Cable & Wireless plc announced it is in discussions regarding a proposed merger between Cable & Wireless HKT Ltd. and Singapore Telecommunications Ltd. Such a merger would create the largest independent telecom group in the Asia-Pacific region.
“These talks are at a stage where there can be no certainty about their outcome,” said Cable & Wireless.
Cable & Wireless owns 54 percent of Cable & Wireless HKT, one of six wireless operators in Hong Kong. SingTel operates SingTel Mobile, the country’s largest wireless operator.
Analysts have speculated the past several weeks that Cable & Wireless would sell part of its stake in the Hong Kong mobile operator. The two companies did not provide details of the structure of a merged company, although industry experts said Cable & Wireless’ stake would be around 20 percent.
Press reports noted the combined company could prove a formidable competitor in both the Japanese and Chinese telecom markets.
The proposed merger follows the Singapore government’s announcement that it plans to open its telecommunications industry to competition and foreign investment in April, two years earlier than previously announced.
The government said the market will be fully open from April 1, and it plans to allow full foreign ownership of telecom companies in Singapore. Foreign ownership previously was limited to 49 percent.
In a statement, the government said it recognized that SingTel and StarHub, the two incumbent operators, had made investment decisions based on the original liberalization schedule of 2002 and would be compensated for potential profit loss due to the new timetable.
“The government’s objective is to see rapid deployment of infrastructure and the provision of new and innovative services to businesses and consumers,” said Singapore’s Ministry of Communications and Information Technology.
Singapore currently has two mobile phone operators, SingTel Mobile and MobileOne, which is owned 35 percent each by Singapore Press Holdings and Keppel Group. StarHub is scheduled to begin wireless service in April. The government currently is determining whether it will license a fourth mobile phone carrier.
Analysts said the timing of the announcement is seen as an attempt to catch up with Hong Kong, Singapore’s main communications and business rival in the region. Hong Kong issued 17 new telecommunications licenses to speed its liberalization earlier this month.
