SINGAPORE-Over the last few months, British Telecommunications plc has been on a buying spree that would put any seasoned shopaholic to shame-chalking up a bill of more than US$1 billion in the Asia-Pacific region alone.
Having kept a relatively low profile in Asia for the past few years, BT now boasts a foothold in practically every major country in the region, including China, India, Japan, Malaysia, Singapore and South Korea.
But what may seem to be a sudden shift in corporate strategy is actually part and parcel of a long-term plan to become a global leader in communications.
“BT has global ambitions,” said Sakina Dhilawala, Singapore-based research manager for Pyramid Research. “This is clear from its attempted acquisition of MCI, its joint venture with AT&T (Corp.), and its stake in several European players.
“In Asia, as a result of regulatory barriers, BT’s strategy has been to buy into companies that operate in deregulated services. When the markets further liberalize, BT either invests more in the company or buys into companies that have (a) basic service license.”
BT’s Asia-Pacific head of corporate relations Martin O’Conner told Global Wireless that Asia has always been viewed by the company as one of its “most important and fastest-growing markets.”
Since establishing offices in Singapore and Hong Kong in 1985, BT had been expanding its presence every year and now has offices, joint ventures or distributorships/partnerships in all key markets in the region.
“Therefore, the recent investments are the results of a long-term plan and have not been done all of a sudden-although we have moved very quickly to conclude some of these deals,” he said.
Having largely covered Europe with eight joint ventures in all of the major countries-ahead of the 1 January 1998 deadline for liberalization in Europe-BT now has shifted its focus to Asia, where “we knew what we had to do, where and when,” said Singapore-based O’Conner.
Analysts say the Asian financial crisis has proven to be a blessing in disguise for BT.
Dhilawala said the crisis has meant that “BT can increase its rate of investment in Asian companies, taking advantage of the weaker economies and currencies.”
“In terms of strategy, BT-in common with many of the other global carriers-[has] been [on] the look-out for buys in Asia for many years,” added Azra Moiz, senior analyst with the Gartner Group in Singapore. “It’s just that they have been among the most cautious. They were thought of as laggards in this area for many years and were much slower compared [with] companies like Deutsche Telekom in entering the more mainstream markets.”
“BT has, however, been buying up quite a few companies in Asia in the last year, and looking back now, I would say it’s been rather shrewd of them,” said Moiz.
By capitalizing on the region’s problems, BT has gotten some reasonably good deals, according to Moiz. If BT had gone into the market two years back, it would have paid a phenomenally high price compared with the market values of the companies now, she said.
Asia remains the engine of growth for the global telecom industry, despite the current financial downturn. Some analysts predict that in the coming 5 to 10 years, the region will account for 60 percent of all worldwide telecom revenue.
“This kind of projection is what is driving most leading telecommunications companies around the world to continue to look at investments in Asia,” BT’s O’Conner said.
But while the Asian financial difficulties have transformed the region into a bargain-hunter’s dream, BT maintains it is not in the business of making investments solely on cost.
“When deciding to invest in any venture, BT goes through a comprehensive study involving many factors. Chief among this is finding like-minded companies who are innovative, forward-thinking enterprises, who have the right mix of technology and people expertise, have solid local regulatory knowledge, government relationships and access to the local customers,” said O’Conner.
BT’s most recent Asian investments include a US$420 million bid for a 33.3-percent stake in Malaysian cellular firm Binariang Bhd.
Also, BT recently received a Type 1 facilities-based license from the Ministry of Posts and Telecommunications in Japan to build and own its own infrastructure. That joint venture with the Marubeni Corp. is slated to launch international voice, leased circuits and card services at the beginning of 1999, targeted initially at large corporations in the finance, transport, retail, manufacturing and IT sectors.
In addition, BT has made inroads into South Korea through a 23.49 per cent stake in LG Telecom Ltd., a leading mobile telephone operator there.
That investment, estimated to be in the region of
