Company Briefs - 29 Jun 2007

SingTel buys stake in Pakistani telco

SINGAPORE Telecommunications has entered into a deal to buy a 30 per cent stake in Pakistan's Warid Telecom for an estimated US$758 million, its first significant acquisition since 2001 .

The stake in Warid, the third largest of Pakistan's six mobile phone operators, gives a boost to SingTel which has been struggling to deliver growth as its two core markets of Singapore and Australia are saturated. For the year ended March 31, it posted flat revenues of $13.15 billion and a net profit of $3.78 billion, down 9.2 per cent.

Yesterday, the company pointed out that it has made substantial investments in markets with high growth potential in South Asia. 'Warid Telecom in Pakistan is a natural fit,' said CEO Chua Sock Koong.

'We see strong upside in terms of the company's performance and look forward to its continued contribution towards the development of mobile communications in Pakistan.' Warid, owned by the Abu Dhabi Group, has a 15-year licence. Since starting operations in 2005, it has built up a market of about 17 per cent of Pakistan's 58.4 million mobile subscribers, based on April's figures.

Pakistan, with a population of 164 million, is a magnet for foreign telco investors attracted by its soaring growth rates. At end-2004, it had only five million subscribers. Pakistan has a moratorium on the issue of new mobile operator licences, so the only way international telecoms companies can enter the market is by buying stakes in existing players, according to Reuters.

An earlier Financial Times report said SingTel beat rivals MTN of South Africa and Britain's Vodafone for the Warid stake.

This year, China Mobile, the world's biggest wireless carrier, agreed to buy an 89 per cent stake in loss-making Pakistan operator Paktel for US$284 million - its first acquisition outside its home market.

Apart from Warid and Paktel, now known as CM PAK, Pakistan's other operators are Mobilink, now a 100 per cent-owned subsidiary of Egypt-based Orascom Telecom, Norway's Telenor, Ufone, part of Pakistan Telecommunication, and private Instaphone.

The Abu Dhabi Group is one of the largest foreign investor groups in Pakistan and also owns Bank Alfalah and Wateen Telecom. It has a stake in United Bank.

SingTel's last major acquisitions were in 2001 for its A$14 billion (S$18 billion) purchase of Australia's second largest telco Optus and a $1.93 billion buy of a 35 per cent stake in Telkomsel, Indonesia's leading mobile firm.

In 2005, it paid $204 million for a 45 per cent stake in Pacific Bangladesh Telecom. Before yesterday's announcement, SingTel had spent $17 billion in overseas acquisitions.

SPH's Paragon revalued at $1.82b

SINGAPORE Press Holdings' main property asset, Paragon, has been revalued at $1.82 billion. This is higher than the valuation of $1.52 billion the media group disclosed in July last year when it announced its results for the third quarter of FY2006.

The latest valuation of the retail and office complex at prime Orchard Road was carried out by Knight Frank. The valuation of Paragon, done on an annual basis, is required under the terms of the bank loan for the property.

While Paragon was once identified as a non-core asset, SPH has said in recent times that it is committed to holding on to the property for the foreseeable future. The complex enjoys full occupancy, and yielded about 9 per cent return on equity, according to SPH's latest annual report. The group has made efforts to enhance rental yields from the complex.

Separately, SPH said it will absorb the Goods and Services Tax (GST) hike of 2 per cent for its suite of newspapers and magazines. Cover prices of its publications will remain unchanged from July 1, 2007. SPH has a stable of 14 newspapers in four languages and over 90 magazine titles in Singapore and the region. The additional cost to SPH of absorbing the 2 per cent GST hike is estimated to be about $4 million a year.

SPH shares rose six cents to $4.64 yesterday. The group will release its financial results for the third quarter ended May 2007 on July 11.

Four Singapore firms invest $127m in Tianjin

FOUR Singapore companies this week unveiled logistics and waste-water treatment projects in the rising north-eastern Chinese manufacturing hub of Tianjin, with total investment of about $127 million.
The companies include Singapore-based logistics firm YCH Group, which yesterday opened a $25 million logistics park linked to Tianjin Airport. The 5.2ha park is its second facility in Tianjin in three years.

Minister for National Development Mah Bow Tan witnessed the opening during a four-day trip to Tianjin, organised by IE Singapore.

He also attended ground-breaking ceremonies for two other projects - with the third due to be held today.

Located just 150km from the capital Beijing, Tianjin's port and sprawling industrial parks were earmarked two years ago by Beijing as the prime mover of growth in northern China.

Singapore companies have been quick to move into Tianjin, and Singapore is now the seventh-largest foreign investor there.

'Our investment affirms our strong belief in Tianjin's growth potential,' YCH chairman and chief executive Robert Yap said yesterday, citing low start-up costs and municipal government incentives among other things.

Water company Hyflux is also set to emerge as a major player in the city, where observers say manufacturing-related services such as logistics, infrastructure design and utilities management are greatly in demand.

Hyflux will have a ground- breaking ceremony today for a waste-water treatment and water- recycling plant being built in Tianjin's Beichen district.

With an initial project value of $38.5 million, it is Hyflux's third project in the municipality. Its other projects include a $155 million desalination plant, now being constructed in partnership with the Tianjin Dagang district government.

Two other Singapore companies active in China, SembCorp Utilities and logistics firm CWT, yesterday laid the groundwork for their first projects in Tianjin.

SembCorp Utilities has set aside $13.8 million as initial investment in a waste-water treatment plant in Lingang, a relatively new industrial area in Tianjin.

CWT is also all set to build a 110,000 sq m, five-storey warehouse and a 40,000 sq m container depot in Tianjin, worth $50 million.

Speaking to the Singapore media yesterday afternoon, Mr Mah noted that Tianjin's huge industrial areas are 'several times the size of Singapore and present a lot of opportunities for us'.
'The main thing for Singapore companies is to try and get in now as they are developing. If we don't act fast, the window of opportunity will be closed,' he said.

In Tianjin, Singapore cannot compete with countries such as Japan and South Korea in terms of huge manufacturing and investment volume.

However, the Republic can make the most of its strengths in utilities and infrastructure services, other Singapore officials said.