Singapore Telecommunications (SingTel) announced this morning it is taking over Cable & Wireless Optus (C&W Optus) in a deal that values its target at $20 billion, and which creates a regional telecommunications powerhouse worth $50 billion.
The new company will have revenues of $8 billion, and there are suggestions it will be dual listed, in Sydney and Singapore.
The deal throws a new dynamic into the competitive relationship with Telstra, Australia's largest telco, which has its own regional aspirations. Optus in Australia has about a third of the mobile phone market, as well as over 300,000 dial-up internet customers and almost half a million customers of other services.
SingTel has been engaged in a short brutal bidding war for the company with Vodafone, which last Thursday withdrew from the field after it was announced that Cable & Wireless was selling just under 20 per cent of Optus to its rival.
For shareholders, it is something of a lucky dip. Apart from the well-publicised cash/share combination offer, which lets them swap their Optus shares for $2.24 cash and 0.82 SingTel shares, shareholders also have the option of taking the money and running with a lower cash bid, or investing in the risk with a higher scrip offer.
SingTel is majority owned by the Singaporean Government, raising the possibility that Singapore could try to manipulate Australian telecommunications policy through Optus, an issue that will no doubt exercise the minds of the Foreign Investment Review Board.
Concerns will have eased, however, as the Singaporean Deputy Prime Minister recently told the country's parliament that his Government had agreed to give up its veto share, which enables it to block any major decisions it feels are against Singapore's national interest.
Longer term, the Government has also made it clear that it plans to divest itself of State-controlled assets such as SingTel.