SingTel to Bid on Australian Mobile Phone Company

Singapore Telecommunications Ltd., Southeast Asia’s largest phone company, has agreed to offer $9.9 billion for Cable & Wireless Optus Ltd. to gain a third of Australia’s mobile phone market, bankers familiar with the plans said Sunday.

Telecom Corp. of New Zealand also wanted to buy Australia’s No. 2 phone company, while Britain’s Vodafone Group quit the bidding Sunday, saying regulatory hurdles were too high. SingTel is backed by Cable & Wireless of Britain, which owns 53% of Optus, the investment bankers said.

SingTel, seeking to build a regional telecommunications network as competition in its home market intensifies, plans to bid $1.12 in cash and 0.80 of a share for each Optus share, plus assume $1.5 billion in debt, the people said. The offer values the Optus at $2.20 per share or 11% more than Friday’s closing share price.

With Optus, SingTel gains 3.4 million of Australia’s 10.3 million mobile customers. SingTel has 6 million mobile customers in Singapore, Thailand and the Philippines.

“The SingTel bid will bring more confidence to the telecommunications market,” said Paul Budde, managing director of Paul Budde Communication. “They are paying a premium” for a business he values at $6.5 billion.

SingTel spokesman Ivan Tan wouldn’t comment and Optus spokesman Steve Wright wasn’t available to comment. Cable & Wireless spokesman Peter Eustace declined to comment. The purchase would be the biggest made by SingTel, which is 78% owned by the Singapore government.

SingTel’s entry into Australia, which the company has designated one of four key markets in Asia, may mean it’s willing to overpay for Optus, analysts said. SingTel shares have declined 8.7% since it turned in a second proposal to buy Optus two weeks ago.

Optus shareholders will be given the option of taking payment in a combination of cash and stock, all in stock or all in cash, the bankers familiar with the plans said.