential acquisition of the telecommunications giant by SingTel.

Singapore Telecommunications (SingTel) won the bidding war with Vodaphone and Telecom New Zealand to buy CWO with a combined cash, share and bond offer worth $17.2 billion ($US8.5 billion).

Some partners were naturally concerned the acquisition may affect their current connections. Marty Gauvin, CEO of data centre Hostworks, said he believes his local relationship with the senior management at Optus is likely to remain strong, but is uncertain about the international consequences of the acquisition. He said many Optus partners rely on Cable & Wireless' global network, which will not necessarily be as easily accessible under the new SingTel ownership.

"Over time, these might amount to some major changes," he said. "What we would like to hear is that under this new deal, we will get the best of both worlds -- that Cable & Wireless' global resources will remain available to us and that SingTel's regional presence will be available to us."

Belinda York, managing director of FairMarket Australia, said the company is very reliant on C&W Optus' data hosting facility in Rosebury for the running of its ASP solutions.

"I don't anticipate the change will have an adverse affect on us," she said. "I would only hope and imagine they would continue to support and enhance this end of the market."

Stephen Johns, marketing manager at WebCentral, the data centre provider behind CWO's PowerHost Accelerator Web hosting service, said that at this point there are no contractual changes to the partnership.

"It's all positive news as we see it," he said. "We're actually quite excited about a new owner being involved -- it can only mean good things and more energy in the project. One never knows what greater opportunities exist in a larger organisation."

Cable & Wireless spokesperson Louise Ingram said that, at this early stage, it is inappropriate for the company to comment on the potential acquisition, but in the interim remains committed to its partners.

The principal agency approving the deal is Australia's Foreign Investment Review Board (FIRB). In the telecommunications sector, FIRB has said that proposals will be dealt with on a case-by-case basis and will normally be approved unless judged contrary to the national interest. SingTel is 78 per cent owned by the Singapore Government, a fact which previously proved an obstacle to its overseas expansion plans.

What the deal means

The proposed CWO/SingTel partnership will create a company with:

- Fiscal 2000 revenue of $US4.8 billion and pre-tax profit of $1.1 billion.

- Wide service coverage in Singapore, Australia, Hong Kong, India, Indonesia, the Philippines, Taiwan and Thailand.

- 6.2 million mobile subscribers and 3.7 million fixed-line customers.

- An extensive Asian data network and infrastructure assets such as the C2C and Southern Cross cables, CWO's national fibre-optic backbone and SingTel's Internet Exchange.

Photograph: FairMarket Australia's managing director Belinda York

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