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SingTel shareholders vote to lift 49% cap on foreign ownership

By Bloomberg, Singapore.CNET.com, Bloomberg on September 26, 2000

Summary

Shareholders of Singapore Telecommunications Ltd, the island-state's dominant phone company, voted to remove the 49 percent limit on foreign ownership, facilitating future investments by overseas investors.

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SINGAPORE--Shareholders of Singapore Telecommunications Ltd, the island-state's dominant phone company, voted to remove the 49 percent limit on foreign ownership, facilitating future investments by overseas investors.

A 15 percent restriction remains on the shareholdings of any individual or group in the company. A larger stake requires permission from Temasek Holdings, the government's investment arm, which currently holds 78.4 percent of SingTel.

"There is no limit," said Lee Hsien Yang, SingTel's chief executive. "If any foreign company wants to buy a stake in the company, they're free to do so in the market. If they'd like a larger stake than that they have to talk to our shareholders."

The decision could make SingTel more attractive to potential buyers abroad as it faces increasing competition at home. The Singapore government opened up the island-state's telecommunications market to new players this year, two years ahead of schedule, ending the phone company's monopoly.

Among foreign phone companies, SingTel is in talks with Deutsche Telekom AG, Europe's biggest phone company, to group their cellular phone assets in Asia. Analysts have speculated for a year that SingTel may also be in discussions to sell a portion of its business to Deutsche Telekom.

The Straits Times daily also reported earlier SBC Communications Inc, Qwest Communications International Inc, and Verizon Communications--which are among the biggest phone companies in the US--are potential buyers of a SingTel stake. The newspaper reported this citing an unidentified source.

Handicap

While the government has broken the telephone monopoly, it has controlling stakes in SingTel and its first new competitors. Singapore officials now say that government control may be a handicap in the overseas expansion by large companies like SingTel, which has about S$4 billion in cash.

The government's 78 percent ownership of SingTel, for instance, was one reason the company in February lost in its bid to buy Cable & Wireless HKT Ltd., Hong Kong's dominant phone company, said Gillem Tulloch director of Asean Telecommunications research at Nomura in Singapore.

"They don't want a foreign government with control of the information flow in their country," Tulloch said. "They feel threatened."

Singapore Prime Minister Goh Chok Tong said then that there was a "perception problem because we own much of the shares and have to over time convince people outside that there is no political agenda".

Asian expansion

HKT was bought by Pacific Century CyberWorks Ltd, Asia's No. 2 Internet investment company controlled by Richard Li.

Li Ka-shing, Richard Li's father and tycoon who controls conglomerate Hutchison Whampoa Ltd said last month he's keen to buy a stake in SingTel when the government sells its holdings.

SingTel and Temasek declined to say if they were in talks to sell stakes to any foreign company.

In recent times, though, SingTel has been aggressively expanding in Asian markets--from Thailand, the Philippines, to India.

The phone company owns a fifth of Advanced Info Services Plc, Thailand's biggest cellular company, and a third of Globe Telecom Inc, the No. 2 mobile phone operator in the Philippines. SingTel said last month that it will spend US$400 million for a stake in Bharti Group, India's biggest private fixed-line operator, making it the biggest foreign investor in the country's phone market.

SingTel shares, down 25 percent this year, fell US$0.03, or 1.2 percent, to S$2.58 at market close yesterday.

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