Professional Documents
Culture Documents
1
4 THE ACQUISITION OF OPTUS 57
4.1 Rationale for ’s acquisition of Optus 58
4.2 Profile of after acquisition of Optus 58
4.3 The benefits of acquiring Optus 59
4.4 ’s intentions in relation to the Optus business 63
4.5 Prospects for 66
4.6 Unaudited Pro-forma Consolidated Financial Information 68
4.7 Notes to the Pro-forma Consolidated Financial Information 79
4.8 Significant differences between Singapore GAAP and Australian GAAP,
and between ’s and Optus’ accounting policies 80
4.9 Report from PricewaterhouseCoopers on the unaudited Pro-forma
Consolidated Financial Information 84
5 ACCEPTANCE CONSIDERATIONS FOR OPTUS SHAREHOLDERS 87
5.1 Summary of Acceptance Considerations 88
5.2 ’s commitment as Optus’ new key strategic shareholder 88
5.3 Benefits of becoming a Shareholder 88
5.4 Liquidity of Shares 89
5.5 Risks of becoming a Shareholder or holding Bonds 89
5.6 Implications of not accepting the Offer 89
5.7 Individual preferences and circumstances of Optus Shareholders 90
5.8 Taxation implications for Optus Shareholders 90
5.9 Rights of Shareholders 90
6 RISK FACTORS 91
6.1 Overview 92
6.2 Changes in economic conditions 92
6.3 Changes in political conditions 92
6.4 Changes in regulatory environment 92
6.5 Competitive environment 92
6.6 Risks associated with ’s regional expansion strategy 93
6.7 Changes in technology 93
6.8 Project risks 94
6.9 Perceived risks associated with electromagnetic energy 94
6.10 Control of 94
6.11 Changes in exchange rates 95
6.12 Market for and liquidity of Shares 95
6.13 Risks associated with the Bonds 96
6.14 Different shareholder rights 97
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7 TAXATION 99
7.1 Australian tax implications for Optus Shareholders 100
7.2 Singapore taxation considerations 109
8 INFORMATION ON SHARES 115
8.1 Share capital of 116
8.2 Recognition of other exchanges 116
8.3 Rights attaching to and regulations affecting Shares 116
8.4 Temasek’s role as majority shareholder 123
8.5 employee incentive plans 123
8.6 Substantial shareholders of 124
8.7 Trading arrangements for Shares 124
9 THE OFFER 127
9.1 The Offer 128
9.2 Consideration 128
9.3 Shares 129
9.4 Bonds 129
9.5 Unsecured Notes 130
9.6 Alternative disposal mechanisms 131
9.7 Buy-Back Alternative 131
9.8 How to accept this Offer 132
9.9 Offer Period 134
9.10 Your agreement resulting from acceptance 134
9.11 Provision of Offer Consideration 136
9.12 Conditions 138
9.13 Offerees 140
9.14 Variation and withdrawal 141
9.15 Governing Law 141
10 SUMMARY OF BOND TERMS AND CONDITIONS 143
10.1 Summary 144
3
11 OTHER INFORMATION 149
11.1 Identity of bidder 150
11.2 Cash consideration 150
11.3 Contracts with C&W plc and Optus 152
11.4 Directors’ interests and corporate governance 156
11.5 Benefits to certain persons 158
11.6 Compulsory Acquisition 159
11.7 Litigation of 159
11.8 Interruptions in ’s business 160
11.9 Material changes in financial position of and Optus 160
11.10 Regulatory and other approvals 160
11.11 ASIC modifications and exemptions 161
11.12 ASX Information Memorandum 163
11.13 ASX waivers 163
11.14 ’s relevant interests and voting power in Optus 164
11.15 Dealings in Optus Shares 164
11.16 Other benefits in relation to bid securities 165
11.17 Other information about 165
11.18 Other information about Optus 165
11.19 Consents and liability 166
11.20 Miscellaneous 166
12 DEFINITIONS AND INTERPRETATION 167
12.1 Definitions 168
12.2 Glossary 173
12.3 subsidiaries, Associated Companies, projects and services 175
12.4 Interpretation 176
ANNEXURES
1 Consolidated financial statements 177
2 Implementation Agreement 223
3 Terms and conditions of the Bonds 239
4 Telecommunications, postal and broadcasting regulation in Singapore 251
5 Material information releases 261
6 Material Optus information releases 265
4
SECTION 1
EXECUTIVE SUMMARY
7
EXECUTIVE SUMMARY
1.2
is the leading provider in Singapore of international and local telephone services, mobile
communications services, data communications services and postal services.
is also one of the leading integrated communications service providers in the Asia Pacific
region. It has 19 offices in 14 countries around the world, extensive networks
throughout the Asia Pacific region and significant investments outside Singapore,
particularly in Belgium, India, the Philippines, Taiwan and Thailand. has a strong track
record of adding value to its international investments and supporting their growth.
As at 30 April 2001, ’s market capitalisation was S$28.1 billion, making it the largest
company listed on the SGX-ST.
Further information about is set out in Section 3. Financial information concerning is
included in Annexure 1.
8
EXECUTIVE SUMMARY
9
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10
SECTION 2
OVERVIEW OF THE OFFER
11
OVERVIEW OF THE OFFE R
12
OVERVIEW OF THE OFFE R
If you wish to accept the Offer for the Share and Cash
Alternative or the Share, Cash and Bond Alternative then
you may elect to receive the applicable cash amount in
either A$ or US$. If no specific choice is made, then the
cash amount will be paid in A$. If an election is made to
receive US$, then the applicable A$ amount will be
converted at an exchange rate of US$0.4940 for every A$1,
being the Announcement Exchange Rate.
Important Note. You should note that the US$/A$
exchange rate from time to time may be above or below
the Announcement Exchange Rate. If the US$/A$ exchange
rate is above 0.4940 at the time of payment, then Optus
Shareholders who would otherwise prefer to receive US$
may be better off by receiving A$ under the Offer and
converting those A$ to US$ at the prevailing exchange rate
rather than electing to receive US$.
3. You may elect to transfer your Optus Shares to
Australia or have them bought back by Optus
13
OVERVIEW OF THE OFFE R
How the Share, Optus Shareholders who choose the Share, Cash and Bond
Cash and Bond Alternative might receive additional Bonds and cash,
Alternative works in lieu of Shares, depending on the Offer Consideration
alternatives chosen by all Optus Shareholders who accept
the Offer.
The total amount of cash and Bonds available for all Offer
Consideration alternatives is capped for this purpose at
A$9.25 billion. Furthermore, the total face value of Bonds
available under the Offer will not exceed A$2.0 billion (as the
Bonds are denominated in US$, the total A$ amount is
determined by using the Announcement Exchange Rate of
US$0.4940/A$1). The allocation of the additional cash and
Bonds or Shares, is achieved via the Unsecured Notes, which
have a face value of A$1.48.
To the extent that all Optus Shareholder elections leave part of
the maximum cash and Bond pool of A$9.25 billion unutilised,
the unutilised cash and Bonds will be allocated to Optus
Shareholders who choose the Share, Cash and Bond
Alternative in substitution for some of the Shares they would
otherwise receive. The allocation will be made first in Bonds
and then in cash up to A$1.48 per Unsecured Note. Any balance
is taken as Shares at a fixed price of A$2.74 per Share.
Further details of how the Share, Cash and Bond Alternative
works are referred to in Section 9.5 of this Bidder’s Statement.
Offer Period The Offer is to remain open for the period commencing on
23 May 2001, which is the date of the Offer, and ending at
7.00 pm (Sydney time) on 3 July 2001 unless the Offer is
extended or withdrawn under the Corporations Law.
Terms of the Offer The terms of the Offer are set out in Section 9 of this Bidder’s
Statement.
Taxation A general description of some of the taxation implications
for certain Optus Shareholders of accepting the Offer and
electing either the Transfer or Buy-Back Alternative is set out
in Section 7.
Offer Conditions The Offer is subject to the conditions set out in Section 9.12,
including:
• Australian Foreign Investment Review Board approval.
• Australia having at any time during or at the end of the Offer
Period received acceptances in respect of more than 50% (by
number) of all Optus Shares (“Minimum Acceptance
Condition”).
• All approvals required under the Australian Financial Sector
(Shareholdings) Act 1998 and the Insurance Acquisitions and
Takeovers Act 1991 being obtained.
• The ASX approving the listing of Shares to be issued pursuant
to the Offer (the “Listing Condition”).
• Shareholders in general meeting passing a resolution to
approve the performance by of its obligations in connection
with funding the Buy-Back and the applicable procedures
under the Singapore Companies Act being complied with.
• No material adverse change (as described in Section
9.12(a)(vi)) occurring in relation to Optus (or any subsidiary
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OVERVIEW OF THE OFFE R
15
OVERVIEW OF THE OFFE R
No brokerage or You will not pay brokerage or stamp duty if you accept
stamp duty the Offer.
How to accept the Offer Please see Section 9.8 and follow the instructions on the
Acceptance Form.
Further information For questions regarding your Optus Shareholding or the
Acceptance Form, please contact Computershare Investor
Services Pty Limited between 8.30 am and 6.00 pm
(Sydney time) Monday to Friday on 1800 501 501 (for callers
in Australia) or +61 3 9615 5970 (for international callers).
For information in relation to the Offer please look up ’s website
at http://optusoffer..com
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OVERVIEW OF THE OFFE R
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18
SECTION 3
AND ITS STRATEGY
19
SINGTEL AND ITS STRATEGY
4,942 4,925
4,884 4,866
S$ million
4,421
20
SINGTEL AND ITS STRATEGY
3,290
S$ million
3,037
2,818
2,738
2,626
2,324
S$ million
1,913
1,838 1,839
1,603
1997 1998 1999 2000 2001
For the year ended 31 March 2001 ’s total operating revenue was S$4.9 billion, with a
profit after tax before extraordinary items of S$2.3 billion. As at 31 March 2001 its total
assets were S$16.2 billion. As at 30 April 2001 ’s market capitalisation was
S$28.1 billion, making it the largest listed company in Singapore and one of the five largest
listed communications companies in the Asia Pacific region (excluding Japan).
’s operating revenue does not include operating revenue from its Associated Companies. If ’s
proportionate share of operating revenue from its Associated Companies outside Singapore
were included in operating revenue, ’s consolidated operating revenue for the year ended 31
March 2001 would increase to S$6.9 billion from S$6.2 billion for the year ended 31 March
1999. The proportionate share of operating revenue of ’s Associated Companies
outside Singapore would have constituted 28.5% of this consolidated operating revenue
for the year ended 31 March 2001.
21
SINGTEL AND ITS STRATEGY
Revenue Composition
Year Ended 31 March 1999
Other 7%
Postal Services 6%
18% Mobile
Revenue Composition
Year ended 31 March 2001
Other 7%
Postal Services 7%
24% International Telephone
18% Mobile
• Network infrastructure
The table below provides some details of ’s key international investments. Further details of
these investments appear in Section 3.8.
’S EFFECTIVE
EQUITY
Virgin Mobile Asia 50%(3) Singapore and other Asian Mobile (MVNO)
markets (excluding Japan)
There are also a number of smaller international investments that has made to capture the
growth potential of relevant markets outside Singapore.
is committed to adding value to its international investments. It does this through both non-
financial and financial contributions, as well as by provision of assistance on specific projects.
For example:
• has seconded a number of its experienced managers and professionals to assist its Associated
Companies to manage their businesses and to provide know-how and support in areas
such as engineering, information technology, interconnection, carrier services, sales and
marketing;
• Through its representation on the boards of its Associated Companies, shares its
experience and expertise in operating fixed line, mobile, and other types of
communications businesses; and
• has provided assistance in a number of Associated Companies’ network projects including
network frequency planning, capacity expansion to improve network quality, installation of
base stations, as well as in the selection of suppliers.
24
SINGTEL AND ITS STRATEGY
26
SINGTEL AND ITS STRATEGY
(b) ’s competitiveness
has competed vigorously to maintain its leading position in all key market segments. It
has focused on identifying and meeting the communications needs of each market
segment by enhancing the range, quality and value of its products and services, while at
the same time ensuring that its products and services are competitively priced. Some of
’s recent initiatives are outlined below:
• has organised its businesses into a number of customer focused business units.
This enables to focus more clearly on the communications needs of different
customer segments. Further details of the activities of ’s principal business units
are set out in Section 3.5;
• to address current and expected customer demands, has continued to invest in the
mobile and data communications service platforms;
• has introduced competitive services and pricing plans to address the varied needs of
its customers relating to service quality and price. These products and pricing plans
include IDD Call (001), BudgetCall 013, v019, FaxPlus 012, FaxPlus Connect, World
Conference and eVoiz (for Internet-savvy customers);
• has refined its market segmentation strategies to identify and meet the needs of ’s
different customers. For example, in April 2000, introduced a new brand, pod, that
targets the youth segment in Singapore’s cellular market;
• has entered into a joint venture with the Virgin Group to resell cellular services
under a new Virgin Mobile brand that targets the market attracted to the Virgin
brand; and
• has launched customer loyalty programs and innovative promotion packages aimed
at retaining existing customers and attracting new ones.
believes it has a number of competitive strengths that enable it to compete effectively
against other communications service providers in Singapore and in the Asia Pacific
region, including the following:
• ’s network infrastructure is of high quality and has extensive reach. has the
largest number of mobile base stations, the majority of public telephone lines
and the most extensive connectivity between Singapore and other countries,
utilising a variety of technologies, including copper, DSL, microwave, fibre optic,
submarine cable and satellite;
• its ownership of network infrastructure enables to control the quality and availability of
its services and maintain a low cost base that allows it to competitively price its
services;
• economies of scale provide with significant cost advantages, for example in the
procurement of network equipment;
• as an integrated communications service provider, is able to provide its
customers with a comprehensive range of services, including cross-border services
to multinational corporations that can be supported by offices around the world;
and
• ’s local and regional partnerships with other companies, such as AIS, Globe Telecom,
Bharti Group, and NCIC, as well as its new venture with the Virgin Group, provide
further bargaining power with suppliers, expanded geographical reach and the ability
to provide seamless services to customers.
27
SINGTEL AND ITS STRATEGY
The target segments of the Corporate Business Unit are multinational corporations,
large corporations and government enterprises, and small and medium enterprises,
within and outside Singapore. In Singapore, offers a full range of corporate voice,
data and IT solutions and is focused on implementing and delivering such services
wherever its customers are. Its services include national and international voice and
data services (including leased lines, frame relay, ATM, IP and ISDN), managed data
networks, Internet exchange, facilities management/data centres, network/system
integration and outsourcing and equipment sales.
The Corporate Business Unit also supplies wholesale communications services and
network access to other communications service providers in Singapore.
also offers some of these services to customers outside Singapore, where regulations
permit it to do so.
(ii) Consumer Business Unit
The Consumer Business Unit focuses on residential fixed line customers and mobile
communications customers in Singapore. Its services include national and
international voice and facsimile services, mobile communications, paging, Internet
access, and equipment sales. The Consumer Business Unit also sells broadband
capacity to ISPs in Singapore.
has Singapore’s most extensive retail distribution network for communications
services and equipment sales, comprising a large number of dealer outlets and 15
owned retail outlets. The Consumer Business Unit is responsible for managing ’s
owned retail outlets and its dealer relationships.
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SINGTEL AND ITS STRATEGY
1999 1.34
2000 1.14
2001 0.70
Collection Rate S$
1999 799
2000 885
2001 1,031
As shown by the top graph, the average net collection rate has fallen from S$1.34 per
minute in the year ended 31 March 1999 to S$0.70 per minute for the year ended
31 March 2001. This decline in collection rates has been offset, in part, by a continuing
increase in outgoing international call volumes (as shown in the lower graph).
30
SINGTEL AND ITS STRATEGY
763
S$ million
621
31
SINGTEL AND ITS STRATEGY
The public data and private network business is experiencing the largest revenue
growth of all of ’s businesses. As the above graph shows, operating revenue has grown
72% from S$621 million for the year ended 31 March 1999 to S$1.1 billion for the
year ended 31 March 2001. Operating revenue from leased lines grew during that
period by 42.3%, but the strongest growth came from Internet-related revenues which
grew by 46.3% and which now amount to more than S$230 million.
’s data services strategy is to maintain and control an extensive, high capacity network
that connects its retail and wholesale customers to key Asia Pacific markets as well as
to Europe and North America. also intends to extend the geographical reach of its
networks by expanding its existing Internet data centres over the coming 18
months. believes these initiatives will position it well to take advantage of the
growth in demand for bandwidth resulting from increasing Internet usage and
e-commerce activities.
(c) Mobile communications services
provides mobile communications services, including cellular, paging and maritime and
aeronautical communications. The majority of the operating revenue from these
services is derived from cellular services.
is the leading mobile communications operator in Singapore with approximately 1.5
million cellular subscribers and a market share of approximately 56% as at 31 March
2001. offers both post-paid and pre-paid services on its dual band GSM900 and
GSM1800 networks. Of ’s 1.5 million mobile subscribers, approximately 38% are pre-
paid subscribers.
Mobile penetration in Singapore has grown rapidly since 1997, with market penetration
reaching approximately 68% as at 31 March 2001.
’s key strategies and initiatives already taken to maintain its significant presence in the
mobile communications market, and to grow its mobile communications business,
include the following:
• focuses on bringing new and innovative products and services to the market to meet
the needs of its various customer groups;
• in June 1999, became one of the first in the world to offer a mobile e- trading
service;
• was the first to offer dual band GSM900/GSM1800 service in Singapore;
• in October 2000, launched GPRS which supports a data rate of up to
115kbps;
• launched a WAP service in February 2000;
• on 23 April 2001, was awarded 3G spectrum rights and an FBO licence after
payment of the licence fee of S$100 million. Prior to award of the licence, , together
with NTT DoCoMo and the Centre for Wireless Communications (part of the
National University of Singapore), was the first in Singapore to complete trials on
Wideband CDMA, a 3G cellular system; and
• continues to improve its mobile communications services to customers while they
are overseas. ’s customers can roam to over 135 destinations worldwide, which is
greater coverage than is available from any other Singapore operator.
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SINGTEL AND ITS STRATEGY
Cellular Subscribers
Year Ended 31 March
1999 745
2000 1,058
2001 1,537
Subscribers (’000)
As the above graph shows, ’s cellular subscriber base increased by 106% from 745,000
as at 31 March 1999 to 1.54 million as at 31 March 2001, as the overall market
experienced significant growth. Despite the entry of a third operator, continues to
hold a commanding market share in both the pre-paid and the post-paid segments.
believes it had the highest post-paid ARPU in the Singapore market of approximately
S$83 for the year ended 31 March 2001 due to its high penetration of the corporate
customer market.
expects that competition in the mobile communications services market will
continue to increase. However, believes that its high quality networks, good
customer service, innovative marketing, and its integrated communications service
provider model will enable it to compete successfully and to maintain its significant
presence in this market.
(d) National telephone services
remains the dominant provider of national telephone services in Singapore, with a
market share of over 99%. has an extensive national fixed line network infrastructure
that can service almost all residential and business premises in Singapore. The national
fixed line network is required to be open for competition as described in Section 3.4(a).
1999 1,778
716 1,107
2000 1,823
787 1,158
2001 1,945
Business Residential
33
SINGTEL AND ITS STRATEGY
Operating revenue has grown steadily over the past three years from S$547 million for
the year ended 31 March 1999 to S$588 million for the year ended 31 March 2001.
As the above graph shows, the total number of working DELs has also grown over the
past three years. Operating revenue growth has been achieved through enhanced
network services, including caller identification, voicemail and call waiting. Such services
now account for 20% of national telephone operating revenue.
(e) IT and engineering services
’s IT and engineering services business is a market leader in its field in Singapore. Both
NCS and Aeradio have an extensive blue chip customer list in this business.
The services provided through ’s IT and engineering services business fall into the
following main categories:
• global competency, comprising:
– consulting, providing advice on its customers’ IT and e-business strategies; and
– package-based solutions, including supply chain management, knowledge
management, mobile commerce, enterprise resource management and customer
relationship management;
• industry solutions, offering complete turnkey solutions to various industries,
including government, banking and finance, transportation, telecommunications,
and education. Services range from consulting, applications development to systems
integration and maintenance;
• infrastructure integration, focusing mainly on the provision of networking
integration for enterprise customers and infrastructure service providers;
• infrastructure outsourcing providing business recovery, call centre, data centre
management, facilities management, groupware and messaging, hosting and
Internet data centre services to its clients; and
• premises distribution, with its key business in distributing communications related
equipment such as structured cabling and wireless devices to the enterprise market.
NCS is extending its activities to other markets in the region and has established offices
or ventures in Australia, China, Hong Kong, India and Malaysia. It is focusing on
providing services to corporate customers in the Asia Pacific region, leveraging on its
extensive consulting and projects experience for customers in government and
commercial sectors such as finance and banking, transportation and
telecommunications in Singapore.
Aeradio has a threefold strategy:
• to expand its customer base in the aviation, banking, environmental, healthcare,
telecommunications, transport and other relevant industry sectors;
• to look for new business, making use of multi-disciplinary state-of-the-art
technologies in providing solutions to meet its customers’ needs; and
• to build a regional presence leveraging off international investments by .
Over the past three years, the operating revenue of the IT and engineering services
business has grown 40.8% from S$341 million for the year ended 31 March 1999 to
S$480 million for the year ended 31 March 2001.
(f) Postal and delivery services
SingPost operates a network of more than 1,000 postal outlets throughout Singapore.
SingPost offers a wide range of postal services, including domestic mail, international
mail, express mail, parcel services, retail sales (including postal and agency products)
and philatelic sales. In the year ended 31 March 2001, SingPost delivered 825 million
items nationally and internationally.
SingPost faces a number of challenges in these markets, including higher costs and the
increasing use of electronic communication services.
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SINGTEL AND ITS STRATEGY
35
SINGTEL AND ITS STRATEGY
36
SINGTEL AND ITS STRATEGY
to USA >
to Hawaii/USA >
JAPAN
KOREA
Chikura to USA >
CHINA
to USA >
Shanghai
to USA >
SINGAPORE
ST-1
o
88 E
Jakarta
INDONESIA
to Australia >
37
SINGTEL AND ITS STRATEGY
38
SINGTEL AND ITS STRATEGY
presence in major cities around the world, including Hong Kong, London, New
York, San Francisco, Sydney and Tokyo, more than 20 private peering partners
within the Asia Pacific region, public peering in key locations such as PAIX, LINX,
and JPIX and connections to more than 70 Asia Pacific ISPs. Additional points of
presence are planned for Chicago, Los Angeles, Osaka, Seoul and other major cities.
(v) Internet data centres
NCS’ Digit@l Centrix provides co-server hosting services for customers who require
Internet data centre facilities and services. The services help companies to go on-line
quickly without the need for significant up-front investment. Digit@l Centrix’s
Internet network has a 155 mbps link leading to IX.
Stor@ge Centric is a value-adding service under Digit@l Centrix, partnering with
leading storage services provider, EMC. Stor@ge Centric provides a flexible and
cost-effective suite of pay-as-you-grow managed storage services.
(vi) International ATM network
’s international ATM service was implemented in 1998. Bilateral ATM service has
been established with 10 major telecom operators, providing customers
connectivity to Australia, China, Germany, Hong Kong, Japan and the United States.
’s ConnectPlus Managed ATM service is now available in key global communications
hubs like Hong Kong, London, New York, San Jose, Sydney and Tokyo through its
own points of presence. In partnerships with others, the coverage is extended to
Indonesia, Malaysia, the Philippines, Thailand and major European and North
American cities.
(c) E-Commerce and Internet network infrastructure
’s strategy is to leverage its network infrastructure and other capabilities across its
businesses to provide e-commerce solutions, on-line media services and infrastructure
along the value chain. ’s involvement extends from provision of terminals, access and
content to procurement and fulfilment.
MHS
IX
39
SINGTEL AND ITS STRATEGY
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SINGTEL AND ITS STRATEGY
Thailand Taiwan
21% of AIS 24.3% of NCIC
14.3% of DPC
India
Hong Kong
28.5% of Bharti
20.35% of APT Satellite
Philippines
Singapore 23.6% of Globe Telecom
50% of
Virgin Mobile Asia
Indonesia
40% of BSI
41
SINGTEL AND ITS STRATEGY
On 7 March 2001, announced that Globe Telecom had signed a series of agreements to
bring it closer to acquiring Isla Communications Co., Inc., also an integrated
communications service provider in the Philippines. The acquisition will enable Globe
Telecom to expand its customer base and the geographic reach of its services in the
Philippines. The acquisition is expected to be completed in mid 2001.
’s effective equity interest in the enlarged Globe Telecom, after legal completion of the
acquisition of Isla Communications Co., Inc., is estimated to be 23.6%.
(c) Bharti Group
Bharti Group is a leading private fixed line and mobile communications service provider
in India. Bharti Group also provides Internet services in India. With the liberalisation of
the telecommunications industry in India, Bharti Group is looking to add domestic long
distance telephone services to its existing communications portfolio in addition to
extending its cellular and fixed line services footprint to new territories within India.
’s interest in Bharti Group consists of a 20% equity interest in Bharti Telecom Limited
and a 15.5% equity interest in Bharti Tele-Ventures Limited, a subsidiary of Bharti
Telecom Limited. ’s effective equity interest in Bharti Tele-Ventures Limited is
approximately 28.5%.
On 7 May 2001, announced that it would increase its investment in Bharti Group by up
to US$200 million. It is expected that ’s effective interest in the Bharti Group will
increase. The percentage shareholding will depend on the investment structure which
is yet to be finalised. Bharti Group also announced that a number of other financial
investors, including E.M. Warburg Pincus, have also separately committed investments
in Bharti Group totalling up to US$260 million.
(d) NCIC
In March 2000, NCIC was awarded a facilities-based licence to operate a fixed line
network in Taiwan. NCIC plans to offer data and broadband services, leased line and
Internet backbone services, as well as international, domestic long distance and local
voice services. NCIC launched its commercial operations in March 2001 using the brand
name sparq*.
’s effective equity interest in NCIC is 24.3%. ’s strategic partner in NCIC is the Far
Eastern Group, which is one of Taiwan’s largest non-electronics industrial groups.
The Far Eastern Group also has a significant interest in Taiwan’s fast-growing cellular
player, Far EasTone.
(e) Virgin Mobile Asia
In November 2000, entered into a joint venture with the Virgin Group to provide
MVNO services in Singapore and other Asian countries (excluding Japan). The
joint venture, Virgin Mobile Asia, intends to launch its services in Singapore in
2001. It also intends to enter the Hong Kong and Taiwan markets in the next 18
months, depending on the feasibility of the business case in each market.
will hold an effective equity interest of 50% in Virgin Mobile Asia upon the completion
of its agreed capital injection.
(f) APT Satellite
APT Satellite primarily provides high quality satellite transponder and
telecommunications services for the international and Asia Pacific broadcasting and
telecommunications sectors. It currently operates three in-orbit satellites, APSTAR I,
APSTAR IA and APSTAR IIR, through its own satellite control centre. It has commissioned
the launch in early 2003 of a new high-powered satellite, APSTAR V, to replace APSTAR I
and to satisfy anticipated demand for transponders. has committed to lease
15 transponders on the APSTAR V satellite.
APT Satellite is listed on the Hong Kong Stock Exchange. For the year ended
31 December 2000, APT Satellite reported revenue of HK$341.5 million and net profit
after tax of HK$143 million. The market capitalisation of APT Satellite on 30 April 2001
was HK$1,331.3 million.
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SINGTEL AND ITS STRATEGY
has an effective equity interest of 20.35% in APT Satellite. Other investors include
China Telecommunications Broadcast Satellite Corporation, China Aerospace Science
and Technology Corporation, CASIL Satellite Holdings Limited and Kwang Hua
Development and Investment Ltd.
(g) DPC
DPC provides cellular services in Thailand, using the digital PCN system.
announced its acquisition of an interest in SDT on 4 May 2001. SDT has a 47.55%
equity interest in DPC. Through this acquisition, has an effective equity interest of
14.3% in DPC. Shin Corporations Public Company Limited, ’s partner in AIS, is also its
strategic partner in SDT.
(h) BSI
BSI has a joint operation agreement with PT Telkom, Indonesia’s monopoly national
telephone services provider, to provide fixed line services in Eastern Indonesia (including
Bali, Sulawesi, Irian Jaya, Ambon and West Timor) for 15 years from 1995 to 2010. BSI
is responsible for managing, operating, repairing and maintaining PT Telkom’s existing
lines and constructing an agreed number of new lines in the Eastern Indonesia region.
In the year ended 31 December 2000, BSI’s share of revenue from the joint operation
was Rp345 billion. BSI reported an operating income of Rp183 billion and incurred a
net loss of Rp151 billion. The net loss is mainly due to foreign exchange losses.
has an effective equity interest of 40.0% in BSI.
The terms of BSI’s joint operation agreement are under review with PT Telkom. As a
result of that review, the future of ’s investment in BSI is uncertain.
(i) Lycos Asia
Lycos Asia was established in 1999. It provides localised versions of the Lycos.com and
Tripod consumer portals to Asian markets. It is one of the largest Internet portals in Asia
with 11 local web sites in Asia. In Singapore, Lycos Asia is in a leading position, and, in
China, one of the world’s top 10 Internet markets, Lycos Asia is among the top 10 portals.
holds an effective equity interest of 50% in Lycos Asia.
(j) Belgacom
Belgacom is the leading and incumbent communications company in Belgium
providing a full range of services in mobile, local, regional and international telephone
services, leased lines, data communications and terminal equipment in Belgium.
Belgacom is owned by the Belgian State and ADSB Telecommunications B.V., a
consortium comprising SBC Communications, Tele Danmark, and Belgian financial
investors.
For the financial year ended 31 December 2000, Belgacom reported revenue of
Bef207.4 billion and net profit after tax of Bef19.3 billion.
holds an effective equity interest of 12.15% in Belgacom.
(k) Other investments and joint ventures
In addition to the investments listed above, has a number of smaller investments in
Singapore and throughout the Asia Pacific region. These investments include an
interest in PointAsia Dot Com (Thailand) Limited in Thailand and Infoserve
Technology Corporation in Taiwan, both of which are ISPs.
3.9 EMPLOYEES
has approximately 13,400 employees. More than 98% of ’s employees are employed on a
full time basis.
Just over half of ’s employees are represented by Singapore labour unions, with
approximately 7,200 employees being members of the Union of Telecoms Employees of
Singapore and approximately 110 Yellow Pages employees being members of the
Singapore Manual and Mercantile Workers’ Union. The remainder of ’s employees are
covered by individual employment contracts.
has no recorded lost working time as a result of industrial disputes in the last five years.
43
SINGTEL AND ITS STRATEGY
3.10 PROPERTY
A large part of ’s network infrastructure is located on land in relation to which , as a
public telecommunications licensee, is entitled to certain rights of access for the
purposes of erecting and maintaining plant and equipment used for the provision of
telecommunications services. also owns and occupies land on which its telephone
exchanges are located. owns approximately seven sites and occupies approximately 60
sites under a lease or other basis, most of which are used for ’s communications operations.
SingPost also owns or occupies under a lease or other basis approximately
71 sites which are used to support its postal and delivery service operations. In addition to
these operational sites, owns or leases properties used for office accommodation, storage
and other corporate purposes.
44
SINGTEL AND ITS STRATEGY
Lim Toon
Chief Operating Officer
Mr Lim was appointed Chief Operating Officer of in April 1999. He is responsible for
synergising the operations of ’s customer units as well as shared-resource units like network
service, customer service and corporate marketing. He has been with since 1970 and, since
1983, has held top management positions in various areas including engineering, radio
services, traffic operations, human resources and information systems. He holds a First
Class Honours degree in Engineering from the University of Canterbury (New Zealand).
Lucas Chow Wing Keung
Executive Vice President, Consumer Business
Mr Chow was appointed Executive Vice President (Consumer Business) in July 2000. He is
also the Chief Executive Officer of Mobile. Mr Chow joined in May 1998 as Group Director
(Total Quality). Before joining , he held several senior positions in Hewlett Packard where he
worked for 20 years. He graduated with a Bachelor of Science (Honours) degree from the
University of Aston, Birmingham (United Kingdom).
45
SINGTEL AND ITS STRATEGY
46
SINGTEL AND ITS STRATEGY
The following table sets out the authorised and issued capital of as at 31 March 2001 and 31
March 2000.
2001 2000
S$ S$
MIL L I ON MIL L I ON
Authorised share capital
33,333,333,330 ordinary shares of S$0.15 each and
1 Special Share of S$0.50 5,000.0 5,000.0
Issued and paid up share capital
Ordinary shares at S$0.15 each (“Shares”)
Balance as at 1 April
15,473,154,226 (2000: 15,249,938,788) Shares 2,321.0 2,287.5
Issue of 787,900 (2000: 223,932,438) Shares 0.1 33.6
Repurchase of 60,778,000 (2000: 717,000) Shares (9.1) (0.1)
Balance as at 31 March
15,413,164,126 (2000: 15,473,154,226) Shares 2,312.0 2,321.0
1 Special Share at S$0.50 * *
2,312.0 2,321.0
* denotes amount of less than S$50,000
47
SINGTEL AND ITS STRATEGY
Notes:
(1) Operating Revenue
2001 2000 1999 2001 2000 1999
S$ S$ S$ % % %
MILLION MILLION MILLION CHANGE CHANGE CHANGE
International Telephone 1,203.1 1,644.7 1,843.7 –26.8% –10.8% –10.4%
Public Data and Private Network 1,065.0 763.0 620.6 39.6% 22.9% 10.5%
Mobile Communications 885.5 851.3 880.0 4.0% –3.3% 9.2%
National Telephone 588.0 572.7 546.6 2.7% 4.8% 1.4%
IT and Engineering Services 480.1 383.5 340.9 25.2% 12.5% 70.7%
Postal Services 341.0 322.6 307.9 5.7% 4.8% –1.3%
Sale of Equipment 166.7 149.9 138.2 11.2% 8.5% –40.6%
Directory Advertising 107.2 97.1 125.8 10.4% –22.8% –3.4%
Others 88.9 81.0 79.8 9.8% 1.5% –22.6%
Operating revenue 4,925.5 4,865.8 4,883.5 1.2% –0.4% –1.2%
48
SINGTEL AND ITS STRATEGY
International telephone
International telephone services remained the largest contributor to ’s operating
revenues, accounting for 38% of the total.
Total outgoing minutes grew by 6.0% to 799 million minutes during the year. This
growth was slower than the previous year’s growth due to the slowdown in Singapore
and the regional economies.
Operating revenue declined by 10.4% to S$1.84 billion, primarily as a result of price
reductions by to ensure that its international telephone services remained competitively
priced compared to international benchmarks, with a decline of 13.8% in average gross
collection rate.
Public data and private network
The largest operating revenue growth, on a comparable basis, came from public data
and private network services, which grew 10.5% to S$621 million.
International and local leased lines were the main contributors to this growth. Greater
demand for leased lines came from companies using applications which required higher
bandwidth, as well as other operators providing cellular and Internet services.
About S$60 million in annual savings were passed on to local leased line customers in
terms of rate reductions, discounts, network modernisation and special schemes for
ISPs and their customers. Prices for ISDN services were also reduced by up to 44%.
These initiatives were designed to further strengthen ’s competitive position as a
regional hub and to stimulate demand.
’s Internet businesses, SingNet and Magix, increased their subscriber bases to over
200,000 and 10,000 subscribers respectively during the year.
Mobile communications
Operating revenue from mobile communications services, including cellular, paging and
maritime services, grew 9.2% to S$880 million, accounting for 18% of ’s total operating
revenue.
’s cellular subscriber base saw strong growth of 15% during the year to 745,000
subscribers. ’s cellular ARPU remained at about S$100, as continued to attract good
quality customers to its networks. Average usage per user was estimated at 350 minutes
per month. Growth in operating revenues from ’s cellular services more than offset
declining revenues from paging services, reflecting the continued migration of the
subscriber base from paging to cellular services. Marketing promotions and the
introduction of a customer loyalty program generated sales and encouraged customer
retention.
National telephone
Operating revenue from national telephone services grew 1.4% to S$547 million,
comprising 11% of ’s total operating revenue.
The total number of working Direct Exchange Lines increased by 5.5% to 1.78 million
lines. A successful second-line-for-the-home campaign and increased Internet penetration
stimulated demand for residential lines. As at 31 March 1999, approximately 19% of
homes had more than one line, up from 15% in the previous year.
Operating revenue from enhanced network services increased by 14%, and comprised
15% of national telephone operating revenue.
IT and engineering services
Operating revenue from IT and engineering services was S$341 million, accounting for
7% of ’s total operating revenue. This represented a 70.7% increase over the prior year.
This growth resulted from the acquisition of NCS in October 1997 which made its first
full year contribution to . NCS’s contribution to operating revenues was S$225 million.
Postal services
Operating revenue from postal services contributed 6% of ’s total operating revenue.
Revenue declined by 1.3% to S$308 million, due mainly to a 2.2% decline in mail
traffic volume.
49
SINGTEL AND ITS STRATEGY
Operating expenses
Total operating expenses were approximately S$2.91 billion, an increase of 6.3% from
the previous year. On a comparable basis (that is, excluding NCS), the overall increase
in operating expenses was 3.5%.
Traffic expenses, which comprised 28% of ’s operating expenses, declined by 1.0% to
S$813 million. Outpayments to other carriers, which accounted for more than 80% of
traffic expenses, declined by 6.1% even though outgoing international telephone traffic
increased by 6.0%. These declines resulted from aggressive accounting rates
negotiation which saw settlement rates drop by more than 20%. Space segment and
leased circuit rental charges were higher to meet increased demand for data services.
Staff costs increased by 13.3% to S$622 million, and accounted for 21% of total
operating expenses. Excluding NCS, staff costs would have increased by only 3.5%.
Selling and administrative expenses amounted to S$557 million, an increase of 20.7%
from the previous year. This was mainly due to an increase of S$52 million in the
provision for doubtful receivables.
Accelerated depreciation of S$90 million on account of technological obsolescence
and for Y2K compliance resulted in an increase in depreciation charges of 14.6% to
S$522 million.
Cost of goods sold is associated with revenues from information technology and
engineering services, sale of equipment and directory advertising. Cost of goods sold
decreased by 10.8% primarily attributed to lower equipment sales.
Profit
As a result of the changes in revenues and expenses outlined above, ’s operating profit
decreased by 10.5% to S$1.97 billion.
Contributions from Associated Companies grew significantly over the year due to higher
contributions from Belgacom and Globe Telecom. For the year ended 31 March 1999,
overseas investments contributed S$292 million, or 11.2%, to ’s profit before tax.
Contributions from overseas investments increased by S$265 million from the previous
year.
During the year, made its second largest investment to date by taking an effective 13%
stake in AIS, the largest cellular operator in Thailand.
During the year, adopted a conservative investment stance by increasing its cash and
fixed income investments and reducing its exposure to equities, resulting in an increase of
13.0% in net finance income. Interest income increased by 36.8% due to an increase in
interest rates and the higher level of fixed income investments. Investment income
declined as a result of this portfolio restructuring.
Profit after tax before extraordinary items grew by 4.1% to S$1.91 billion. Earnings per
share before extraordinary items increased by 4.1% to 12.54 cents.
There was a net extraordinary gain of S$87 million which was the result of gains
realised from the sale of various long term portfolio investments, offset by provision for
diminution in value for certain investments. The profit after extraordinary items
amounted to S$2.0 billion, an increase of 12.1% from the previous year.
Financial position
As at 31 March 1999, ’s total assets stood at S$12.94 billion, an increase of 11.2%
from the previous year. This increase was largely a result of an increase of 14.5% in the
cash and short term investments held by to S$6.4 billion on account of strong cash flow
generated from operations as well as a 13.6% increase in property, plant and
equipment, net of depreciation to S$4.6 billion. Capital expenditure for the year
totalled S$1.1 billion, an increase of 15.1% from the previous year.
Shareholders’ funds increased 16.1% to S$7.57 billion and net tangible assets per share
was 49.66 cents, compared to 42.76 cents a year ago.
50
SINGTEL AND ITS STRATEGY
51
SINGTEL AND ITS STRATEGY
maintained at more than S$90. The successful launch of new pre-paid services, and a
ten-fold increase in ’s pre-paid subscriber base, led to a reduction in overall ARPU from
approximately S$100 to approximately S$80, as pre-paid ARPU is lower than post- paid
ARPU.
National telephone
Operating revenue from national telephone services grew by 4.8% to S$573 million.
The total number of working Direct Exchange Lines grew 2.5% to 1.8 million lines.
With the economic recovery, there was a 3.5% increase in the number of business lines,
resulting in a total of 716,000 business lines. The year also saw an increase in the
number of residential lines, on the back of growing demand for a second line in the
home. As at 31 March 2000, 21% of residential customers had more than one line.
Operating revenue from enhanced network services increased 33% to S$116 million.
Enhanced network services made up approximately 20% of operating revenue from
national telephone services.
IT and engineering services
IT and engineering services saw revenue growth of 12.5% to S$384 million. The bulk of
the revenue growth came from ’s subsidiary, NCS, whose revenues increased
substantially by S$61 million, or 25%. NCS’s growth was achieved as a result of various
factors including continued growth of the existing business, expansion into new
markets and the continued growth in demand.
Postal services
Operating revenue from postal services was S$323 million, representing a 4.8% annual
increase in line with improved economic conditions in Singapore. Postal services
contributed 7% to ’s total operating revenue. Mail volume increased 3.4% to 791
million items.
Operating expenses
Overall operating expenses increased 3.5% to S$3.01 billion. However, if accelerated
depreciation costs were not accounted for this financial year and the preceding financial
year, operating expenses, on a comparable basis, would have decreased by 1.9%.
The largest cost component of operating expenses, traffic expenses, declined 13.8% to
S$701 million. The cost of carrying traffic continued to be contained through aggressive
settlement rate negotiations, resulting in international outpayment rates falling by
30.4%. As a result, overall outpayments, which contributed more than 80% of total
traffic expense, fell by 18.9%.
Staff costs, which accounted for 20% of operating expenses, fell 4.3% to S$595 million.
Most of these savings resulted from the mandated rate reduction in employer’s CPF
contributions, as part of the Government’s initiatives in January 1999.
took a one-off accelerated depreciation charge of S$245 million to reflect the results
of an asset impairment review undertaken during the year, leading to an increase of
50% in depreciation expense.
Selling and administrative costs declined by 5.6% to S$526 million largely on account
of more cost effective advertising and promotional programs.
Cost of goods sold declined 1.6%, which reflected better margins from IT and
engineering services.
Profit
As a result of the slight decline in revenues and the impact of accelerated depreciation
outlined above, operating profits decreased S$120 million or 6.1%. However, ’s share of
pre-tax profits of Associated Companies increased by S$76 million or 26.0%. This
growth was consistent with ’s continued internationalisation efforts and resulted in
greater diversity in earnings streams.
Significantly improved contributions from overseas investments, cost control initiatives
and productivity gains enabled to record growth in EBITDA, which rose to S$3.04
billion.
52
SINGTEL AND ITS STRATEGY
Interest income decreased by 19.8% due to a fall in interest rates, leading to a decline
of 13.2% in net financial income.
Profit after tax before extraordinary items decreased 3.9% to S$1.84 billion. Earnings
per share before extraordinary items decreased 4.3% to 12.00 cents.
During the year, realised gains from the sale of various long-term investments such as
NetCom ASA and AAPT Limited of S$706 million. Together with provisions for certain
investments, extraordinary items amounted to S$701 million, resulting in a profit
after tax and extraordinary items of S$2.54 billion, a 27.0% increase from the previous
year. Earnings per share after extraordinary items grew by 26.5% to
16.58 cents.
Financial position
As at 31 March 2000, ’s total assets were S$13.92 billion, up S$980 million or 7.6%.
The increase in total assets was driven primarily by additional investments in ventures.
However, ’s property, plant and equipment after depreciation decreased 2.5% to
S$4.44 billion. Capital expenditure for the year decreased by 34.7% to S$714 million.
Cash and short term investments decreased 7.4% to S$5.9 billion as about S$2.0 billion in
total was distributed as special and final dividends during the year.
’s Shareholders’ funds were S$8.57 billion, up S$997 million or 13.2% from 31
March 1999 and net tangible assets per share at 55.38 cents was 5.7 cents or
11.5% higher than a year ago.
(c) For the financial year ended 31 March 2001
The financial year ended 31 March 2001 was a period which saw continued
improvement in the region’s economies. Operating revenues rose due to very strong
growth in public data and private network services and IT and engineering services,
which offset declining revenue from international telephone services. Overall, showed
positive EBITDA and earnings growth for the year (before extraordinary items)
notwithstanding the impact of competition arising from the full liberalisation of
Singapore’s communications market on 1 April 2000. ’s international investments
continued to contribute significantly to profitability, although due to foreign exchange
translation losses incurred by Globe Telecom, contributions were slightly lower than in
the previous year.
EBITDA increased 8.3% from S$3.04 billion to S$3.29 billion.
Operating revenue
’s operating revenue was S$4.93 billion, an increase of 1.2%.
International telephone
The improved economic conditions and liberalisation of Singapore’s
telecommunications market led to a sharp increase in international call volumes.
recorded a strong 16.5% growth in total outgoing international traffic, driven by
cellular IDD calls and wholesale business. Incoming minutes, however, decreased 2.8%.
continued to implement tariff reductions, which were successful in maintaining its
competitiveness and ensuring minimal loss of market share to competitors in the face
of full competition. These tariff reductions resulted in the average net collection rate
declining by 38.3% to S$0.701. ’s estimated market share of outgoing calls over the
year was in excess of 90%.
As a result of tariff reductions, international telephone revenue declined by 26.8% to
S$1.2 billion. Margin erosion continued to be mitigated by declines in traffic expenses
as described below.
Public data and private network
Public data and private network services continued to grow at a rapid pace, registering
the highest growth rate amongst ’s businesses. Operating revenues grew by a record
39.6% to almost S$1.1 billion.
53
SINGTEL AND ITS STRATEGY
Revenues from leased lines grew by 30% and continued to be driven by strong growth
in demand for international bandwidth. Demand was particularly strong from new
competitors requiring leased line capacity to provide telecommunications services in
Singapore and in the region.
’s Internet related activities continued their robust growth. Revenues from SingNet,
IX and Magix grew by S$74 million or 46.3%. Total Internet-related revenues
amounted to just over S$230 million, and comprise about 19% of total public data and
private network services operating revenues.
SingNet’s revenue grew strongly at 44.5% as it shifted its focus from dial up customers
to high value corporate customers. The revenue for IX also recorded good growth
as demand for regional traffic continued to increase. Monthly ARPU for Magix’s 30,000
subscribers increased to slightly over S$100 from S$90 last year.
Mobile communications
Mobile communications revenue grew by 4.0% to S$886 million. This growth was
mainly due to strong growth of 10.8% in operating revenues from cellular services.
Operating revenue from paging services, on the other hand, declined by 24.5% as
demand for paging services continued to be replaced by demand for cellular services.
benefited from increased demand for its cellular services resulting from advertising and
promotional activities. In spite of the entry of Singapore’s third cellular operator on 1
April 2000, ’s cellular subscriber base grew by a record half a million subscribers over
the year to 1.5 million subscribers, reflecting a 45% increase.
The large increase in the number of subscribers caused a decline in monthly post-paid
ARPU to around S$83. Overall ARPU declined to approximately S$60 as a result of a
higher proportion of pre-paid subscribers in ’s overall subscriber base.
National telephone
Operating revenue from national telephone services grew by 2.7% to S$588 million.
The total number of working Direct Exchange Lines grew 3.6% to 1.94 million lines.
Operating revenue from enhanced network services increased 8.4% to S$126 million,
and comprised approximately 20% of operating revenue from national telephone
services.
IT and engineering services
IT and engineering services saw strong operating revenue growth of 25.2% to S$480
million. The growth was driven by strong demand for systems integration, technical
consulting and information services.
Postal services
Operating revenue from postal services was S$341 million, a 5.7% increase. Postal
services contributed 7% to ’s total operating revenue. Growth in operating revenues
was driven by a 4.4% increase in mail volume and an increase in the national postal
rates.
Operating expenses
Overall operating expenses increased marginally by 0.8%.
The average number of staff increased by 5.8% during the year. This, and overall wage
increases, combined with the increase of employers’ CPF contributions from 10% to
12% in April 2000 and to 16% from January 2001, led to an increase in staff costs of
12.0% to S$667 million. Staff costs accounted for 22% of operating expenses and
became the largest cost component of operating expenses. The increase in staff
numbers was largely due to an increased focus on customer service and to increased
activity in ’s public data and private network and IT and engineering businesses and ’s
focus on these growth areas.
The second largest cost component of operating expenses (previously the largest cost
component), traffic expenses, decreased 5.1% to S$665 million. The cost of carrying
traffic continued to decline as a result of aggressive settlement rate negotiations,
resulting in the average outpayment rate falling by 23.0%.
54
SINGTEL AND ITS STRATEGY
55
SINGTEL AND ITS STRATEGY
3.0
2.5
2.0
1.5
1.0
0.5
0.0
1 May 2000 1 Aug 2000 1 Nov 2000 1 Feb 2001
MSCI Singapore (Free) Index Rebased MSCI World Diversified Telecom Services
Index Rebased
56
SECTION 4
THE ACQUISITION OF OPTUS
57
THE ACQUISITION OF OPTUS
58
THE ACQUISITION OF OPTUS
considerable revenue from other international investments. The diverse business activities and
geographies of these revenue streams would reduce ’s dependence on specific sectors or markets.
The above chart sets out certain pro-forma post-acquisition operating statistics for for the year ended 31
March 2001. For further details of the pro-forma financial impact on of the acquisition, see Sections 4.6
to 4.9.
59
THE ACQUISITION OF OPTUS
Thailand
21% of AIS
14.3% of DPC
India
28.5% of Bharti
Philippines
Singapore 23.6% of Globe Telecom
50%
of Virgin Mobile Asia
Australia
Optus
Through the addition of Optus’ 3.7 million cellular subscribers as at 31 March 2001, and its Associated
Companies would have a total of 10.9 million cellular subscribers in the region. and AIS are market
leaders in their respective countries. Globe Telecom is the number two cellular operator in the
Philippines. Bharti Group is among the top five cellular service providers in India, and one of the
leading cellular service providers in the geographical areas in which it operates in India.
Optus has the number two market position in Australia, with a 33% market share. Adjusting the
above aggregate subscriber base for ’s percentage ownership in its Associated Companies (and assuming
acquires 100% of Optus), ’s proportionate cellular subscriber base would be
6.9 million subscribers as at 31 March 2001. Such scale is expected to bring potential cost
advantages, including lower equipment costs from greater bargaining power with equipment
suppliers.
, its Associated Companies and its regional partners continually work towards joint initiatives that
would enhance the value of their respective businesses. Optus would also benefit from these regional
initiatives, such as enhanced roaming and mobile enterprise solutions for corporates a nd multi-cultural
and multi-lingual content development.
also believes that product development savings may be achieved through initiatives for the joint
development of mobile communications services across the various cellular operations in the
different markets.
Given that and Optus already have joint ventures with the Virgin Group, there may also be
opportunities to enhance the value of these existing relationships, with the potential to expand
operations into certain other markets in Asia.
60
THE ACQUISITION OF OPTUS
to USA >
Jakarta INDONESIA
Pacrim
JASURAUS West
Cairns
AUSTRALIA
to New Zealand,
Fiji, Hawaii & USA >
Brisbane
Southern
Cross
Melbourne
Launceston
Hobart
61
THE ACQUISITION OF OPTUS
62
THE ACQUISITION OF OPTUS
(1)
Shareholdings
22%
Free Float
27%
78%
Temasek
68%
0%
C&W plc
5%
Pro-forma Current
(1) Assumes 100% acceptance level with C&W plc electing the Share, Cash and Bond Alternative and the
remaining shareholders electing the Share and Cash Alternative.
As illustrated in the above chart, it is expected that the liquidity of ’s Shares subsequent to the acquisition
will be improved. It is also expected that such liquidity will also be enhanced by the listing of Shares on
the ASX.
63
THE ACQUISITION OF OPTUS
Australia’s intentions if it acquires 100% ownership of Optus are set out below.
(i) Formation of Integration Committee
In order to facilitate the integration of the Optus business into the business and to identify and
realise, where feasible, the benefits of the acquisition, including those set out in Section 4.3, will
form an Integration Committee made up of senior and Optus executives. The Integration
Committee will also conduct a review of Optus and refine plans for each of Optus’ business units
and, at the appropriate time, make recommendations to the Board regarding the implementation
of those plans. Having regard to the terms of the Separation Deed (described in Section 11.3), one
of the tasks of the Integration Committee will be to review certain contracts between C&W plc
and Optus (also described in Section 11.3).
(ii) Optus’ businesses
• Overall business
Optus has a strong position in the Australian market on account of its integrated strategy,
brand name, networks and strong management team. ’s intention is that Optus’ day-to- day
operations will be managed, for the foreseeable future, as a stand-alone business. Optus’ core
brands will continue to be used in Australia. intends to expand and develop Optus’
operations in Australia with a view to benefiting from growth opportunities in the Australian
market and improving shareholder returns. In addition, Optus would participate in, and
benefit from, ’s regional development activities.
• Mobile
recognises the excellent track record of Optus’ mobile business unit in terms of its market share
and strong brand name. It is generally supportive of Optus’ current strategy to increase subscriber
numbers, to be a leader in emerging mobile data applications and to improve processes to
reduce costs. intends to add value to Optus’ mobile business unit, utilising its own experience and
services and those of its Associated Companies in the Asia Pacific region.
plans to develop 3G business opportunities in Australia and intends to ensure that there will be
sufficient investment in the rollout of Optus’ 3G network.
• Data and Business Services
intends to retain Optus’ data and business services network infrastructure, including its national
fibre optic backbone and central business district fibre optic rings, within Optus.
supports Optus’ strategy for its data and business services operations, which includes:
– increasing its share of the business communications market by providing creative and flexible
customer solutions;
– expanding its customer access networks in a cost-effective manner (as evidenced by Optus’
DSL rollout initiatives); and
– continuing to develop services and solutions, including hosting applications and e-commerce
solutions.
believes that this strategy, whereby Optus will be both a service provider and a network
operator, will be effective in enabling Optus to benefit from anticipated high growth rates in
the communications industry in Australia.
will also examine the advantages of combining certain of Optus’ and ’s international networks
and services, including satellite and submarine cable assets, subject to the relevant regulatory
approvals. believes that the combined strengths of and Optus would enable both companies
to provide an enhanced range of data communications services to multinational corporations
and other corporate customers with communications hubs in Singapore or Australia. also
believes its position and branding as one of
Asia Pacific’s leading communications service providers and the development of its existing
international offices and operations will enhance Optus’ own competitive position
outside Australia.
• Consumer and Multimedia
believes that there are distinct cost advantages in sharing Optus’ consumer and multimedia
infrastructure. For example, believes that Optus’ plans to expand its national fibre optic
backbone network and submarine cable networks could result in benefits to the consumer and
multimedia business in the form of increased reliability and lower bandwidth costs.
64
THE ACQUISITION OF OPTUS
will review strategic options for the consumer and multimedia business, including the
possibility of entering into strategic partnerships with other media companies and content
providers. The outcome of this review will be guided by ’s desire to maximise shareholder
value.
(iii) ASX listing and inclusion in S&P/ASX 200 Index
Australia intends to seek the removal of Optus from the Official List of the ASX, which will result in the
removal of Optus from the S&P/ASX 200 Index.
will apply for a listing of its shares (other than those held by Temasek) on the ASX.
In these circumstances, understands that it would be considered for inclusion in the S&P/ASX
200 Index. However, whether to include in this Index (and at what weighting) are decisions for
the Australian Index Committee of S&P/ASX.
(iv) Optus board of directors
Australia intends to seek the resignation of the directors of Optus and to appoint nominees of
Australia in their place. Some of the existing directors of Optus may be reappointed, subject to
their agreement to be reappointed.
(v) Australian Advisory Board and Board
intends to establish an Australian advisory board to ensure that issues relating to Optus are properly
addressed and that Optus continues to offer innovative, progressive and competitive communications
services to the Australian public.
In addition, intends to invite Australian representation onto the Board to reflect the importance of
Australia to its overall business.
(vi) Financial reporting
intends to separately disclose Optus’ financial statements for the year ending 31 March 2002
under Australian GAAP, prepared on a consistent basis. will also consolidate the results of
Optus’ operations into its consolidated financial statements. As ’s consolidated financial
statements are prepared under Singapore GAAP, adjustments will be made to Optus’ financial
statements to conform with Singapore GAAP and the accounting policies adopted
by .
(vii) Management and employees
Given the talent, strong track record and experience of the Optus management team, wishes to
retain core members of Optus’ management team to manage Optus’ Australian operations on a
day-to-day basis. will also explore the possibility of seconding some of its current employees to,
or recruiting from the market for, management positions in Optus.
intends to maintain continuity and minimise disruption. It will seek to retain existing Optus
employees, having regard to the positions of Optus’ employees and the staffing requirements of
the business going forward. believes that both and Optus employees will benefit from
participation in ’s enlarged operations with enhanced opportunities across a wider range of
markets and services and may introduce group-wide secondment programs.
(viii) Optus Options outstanding under existing employee option incentive schemes
will maintain the existing EOP and SPP for the benefit of those employees who continue to hold
Optus Options under these plans, but no further Optus Options will be issued under these
plans after the end of the Offer Period. No further Optus Shares will be issued under the EOP or
SPP after that time, but alternative arrangements will be made for unexercised options under the
EOP and SPP as described below.
As soon as possible after issuing notices of Compulsory Acquisition, will cause the rules of the EOP
and SPP to be amended. Under the amended rules, any performance hurdle may relate to
instead of Optus, and Optus may discharge its obligations on the exercise of the Optus Options by
arranging for the issue of Shares in the ratio of 1.66 Shares per Optus Option instead of issuing
Optus Shares. will waive receipt of 41¢ of the A$4.11 exercise price of the EOP options so that
the price at which the shares are issued on exercise of the options includes a premium over market
price of those shares as at 30 April 2001 that is consistent with the premium of the full exercise price
over the market price of Optus shares at that date but no additional benefit is given to option
holders which is not available to ordinary shareholders.
65
THE ACQUISITION OF OPTUS
Holders of Optus Options will not have any claim on , but will undertake to Optus to issue
Shares to plan participants to enable Optus to satisfy the exercise of any of their option right s in
that way.
also intends to replace existing Optus employee option and share plans with option and share
plans, in order to better incentivise the employees to enhance the shareholder value of the enlarged
instead of Optus only.
(ix) Australian corporate office
intends to maintain Optus’ corporate office in Australia to support Optus’ Australian operations.
Where appropriate, duplicated corporate office activities and costs between Singapore and
Australia will be rationalised, taking into account the office and infrastructure assets required to
support Optus’ Australian operations.
(b) Changes to Australia’s intentions if it acquires less than 100% ownership of Optus Australia’s
intentions as described in Section 4.4(a) are dependent on Australia obtaining 90% or more
ownership of Optus so as to enable Australia to compulsorily acquire all remaining Optus Shares.
Even if that is not obtained, subject to the terms of the Offer (which includes the Minimum
Acceptance Condition, which will not be waived), Australia will be the majority shareholder in
Optus.
As the majority shareholder, Australia will still seek to implement its intentions referred to in Section
4.4(a) as far as possible. However, its ability to implement these intentions will be subject to applicable
legal and regulatory requirements which may delay or affect the extent of their implementation.
The changes in Australia’s intentions if it does not acquire 100% ownership of Optus are as follows.
(i) ASX Listing
’s intention is for Optus to retain its inclusion in the Official List of the ASX, subject to Optus
retaining a sufficient spread of shareholders acceptable to the ASX.
(ii) Optus board of directors
Australia intends to seek the resignation of the C&W plc nominees from the Optus board, and the
appointment of Australia’s nominees to the Optus board. The number of Australia nominees will
be determined in due course, having regard to the interests of minority shareholders and
principles of good corporate governance. Some of the existing directors of Optus may become
Australia’s nominees, subject to their agreement to those nominations.
(iii) Board
intends to invite Australian representation on its Board to reflect the importance of Australia
to ’s overall business.
(iv) Financial reporting
will consolidate the results of Optus’ operations into its consolidated financial statements. As ’s
consolidated financial statements are prepared under Singapore GAAP, adjustments will be made
to Optus’ financial statements to conform with Singapore GAAP and accounting policies adopted
by .
(v) Management and employees
Australia and will seek to give effect to their intentions described in Section 4.4(a)(vii),
subject to the agreement of the Optus board.
(vi) Optus Options outstanding under existing employee incentive schemes
intends to maintain the existing EOP and SPP for the benefit of those employees who continue
to hold Optus Options under these plans, but no further Optus Options will be issued under
those plans. would not seek to replace existing Optus employee option and share plans with
plans.
66
THE ACQUISITION OF OPTUS
It will continue to diversify into growth areas such as data communications services, Internet
broadband and mobile communications services to offset declining revenues from international
telephone services. will also continue to proactively manage its cost structure and expects
continued earnings growth from its Singapore operations.
Details of ’s performance for the year ended 31 March 2001 and discussion of operating trends during
that year (and the two preceding years) appear in Sections 3.13 and 3.14 and Annexure 1.
will continue to extend its footprint and make investments that are expected to enhance its long
term shareholder value and growth. Some of these investments are greenfield investments that will
incur start-up costs while others may be at the growth stage which requires significant funding
and are still loss-making. As such, expects a decline in the earnings contribution from its Associated
Companies in the near term. Investment and interest income are expected to decline with the
deployment of funds into investments and acquisitions, and interest expense will increase with
higher borrowings. Overall, excluding Optus, expects lower earnings in the near term, arising mainly
from its investment activities which are targeted to capture longer term gains.
The effect of the proposed acquisition of Optus on is largely dependent upon the final level of
ownership in Optus that achieves upon the completion of the Offer. believes that its longer term
prospects and businesses will be enhanced with the acquisition of Optus. The acquisition will result
in greater diversity of earnings for and increase the contribution from international investments to ’s
overall financial results.
The Board believes that it does not have sufficient information to provide meaningful and reliable
forecast financial information with respect to after the acquisition of Optus in this Bidder’s
Statement. Notwithstanding this, is able to make a number of general observations on the outlook
for its principal business activities, including as set out in Sections 3.6, 3.8, 4.1, 4.2 and 4.3 and as set
out below.
(i) International telephone
believes that its initiatives of introducing competitive prices and innovative products and services, as
well as the quality of those products and services, will enable it to continue to manage the rate of
decline in tariffs and to increase usage and protect market share as competition intensifies.
expects that the acquisition of Optus is not likely to impact significantly on this business as most of its
revenue is generated from international call traffic originating from Singapore.
(ii) Mobile communications
Due to the existing high penetration rate, expects growth in the Singapore cellular market to
moderate over the next 12 months, while competition continues to intensify. believes that its
competitive strengths and brand initiatives will enable it to compete effectively and maintain its
market leadership in Singapore.
believes that the acquisition of Optus will benefit the mobile communications business in a
number of areas, which are expected to improve the overall strength of this business. Details of
these expected benefits are discussed above in this Section 4.
(iii) Public data and private networks
expects that, on a stand-alone basis, this business will continue to be a key driver of revenue and
earnings growth, despite the likely reduced rate of growth in demand for bandwidth a nd data
communications due to the expected global economic slowdown. believes it is well positioned to
capture demand for these services through the development of its state-of-the-art national and
international networks and its relationships with other service providers in the region.
expects that the acquisition of Optus will benefit the public data and private networks business
in a number of areas, by increasing the scale of its networks, extending its geographical reach
and enhancing the services it can offer to its customers. Details of these expected benefits are
discussed above in this Section 4.
(b) Further acquisitions
Consistent with its regional expansion strategy, continuously evaluates opportunities in the Asia
Pacific region. has submitted non-binding expressions of interest or memoranda of understanding,
conducted due diligence, or entered into negotiations in relation to certain opportunities.
67
THE ACQUISITION OF OPTUS
68
THE ACQUISITION OF OPTUS
• 31 March 2001 for the purposes of presenting the Pro-forma Consolidated Balance Sheet.
(c) Significant accounting policies
The financial information of under Singapore GAAP has been prepared based on the significant
accounting policies as disclosed in the historical financial statements of included in Annexure 1 to this
Bidder’s Statement.
The Pro-forma Consolidated Financial Information has been prepared in accordance with ’s accounting
policies under Singapore GAAP, which differ in certain respects from Optus’ accounting policies
which are prepared in accordance with Australian GAAP. A description of the principal differences is
set out in Section 4.8. An initial assessment has been made of the impact on Optus’ financial
statements of the application of ’s accounting policies and Singapore GAAP. A complete
assessment has not been made as will not have available to it sufficient information on the exact
nature of Optus’ implementation of its accounting policies for this purpose until after completion of
the acquisition. The reclassifications and adjustments made to the Optus Financial Infor mation will
not necessarily be adopted in preparing Optus’ Financial Statements in the future.
As an Australian entity, Optus may continue to prepare its accounts in accordance with its existing
accounting policies under Australian GAAP.
For the purposes of presenting the Pro-forma Consolidated Financial Information, the Optus Financial
Information has been reclassified to conform with ’s presentation under Singapore GAAP, and pro-forma
adjustments have been made to the Optus Financial Information to account for the significant
differences identified between Optus’ and ’s respective accounting policies. These adjustments are
described in Section 4.7 below. These reclassifications and adjustments are not necessarily in accordance
with future Optus presentations.
(d) Consolidation
will account for its acquisition of Optus as an acquisition under Singapore GAAP. Under this method
of accounting, the excess of the fair value of the Offer Consideration over the interest acquired by
in the fair value of the identifiable assets and liabilities of Optus as at the date of acquisition
represents goodwill on consolidation. Goodwill on consolidation is recognised as an intangible
asset and amortised on a straight line basis over 20 years.
The date of acquisition for accounting purposes is the date the Offer becomes unconditional.
will record the identifiable assets and liabilities of Optus at their fair values as at the date of
acquisition. However, until conclusion of the Offer, will not have sufficient information to enable it
to ascertain the fair values of these identifiable assets and liabilities, especially the identifiable assets
for which there is no active market. Accordingly, for the purposes of preparing the Pro-forma
Consolidated Financial Information, the excess of the Offer Consideration over ’s interest in the book
values of Optus’ net assets has been provisionally assigned to goodwill on consolidation until has
full access to the Optus Financial Information.
For the purposes of ’s accounting for its acquisition of Optus under Singapore GAAP, the fair value of
the Offer Consideration will comprise:
• the fair value of the Shares issued, based on their quoted price as at the date of
acquisition;
• the fair value of the Offer Consideration paid in the form of cash and Bonds, translated at the
prevailing S$/US$ and S$/A$ exchange rates on the date of acquisition, after taking into account
any foreign exchange hedging contracts entered into prior to that date; and
• the expenses directly attributable to the acquisition.
The fair value of the Offer Consideration set out above cannot be determined until after the date of
acquisition. For the purposes of preparing the Pro-forma Consolidated Financial Information, the cost
of acquisition is assumed to be as follows:
• the fair value of the Shares to be issued is based on the Share price of S$1.82 as at close of trading
on the SGX-ST on 30 April 2001;
• the fair value of the Offer Consideration paid in the form of cash and Bonds is translated at the
S$/US$ and S$/A$ exchange rates on 30 April 2001 of S$1.8180/US$1 and S$0.9262/A$1
respectively, and after taking into account any foreign exchange hedging contracts up to that
date; and
69
THE ACQUISITION OF OPTUS
• an estimation has been made of the transaction expenses to be incurred as part of the acquisition.
The Optus Financial Information expressed in A$ has been translated into S$ for the purposes of preparing the
Pro-forma Consolidation Financial Information using the following exchange rates:
• income statement and cash flow statement have been translated at the average rate for the year ended
31 March 2001: S$0.9676/A$1; and
• balance sheet items have been translated at the 31 March 2001 year-end rate: S$0.8822/A$1.
(e) Scenario 1
(i) Key assumptions
The following assumptions have been used to compile the Pro-forma Consolidated Financial Information for
Scenario 1.
• Alternative chosen by accepting Optus Shareholders
It is assumed under Scenario 1 that C&W plc accepts the Offer in respect of its entire 52.5% shareholding in
Optus and chooses the Share, Cash and Bond Alternative. It is further assumed under Scenario 1 that no
other Optus Shareholders accept the Offer.
• Cost of acquisition
It is assumed under Scenario 1 that, consistent with the Pre-Bid Agreement, C&W plc will receive cash in US$
at the fixed exchange rate of US$0.4940/A$1, in lieu of Shares.
The following table summarises the total cost of acquisition under Scenario 1. The actual mechanism through
which the Optus Shareholders receive additional cash and Bonds in lieu of Shares is set out in Section 9.5 of this
Bidder’s Statement.
CONSIDERATION IMPLIED
PAID AFTER VALUE OF
BASE CASE(1) SUBSTITUTION(2) SUBSTITUTION (3) CONSIDERATION(4)
A$ A$ A$ US$ S$
MILLION MILLION MILLION MILLION MILLION
Shares 2,103.0 (2,103.0) – – –
Cash 3,962.8 1,824.0 – 2,858.7 5,186.3
Bonds 891.6 1,108.4 – 988.0 1,796.2
Total 6,957.4 829.4 – 3,846.7 6,982.5
Estimated transaction costs 89.1
Cost of acquisition 6,957.4 829.4 – 3,846.7 7,071.6
(1) Base case: The cost of acquisition reflects C&W plc’s choice of the Share, Cash and Bond Alternative.
(2) Substitution: Shows the effect on the cost of acquisition upon substitution of Shares for additional cash and Bonds.
(3) Consideration paid after substitution: Shows the consideration payable in US$ via cash and Bonds, translated at the fixed ex change
rate of US$0.4940/A$1.
(4) Implied value: Shows the total cost of acquisition in S$, translated at the S$/US$ exchange rate on 30 April 2001 of S$1.8180/US$1
adjusted for the effect of foreign exchange hedging contracts up to that date.
The above implied values of the cash and Bonds components of the Offer Consideratio n in S$ may vary
depending upon movements in exchange rates in the period up to the date of acquisition.
The above computation is based on 3,774.0 million Optus Shares issued as at 31 March 2001. It does not
include any Optus Shares that have been or may be issued from 1 April 2001 to the end of the Offer Period,
details of which are set out in Section 11.2(a) of this Bidder’s Statement.
• Financing the acquisition and acquisition funding costs
The acquisition of Optus Shares will be financed by newly issued Shares, ’s cash reserves and additional
long term debt, as well as newly issued Bonds. The assumed funding under Scenario 1, used for the
Pro-forma Consolidated Financial Information, is as follows:
IMPLIED VALUE
C OS T OF A C Q U IS I T I O N F U N DE D BY: S$ M IL L IO N
Shares –
’s cash reserves 4,464.6
’s new long term debt 810.8
Bonds 1,796.2
7,071.6
For pro-forma purposes, cost of acquisition is assumed to be funded by ’s cash reserves comprising
S$3,637.3 million from cash and cash equivalents and S$827.3 million from short term investments.
For the purposes of the pro-forma consolidation, funding costs are assumed to be S$323.3 million, including
S$176.8 million reduction in interest and investment income due to cash reserves being utilised.
• Synergies
No synergistic benefits have been factored into the Pro-forma Consolidated Financial Information.
70
THE ACQUISITION OF OPTUS
Scenario 1
Pro-forma Consolidated Income Statement (unaudited)
For the year ended 31 March 2001
The following unaudited Pro-forma Consolidated Income Statement has been prepared to illustrate the pro-forma
consolidated operating results of , as if Australia had acquired 52.5% of Optus Shares outstanding on 31 March
2000. The accompanying notes in Section 4.7 form an integral part of this statement.
RECLASS- PRO-FORMA (SING GAAP)
OPTUS (AUST GAAP) IFICATION(2) ADJUSTMENTS(3) (POST-ACQUISITION)
S$ MILLION A$ MILLION S$ MILLION S$ MILLION
(1)
S$ MILLION S$ MILLION A$ MILLION(1)
Operating revenue 4,925.5 4,904.4 4,745.5 (8.7) (230.5) 9,431.8 9,747.6
Operating expenses (3,036.9) (4,443.9) (4,299.9) (49.4) (326.6) (7,712.8) (7,971.1)
Operating profit 1,888.6 460.5 445.6 1,719.0 1,776.5
Compensation from IDA 337.0 – – 337.0 348.3
Other income 93.2 – – 85.0 178.2 184.2
2,318.8 460.5 445.6 2,234.2 2,309.0
Share of results of
– associated companies 357.8 – – 357.8 369.8
– joint venture companies (8.9) 65.0 62.9 (147.4) (93.4) (96.5)
Abnormal items – 55.0 53.2 (53.2) – –
Interest and investment income 393.6 – – 49.8 (185.8) 257.6 266.2
Interest on borrowings (9.1) (154.5) (149.5) (41.1) (146.5) (346.2) (357.8)
Profit on ordinary activities
before tax 3,052.2 426.0 412.2 2,410.0 2,490.7
Taxation (715.1) (1.5) (1.5) 79.2 (637.4) (658.7)
Profit after tax 2,337.1 424.5 410.7 1,772.6 1,832.0
Minority interests (12.9) (0.7) (0.7) 24.0 10.4 10.7
Profit before extraordinary
items 2,324.2 423.8 410.0 1,783.0 1,842.7
Extraordinary items (317.9) – – 17.6 (8.4) (308.7) (319.0)
Profit attributable to Shareholders
2,006.3 423.8 410.0 – (942.0) 1,474.3 1,523.7
(1) The Optus Income statement expressed in A$ has been translated into S$ for consolidation at the average rate for the year ended 31 March 2001 of
S$0.9676/A$1. For illustrative purposes, the post acquisition Pro-forma Consolidated Income Statement expressed in S$ has been translated into A$ at
the same average rate.
(2) Reclassification: Pro-forma reclassification of Optus Financial Information prepared under Australian GAAP to conform with ’s presentation.
(3) Pro-forma Adjustments comprise (a) Pro-forma GAAP adjustments to restate Optus Financial Information prepared under Australian GAAP (“Aust
GAAP”) to conform with ’s accounting policies under Singapore GAAP (“Sing GAAP”); and (b) Pro-forma consolidation adjustments to give effect
to the goodwill and funding costs arising from the acquisition of Optus by , and the minority interest’s share of Optus’ results. An explanation of
these adjustments is set out in Section 4.7.
71
THE ACQUISITION OF OPTUS
Scenario 1
Pro-forma Consolidated Balance Sheet (unaudited)
As at 31 March 2001
The following unaudited Pro-forma Consolidated Balance Sheet has been prepared to illustrate the pro-forma
consolidated financial position of , as if Australia had acquired 52.5% of Optus Shares outstanding on 31 March
2001. The accompanying notes in Section 4.7 form an integral part of this statement.
RECLASS- PRO-FORMA (SING GAAP)
OPTUS (AUST GAAP) IFICATION(2) ADJUSTMENTS(3) (POST-ACQUISITION)
S$ MILLION A$ MILLION S$ MILLION S$ MILLION
(1)
S$ MILLION S$ MILLION A$ MILLION(1)
Current assets
Cash and cash equivalents 4,095.4 278.6 245.7 (3,637.3) 703.8 797.7
Short term investments 2,533.3 – – (827.3) 1,706.0 1,933.8
Trade and other debtors 1,228.7 1,636.7 1,443.9 (3.2) (374.4) 2,295.0 2,601.5
Inventories 105.0 73.4 64.8 (4.7) 165.1 187.1
7,962.4 1,988.7 1,754.4 4,869.9 5,520.1
Non-current assets
Property, plant and equipment 5,475.8 6,898.4 6,085.8 (333.7) 11,227.9 12,727.2
Intangible assets – 1,073.4 947.0 5,147.6 6,094.6 6,908.4
Associated companies 1,637.2 – – 1,637.2 1,855.8
Joint venture companies 231.0 19.3 17.0 86.5 (74.0) 260.5 295.3
Long term investments 782.2 42.6 37.6 819.8 929.3
Other non-current assets 64.0 911.7 804.3 (363.7) (279.0) 225.6 255.7
8,190.2 8,945.4 7,891.7 20,265.6 22,971.7
Total assets 16,152.6 10,934.1 9,646.1 25,135.5 28,491.8
Current liabilities
Trade and other creditors (2,570.6) (1,878.5) (1,657.2) 26.9 (4,200.9) (4,761.8)
Borrowings – (100.2) (88.4) (88.4) (100.2)
Current income tax (596.5) – – (596.5) (676.2)
Proposed final dividend (640.0) – – (640.0) (725.5)
(3,807.1) (1,978.7) (1,745.6) (5,525.8) (6,263.7)
Non-current liabilities
Deferred income tax (778.1) (292.7) (258.2) 258.2 (778.1) (882.0)
Trade and other creditors – (23.2) (20.5) (20.5) (23.2)
Borrowings (1,000.0) (3,262.3) (2,878.0) (2,607.0) (6,485.0) (7,350.9)
Deferred income (2,051.4) – – (257.5) (2,308.9) (2,617.2)
(3,829.5) (3,578.2) (3,156.7) (9,592.5) (10,873.3)
Total liabilities (7,636.6) (5,556.9) (4,902.3) (15,118.3) (17,137.0)
Net assets 8,516.0 5,377.2 4,743.8 10,017.2 11,354.8
Share capital and reserves
Share capital 2,312.0 5,305.5 4,680.5 (4,680.5) 2,312.0 2,620.7
Reserves 5,753.7 71.7 63.3 (63.3) 5,753.7 6,522.0
Interests of shareholders
8,065.7 5,377.2 4,743.8 8,065.7 9,142.7
Minority interests 450.3 – – 1,501.2 1,951.5 2,212.1
8,516.0 5,377.2 4,743.8 10,017.2 11,354.8
(1) The Optus Balance Sheet expressed in A$ has been translated into S$ for consolidation at the 31 March 2001 exchange rate of S$0.8822/A$1. For
illustrative purposes, the post acquisition Pro-forma Consolidated Balance Sheet expressed in S$ has been translated to A$ at the same rate.
(2) Reclassification: Pro-forma reclassification of Optus Financial Information prepared under Australian GAAP to conform with ’s presentation.
(3) Pro-forma Adjustments comprise (a) Pro-forma GAAP adjustments to restate Optus Financial Information prepared under Australian GAAP (“Aust
GAAP”) to conform with ’s accounting policies under Singapore GAAP (“Sing GAAP”); and (b) Pro-forma consolidation adjustments to give effect
to the goodwill and funding costs arising from the acquisition of Optus by , and the minority interest’s share of Optus’ net assets. An explanation
of these adjustments is set out in Section 4.7.
72
THE ACQUISITION OF OPTUS
Scenario 1
Pro-forma Consolidated Cash Flow Statement (unaudited)
For the year ended 31 March 2001
The following unaudited Consolidated Cash Flow Statement has been prepared to illustrate the pro-forma
consolidated cash flows of the Combined Group, as if Australia had acquired 52.5% of Optus Shares
outstanding on 31 March 2000. The accompanying notes in Section 4.7 form an integral part of this statement.
(SING OPTUS (AUST GAAP) PRO-FORMA (POST-
GAAP) S$ RECLASSIFIED(2) ADJUSTMENTS(3) ACQUISITION)
MILLION A$ MILLION S$ MILLION (1)
S$ MILLION S$ MILLION A$ MILLION(1)
Net profit before tax 3,052.2 407.7 394.6 (1,036.8) 2,410.0 2,490.7
Extraordinary items (317.9) 18.3 17.6 (300.3) (310.4)
2,734.3 426.0 412.2 2,109.7 2,180.3
Adjustments for:
Depreciation and amortisation 622.5 809.5 783.3 276.8 1,682.6 1,739.0
Compensation from IDA (337.0) – – (337.0) (348.3)
Share of results of joint ventures
and associates (348.9) (65.0) (62.9) 147.4 (264.4) (273.3)
Net gain from sale of property,
plant and equipment (30.6) (87.8) (85.0) (115.6) (119.5)
Profit on sale of investments (52.0) (18.3) (17.7) (69.7) (72.0)
Interest and investment income (393.6) (51.5) (49.8) 185.8 (257.6) (266.2)
Provision for investment 389.4 – – 389.4 402.4
Interest expense 9.1 197.0 190.6 146.5 346.2 357.8
Others (19.4) 21.6 20.8 (4.2) (2.8) (2.9)
(160.5) 805.5 779.3 1,371.1 1,417.0
Operating cash flow before working
capital changes 2,573.8 1,231.5 1,191.5 3,480.8 3,597.3
Changes in working capital 631.7 (219.0) (211.9) 319.4 739.2 764.0
3,205.5 1,012.5 979.6 4,220.0 4,361.3
Dividend received from joint ventures
and associates 43.0 154.0 149.0 192.0 198.4
Interest paid (8.1) – – (8.1) (8.4)
Income tax paid (565.9) (1.5) (1.5) (567.4) (586.4)
IDA compensation received 859.0 – – 859.0 887.8
Cash Flows from Operating Activities 3,533.5 1,165.0 1,127.1 4,695.5 4,852.7
Cash Flows from Investing Activities
Net investment in subsidiaries,
joint ventures, associates and long
term investments (1,220.0) (65.9) (63.8) (1,283.8) (1,326.8)
Purchase of property, plant and
equipment and intangible assets (1,762.0) (2,054.2) (1,987.6) (34.9) (3,784.5) (3,911.1)
Sale of property, plant and equipment 97.5 200.6 194.1 291.6 301.4
Net investment in short term investments (782.5) – – (4.8) (787.3) (813.7)
Funds from minority shareholders 367.1 – – 367.1 379.4
Interest and dividends received 247.8 33.6 32.5 (172.0) 108.3 111.9
Others – (9.3) (9.0) (9.0) (9.3)
(3,052.1) (1,895.2) (1,833.8) (5,097.6) (5,268.2)
Cash Flows from Financing Activities
Dividends paid to shareholders (1,493.8) – – (1,493.8) (1,543.8)
Net borrowings 900.0 1,056.0 1,021.8 1,921.8 1,986.2
Repurchase of shares (142.3) – – (142.3) (147.1)
Interest paid – (203.1) (196.5) (146.5) (343.0) (354.5)
Others 19.4 – – 19.4 20.0
(716.7) 852.9 825.3 (37.9) (39.2)
Net change in cash and cash equivalents (235.3) 122.7 118.6 (323.3)(4) (440.0) (454.7)
Cash and cash equivalents at beginning
of year 4,330.7 155.9 150.3 (3,637.3)(4) 843.7 875.1
Exchange difference (23.2) (23.2) 10.9
Cash and cash equivalents at end of year 4,095.4 278.6 245.7 (3,960.6)(4) 380.5(4) 431.3
(1) The Optus Cash Flow statement expressed in A$ has been translated into S$ for consolidation at the average rate for the year ended 31 March 2001
of S$0.9676/A$1. For illustrative purposes, the post acquisition Pro-forma Consolidated Cash Flow Statement expressed in S$ has been translated into
A$ at the same average rate.
(2) Reclassification: Pro-forma reclassification of Optus Financial Information prepared under Australian GAAP to conform with ’s presentation.
(3) Pro-forma Adjustments comprise (a) Pro-forma GAAP adjustments to restate Optus Financial Information prepared under Australian GAAP (“Aust
GAAP”) to conform with ’s accounting policies under Singapore GAAP (“Sing GAAP”); and (b) Pro-forma consolidation adjustments to give effect to
the goodwill and funding costs arising from the acquisition of Optus by . An explanation of these adjustments is set out in Section 4.7.
(4) For the purposes of the pro-forma cash flows, it is assumed that payment for ’s acquisition of Optus took effect on 31 March 2000, and the
associated interest costs were paid during the year ended 31 March 2001. Accordingly, the cash and cash equivalents of (Post Acquisition) is
reduced by S$3,637.3 million being Offer Consideration to be paid out of ’s existing cash and cash equivalents for Scenario 1; and S$323.3 million,
being the pro-forma funding costs of the acquisition.
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THE ACQUISITION OF OPTUS
(f) Scenario 2
(i) Key assumptions
The following assumptions have been used to compile the Pro-forma Consolidated Financial Information under
Scenario 2:
• Alternative chosen by accepting Optus Shareholders
The same assumptions made under Scenario 1 with respect to elections by C&W plc in respect of its 52.5%
shareholding in Optus have been made in Scenario 2.
It is assumed that the remaining Optus Shareholders (holding 47.5% of Optus Shares) elect the Share and
Cash Alternative.
• Cost of acquisition
Subject to the maximum pools alloted for cash and Bonds, the same assumptions made under Scenario 1
with respect to elections made by C&W plc to exercise its rights under the Share, Cash and Bond Alternative have
been made under Scenario 2.
It is assumed that the remaining Optus Shareholders (holding 47.5% of the outstanding Optus Shares) elect
to receive the cash component of the Offer Consideration in A$.
The following table summarises the total cost of acquisition under Scenario 2. The actual mechanism through
which the Optus Shareholders receive additional cash and Bonds in lieu of Shares is s et out in Section 9.5 of this
Bidder’s Statement.
C ON S I DE R A T I O N IMP L I E D V ALUE
BASE CASE ( 1 ) SUBS TI TUTION ( 2 ) PAID AFTER OF
C&W 47.5% C&W S U B S TI TU TI ON ( 3 ) CONSIDERATION(4)
A$ M IL L IO N A$ M IL L IO N A$ M IL L IO N A$ M IL L IO N US$ MIL L I ON S$ MILLION
Shares 2,103.0 2,818.1 (259.7) 4,661.4 – 4,317.4
Cash 3,962.8 4,033.5 – 4,033.5 1,957.6 7,283.9
Bonds 891.6 – 362.1 – 619.4 1,126.0
Total 6,957.4 6,851.6 102.4 8,694.9 2,577.0 12,727.3
Estimated transaction
costs 89.1
Cost of acquisition 6,957.4 6,851.6 102.4 8,694.9 2,577.0 12,816.4
Shares issued
(million) 1,070.2 1,434.1 (132.1) 2,372.2 2,372.2
(1) Base case: The cost of acquisition reflects C&W plc’s choice of the Share, Cash and Bond Alternative and the remaining Optus
Shareholders’ choice of the Share and Cash Alternative.
(2) Substitution: Shows the effect on the cost of acquisition of substitution of Shares for additional cash and Bonds by C&W plc,
subject to the maximum limits under the Offer.
(3) Consideration paid after substitution: Shows the consideration payable in A$ and US$ via cash and Bonds, with the US$ portions translated at
the fixed exchange rate of US$0.4940/A$1. Also shows the A$ implied value of Share consideration.
(4) Implied value: Shows the total cost of acquisition in S$ translated at the S$/US$ and S$/A$ exchange rates on 30 April 2001 of
S$1.8180/US$1 and S$0.9262/A$1 respectively, adjusted for the effect of foreign exchange hedging contracts up to that date.
The above implied values of the Shares, cash and Bond components of the Offer Consideration in S$ may
vary depending upon movements in the Share price and exchange rates in the period up to the date of
acquisition.
The above computation is based on 3,774.0 million Optus Shares issued as at 31 March 2001. It does not
include any Optus Shares that have been or may be issued from 1 April 2001 to the end of the Offer Period,
details of which are set out in Section 11.2(a) of this Bidder’s Statement.
• Financing the acquisition and acquisition funding costs
The acquisition of Optus Shares will be financed by newly issued Shares, ’s cash reserves and additional
long term debt, as well as newly issued Bonds. The assumed funding under Scenario 2 used for the
Pro-forma Consolidated Financial Information is as follows:
IMPLIED VALUE
COST OF ACQUISITION FUNDED BY: S$ MILLION
Shares 4,317.4
’s cash reserves 4,594.4
’s new long term debt 2,778.6
Bonds 1,126.0
12,816.4
For pro-forma purposes, cost of acquisition is assumed to be funded by ’s cash reserves comprising
S$3,767.1 million from cash and cash equivalents and S$827.3 million from short term investments.
For the purposes of the pro-forma consolidation, funding costs are assumed to be S$392.5 million, including
S$181.5 million reduction in interest and investment income due to cash reserves being utilised.
• Synergies
No synergistic benefits have been factored into the Pro-forma Consolidated Financial Information.
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THE ACQUISITION OF OPTUS
Scenario 2
Pro-forma Consolidated Income Statement (unaudited)
For the year ended 31 March 2001
The following unaudited Pro-forma Consolidated Income Statement has been prepared to illustrate the pro-forma
consolidated operating results of , as if Australia had acquired 100% of Optus Shares outstanding on 31 March 2000.
The accompanying notes in Section 4.7 form an integral part of this statement.
RECLASS- PRO-FORMA (SING
GAAP) OPTUS (AUST GAAP) IFICATION(2) ADJUSTMENTS(3) (POST-ACQUISITION)
S$ MILLION A$ MILLION S$ MILLION S$ MILLION
(1)
S$ MILLION S$ MILLION A$ MILLION(1)
Operating revenue 4,925.5 4,904.4 4,745.5 (8.7) (230.5) 9,431.8 9,747.6
Operating expenses (3,036.9) (4,443.9) (4,299.9) (49.4) (538.8) (7,925.0) (8,190.4)
Operating profit 1,888.6 460.5 445.6 1,506.8 1,557.2
Compensation from IDA 337.0 – – 337.0 348.3
Other income 93.2 – – 85.0 178.2 184.2
2,318.8 460.5 445.6 2,022.0 2,089.7
Share of results of
– associated companies 357.8 – – 357.8 369.8
– joint venture companies (8.9) 65.0 62.9 (147.4) (93.4) (96.5)
Abnormal items – 55.0 53.2 (53.2) – –
Interest and investment income 393.6 – – 49.8 (190.5) 252.9 261.4
Interest on borrowings (9.1) (154.5) (149.5) (41.1) (211.0) (410.7) (424.5)
Profit on ordinary activities
before tax 3,052.2 426.0 412.2 2,128.6 2,199.9
Taxation (715.1) (1.5) (1.5) 96.2 (620.4) (641.2)
Profit after tax 2,337.1 424.5 410.7 1,508.2 1,558.7
Minority interests (12.9) (0.7) (0.7) (13.6) (14.1)
Profit before extraordinary
items 2,324.2 423.8 410.0 1,494.6 1,544.6
Extraordinary items (317.9) – – 17.6 (300.3) (310.4)
Profit attributable to shareholders
2,006.3 423.8 410.0 – (1,222.0) 1,194.3 1,234.2
(1) The Optus Income Statement expressed in A$ has been translated into S$ for consolidation at the average exchange rate for the year ended 31 March
2001 of S$0.9676/A$1. For illustrative purposes, the post acquisition Pro-forma Consolidated Income Statement expressed in S$ has been translated
into A$ at the same average rate.
(2) Reclassification: Pro-forma reclassification of Optus Financial Information prepared under Australian GAAP to conform with ’s presentation.
(3) Pro-forma Adjustments comprise (a) Pro-forma GAAP adjustments to restate Optus Financial Information prepared under Australian GAAP (“Aust
GAAP”) to conform with ’s accounting policies under Singapore GAAP (“Sing GAAP”); and (b) Pro-forma consolidation adjustments to give effect to
the goodwill and funding costs arising from the acquisition of Optus by . An explanation of these adjustments is set out in Section 4.7.
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THE ACQUISITION OF OPTUS
Scenario 2
Pro-forma Consolidated Balance Sheet (unaudited)
As at 31 March 2001
The following unaudited Pro-forma Consolidated Balance Sheet has been prepared to illustrate the pro-forma
consolidated financial position of , as if Australia had acquired 100% of Optus Shares outstanding at 31 March 2001.
The accompanying notes in Section 4.7 form an integral part of this statement.
RECLASS- PRO-FORMA (SING GAAP)
OPTUS (AUST GAAP) IFICATION(2) ADJUSTMENTS(3) (POST-ACQUISITION)
S$ MILLION A$ MILLION S$ MILLION S$ MILLION
(1)
S$ MILLION S$ MILLION A$ MILLION(1)
Current assets
Cash and cash equivalents 4,095.4 278.6 245.7 (3,767.1) 574.0 650.5
Short term investments 2,533.3 – – (827.3) 1,706.0 1,933.8
Trade and other debtors 1,228.7 1,636.7 1,443.9 (3.2) (374.4) 2,295.0 2,601.5
Inventories 105.0 73.4 64.8 (4.7) 165.1 187.1
7,962.4 1,988.7 1,754.4 4,740.1 5,372.9
Non-current assets
Property, plant and equipment 5,475.8 6,898.4 6,085.8 (333.7) 11,227.9 12,727.2
Intangible assets – 1,073.4 947.0 9,391.2 10,338.2 11,718.7
Associated companies 1,637.2 – – 1,637.2 1,855.8
Joint venture companies 231.0 19.3 17.0 86.5 (74.0) 260.5 295.3
Long term investments 782.2 42.6 37.6 819.8 929.3
Other non-current assets 64.0 911.7 804.3 (363.7) (279.0) 225.6 255.7
8,190.2 8,945.4 7,891.7 24,509.2 27,782.0
Total assets 16,152.6 10,934.1 9,646.1 29,249.3 33,154.9
Current liabilities
Trade and other creditors (2,570.6) (1,878.5) (1,657.2) 26.9 (4,200.9) (4,761.8)
Borrowings – (100.2) (88.4) (88.4) (100.2)
Current income tax (596.5) – – (596.5) (676.2)
Proposed final dividend (640.0) – – (640.0) (725.5)
(3,807.1) (1,978.7) (1,745.6) (5,525.8) (6,263.7)
Non-current liabilities
Deferred income tax (778.1) (292.7) (258.2) 258.2 (778.1) (882.0)
Trade and other creditors – (23.2) (20.5) (20.5) (23.2)
Borrowings (1,000.0) (3,262.3) (2,878.0) (3,904.6) (7,782.6) (8,821.8)
Deferred income (2,051.4) – – (257.5) (2,308.9) (2,617.2)
(3,829.5) (3,578.2) (3,156.7) (10,890.1) (12,344.2)
Total liabilities (7,636.6) (5,556.9) (4,902.3) (16,415.9) (18,607.9)
Net assets 8,516.0 5,377.2 4,743.8 12,833.4 14,547.0
Share capital and reserves
Share capital 2,312.0 5,305.5 4,680.5 (4,324.7) 2,667.8 3,024.0
Reserves 5,753.7 71.7 63.3 3,898.3 9,715.3 11,012.6
Interests of shareholders
8,065.7 5,377.2 4,743.8 12,383.1 14,036.6
Minority interests 450.3 – – 450.3 510.4
8,516.0 5,377.2 4,743.8 12,833.4 14,547.0
(1) The Optus Balance Sheet expressed in A$ has been translated into S$ for consolidation at the 31 March 2001 rate of S$0.8822/A$1. For illustrative
purposes, the post acquisition Pro-forma Consolidated Balance Sheet expressed in S$ has been translated to A$ at the same rate.
(2) Reclassification: Pro-forma reclassification of Optus Financial Information prepared under Australian GAAP to conform with ’s presentation.
(3) Pro-forma Adjustments comprise (a) Pro-forma GAAP adjustments to restate Optus Financial Information prepared under Australian GAAP (“Aust GAAP”)
to conform with ’s accounting policies under Singapore GAAP (“Sing GAAP”); and (b) Pro-forma consolidation adjustments to give effect to the
goodwill and funding costs arising from the acquisition of Optus by . An explanation of these adjustments is set out in Section 4.7.
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THE ACQUISITION OF OPTUS
Scenario 2
Pro-forma Consolidated Cash Flow Statement (unaudited)
For the year ended 31 March 2001
The following unaudited Pro-forma Consolidated Cash Flow Statement has been prepared to illustrate the pro-forma
consolidated cash flows of , as if Australia had acquired 100% of Optus Shares outstanding at 31 March 2000. The
accompanying notes in Section 4.7 form an integral part of this statement.
OPTUS (AUST GAAP) PRO-FORMA (SING
GAAP) RECLASSIFIED(2) ADJUSTMENTS(3) (POST-ACQUISITION)
S$ MILLION A$ MILLION S$ MILLION (1)
S$ MILLION S$ MILLION A$ MILLION(1)
Net profit before tax 3,052.2 407.7 394.6 (1,318.2) 2,128.6 2,199.9
Extraordinary items (317.9) 18.3 17.6 (300.3) (310.4)
2,734.3 426.0 412.2 1,828.3 1,889.5
Adjustments for:
Depreciation and amortisation 622.5 809.5 783.3 489.0 1,894.8 1,958.3
Compensation from IDA (337.0) – – (337.0) (348.3)
Share of results of joint ventures and
associates (348.9) (65.0) (62.9) 147.4 (264.4) (273.3)
Net gain from sale of property, plant
and equipment (30.6) (87.8) (85.0) (115.6) (119.5)
Profit on sale of investments (52.0) (18.3) (17.7) (69.7) (72.0)
Interest and investment income (393.6) (51.5) (49.8) 190.5 (252.9) (261.4)
Provision for investment 389.4 – – 389.4 402.4
Interest expense 9.1 197.0 190.6 211.0 410.7 424.5
Others (19.4) 21.6 20.8 (4.2) (2.8) (2.9)
(160.5) 805.5 779.3 1,652.5 1,707.8
Operating cash flow before working
capital changes 2,573.8 1,231.5 1,191.5 3,480.8 3,597.3
Changes in working capital 631.7 (219.0) (211.9) 319.4 739.2 764.0
3,205.5 1,012.5 979.6 4,220.0 4,361.3
Dividends received from joint ventures
and associates 43.0 154.0 149.0 192.0 198.4
Interest paid (8.1) – – (8.1) (8.4)
Income tax paid (565.9) (1.5) (1.5) (567.4) (586.4)
IDA compensation received 859.0 – – 859.0 887.8
Cash Flows from Operating Activities 3,533.5 1,165.0 1,127.1 4,695.5 4,852.7
Cash Flows from Investing Activities
Net investment in subsidiaries, joint
ventures, associates and long term
investments (1,220.0) (65.9) (63.8) (1,283.8) (1,326.8)
Purchase of property, plant and
equipment and intangible assets (1,762.0) (2,054.2) (1,987.6) (34.9) (3,784.5) (3,911.1)
Sale of property, plant and equipment
and intangible assets 97.5 200.6 194.1 291.6 301.4
Net investment in short term investments (782.5) – – (4.8) (787.3) (813.7)
Funds from minority shareholders 367.1 – – 367.1 379.4
Interest and dividends received 247.8 33.6 32.5 (176.7) 103.6 107.1
Others – (9.3) (9.0) (9.0) (9.3)
(3,052.1) (1,895.2) (1,833.8) (5,102.3) (5,273.0)
Cash Flows from Financing Activities
Dividends paid to shareholders (1,493.8) – – (1,493.8) (1,543.8)
Net borrowings 900.0 1,056.0 1,021.8 1,921.8 1,986.2
Repurchase of shares (142.3) – – (142.3) (147.1)
Interest paid – (203.1) (196.5) (211.0) (407.5) (421.1)
Others 19.4 – – 19.4 20.0
(716.7) 852.9 825.3 (102.4) (105.8)
Net change in cash and cash equivalents (235.3) 122.7 118.6 (392.5)(4) (509.2) (526.1)
Cash and cash equivalents at beginning
of year 4,330.7 155.9 150.3 (3,767.1)(4) 713.9 740.5
Exchange difference (23.2) (23.2) (8.7)
Cash and cash equivalents at end of year 4,095.4 278.6 245.7 (4,159.6)(4) 181.5(4) 205.7
(1) The Optus Cash Flow statement expressed in A$ has been translated into S$ for consolidation at the average rate for the year ended 31 March 2001
of S$0.9676/A$1. For illustrative purposes, the post acquisition Pro-forma Consolidated Cash Flow Statement expressed in S$ has been translated into
A$ at the same average rate.
(2) Reclassification: Pro-forma reclassification of Optus Financial Information prepared under Australian GAAP to conform with ’s presentation.
(3) Pro-forma Adjustments comprise (a) Pro-forma GAAP adjustments to restate Optus Financial Information prepared under Australian GAAP (“Aust
GAAP”) to conform with ’s accounting policies under Singapore GAAP (“Sing GAAP”); and (b) Pro-forma consolidation adjustments to give effect to
the goodwill and funding costs arising from the acquisition of Optus by . An explanation of these adjustments is set out in Section 4.7.
(4) For the purpose of the pro-forma cash flows, it is assumed that payment for ’s acquisition of Optus took effect on 31 March 2000, and the
associated interest costs were paid during the year ended 31 March 2001. Accordingly, the cash and cash equivalents of (Post Acquisition) is
reduced by S$3,767.1 million, being Offer Consideration to be paid out of ’s existing cash and cash equivalents for Scenario 2; and S$392.5 million,
being the pro-forma funding costs of the acquisition.
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THE ACQUISITION OF OPTUS
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THE ACQUISITION OF OPTUS
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THE ACQUISITION OF OPTUS
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THE ACQUISITION OF OPTUS
(iii) Regulatory bodies that promulgate Singapore GAAP and Australian GAAP have significant
projects ongoing that could affect future comparisons of Singapore GAAP and Australian GAAP,
including proposed standards or changes in existing standards that are exposed for public
comment. No attempt has been made to identify all future differences between Singapore GAAP and
Australian GAAP that may affect the post acquisition consolidated financial statements as a result of
transactions or events that may occur in the future.
(b) Capacity sales and purchases
(i) Indefeasible Rights of Use (“IRUs”)
Both Optus and have entered into IRU contracts to sell capacity on cable systems. Under Australian
GAAP, leases of land and integral plant are separated into components, and each component must be
accounted for separately. Optus Policies account for these capacity sales as “sales-type” finance leases
and recognise profit on sale in the period in which the sale takes place. There is no specific guidance
under Singapore GAAP for the treatment of the sale of IRUs, and follows closely the generally
accepted accounting practices in the United States (US GAAP) in regard to IRUs. Under US GAAP, an
IRU can only be accounted for as a sales-type lease if the IRU transfers substantially all the risks and
rewards of ownership to the lessee, and provision is made in the IRU agreement for ownership of the
asset to pass to the lessee by the end of the lease.
Accordingly, unless the relevant criteria are met, Policies account for capacity sales as operating
leases and recognise lease income on a straight line basis over the lease term.
(ii) Exchanges of Capacity
Under Australian GAAP, revenue is not recognised on the exchange of goods or services that are of
the “same” nature and value. Under Singapore GAAP, revenue is not recognised on the exchange
of “similar” assets that have “similar” use in the same line of business and which have “similar” fair
value. As a result of the difference in definition, exchanges of certain assets that have been treated
as giving rise to revenue under Australian GAAP, have been treated as not resulting in a sale under
Singapore GAAP, and have been accounted for as a swap of assets at cost.
(c) Customer acquisition costs
Under Optus Policies, customer acquisition costs are deferred to the extent that these are recoverable
out of future revenue, do not relate solely to revenue which has already been brought to account,
and will contribute to future earning capacity. These costs are then amortised over the lesser of the
average customer life or three years. They are reviewed at balance sheet date to determine the
amounts, if any, that are no longer recoverable, and all such amounts are written off. Under Policies,
customer acquisition costs are expensed as incurred.
(d) Property, plant and equipment
(i) Capitalisation of overhead costs
Under Optus Policies, the cost of self-constructed assets includes a proportion of general and
administrative overhead costs. Under Policies, general and administrative overhead costs are
expensed as incurred.
(ii) Revaluation of land and buildings
Under Optus Policies, land and buildings have, in the past, been independently revalued (on the
basis of open market value of the properties in their existing use), and included in the financial
statements at the revalued amounts. Although permissible under Singapore GAAP, has not
adopted a policy of revaluation and accounts for land and buildings at cost net of depreciation.
(iii) Partial depreciation of network assets
Under Optus Policies, network assets are subject to partial depreciation until they are at expected
operating capacity or until five years after operation, whichever is earlier. Once at expected
operating capacity, the asset is depreciated on a straight-line basis over its remaining useful life.
Under Policies, network assets are depreciated on a straight-line basis over their estimated useful
lives from the date such assets are placed in service.
(iv) Change in useful lives
During the financial year ended 31 March 1997, Optus reassessed the estimate of useful lives of
certain assets as required under an amendment to the definition of “useful life” set out in a revised
Australian Accounting Standard. The effect of this change was applied retrospectively in
accordance with the transitional provisions of the revised Australian Accounting Standard. Under
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THE ACQUISITION OF OPTUS
Singapore GAAP, this retrospective adjustment would not be permissible and the effect of the
change would have been included in the determination of net profit or loss in the period of the
change and future periods.
(e) Construction Contracts
Under Singapore GAAP, both the percentage of completion method and completed contract method
are permissible for construction contracts. Under the percentage of completion method, contract
revenues and contract costs associated with a construction contract are recognised as revenues and
expenses respectively by reference to the stage of completion of the contract activity at the balance
sheet date. Under the completed contract method, such contract revenues and contract costs are
recognised as revenues and expenses respectively when the contract is completed or substantially
completed. The completed contract method is not permitted under Australian GAAP. Where the
outcome of the contract cannot be reliably estimated, Australian GAAP requires that the revenues be
recognised only up to the extent of the contract costs incurred that are probable of being recovered.
Optus Policies apply the percentage of completion method to satellite construction contracts. Policies
apply the completed contract method to satellite construction contracts.
(f) Amortisation of Telecommunication Licences
Optus Policies account for telecommunication licences at cost on the basis that the life of the licences
is infinite. Policies amortise such intangible assets over their estimated useful lives. For the purpose of
the Pro-forma Consolidated Financial Information, the Optus telecommunication licence is amortised
over 20 years.
(g) Goodwill
Optus Policies amortise goodwill, arising on acquisition, on a straight-line basis over three to five
years. Policies currently adjust the goodwill against shareholders’ equity.
A revised Singapore Standard, SAS 22 (Revised), “Business Combinations”, will be applicable in
Singapore for financial statements covering periods beginning 1 October 2000. For , this will take
effect from the financial year beginning 1 April 2001. The choice of adjusting goodwill against shareholders’
equity will no longer be permissible under Singapore GAAP. Under SAS 22 (Revised), goodwill must be
recognised as an asset and systematically amortised over its useful life, and there is a rebuttable
presumption that the useful life will not exceed 20 years.
As the Transaction will be completed after 1 April 2001, the acquisition goodwill arising from the
Transaction has been accounted for under SAS 22 (Revised). The estimated useful life is 20 years.
(h) IDA Compensation
received S$1.5 billion in 1997 and S$859 million in 2000, from the IDA as compensation for modification
of its telecommunications licence. Under Australian GAAP, such receipts are recognised in full when
an enterprise has a right to receive them and has no obligation to repay. Under Policies, such receipts
are recognised as income, on a systematic basis, over the periods necessary to match them with the
related opportunity loss which they are intended to compensate.
(i) Format of financial statements
(i) Income Statement Presentation
The presentation of the income statement under Australian GAAP is different from the presentation
under Singapore GAAP. Under Singapore GAAP, an enterprise is required to present, either on the
face of the income statement or in the notes to the income statement, an analysis of expenses
using a classification based on either the nature of expenses or their function within the enterprise.
Under Australian GAAP, the requirement to provide such an analysis of expenses has been recently
introduced for financial years ending on or after 30 June 2001.
(ii) Revenue
The definitions of “revenue” for financial statement presentation purposes under Australian GAAP
and under Singapore GAAP are different. The Australian definition includes gross inflows from
transactions and other events including gross proceeds on sale of property, plant and equipment.
Such gross inflows are not included as “revenue” disclosed under Singapore GAAP.
(iii) Abnormal Items
Under both Australian and Singapore GAAP, when items of income and expense within profit or
loss from ordinary activities are of such size or nature that their disclosure is relevant to explain the
performance of the enterprise for the period, the nature and amount of such items is disclosed
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THE ACQUISITION OF OPTUS
separately. These are referred to as abnormal items under Australian GAAP and as exceptional
items under Singapore GAAP. Optus shows abnormal items on the Income Statement as a separate
line. incorporates the exceptional items within the respective line items in the Income Statement,
and discloses the amount and nature of exceptional items as part of the notes to the accounts for
these Income Statement items.
(iv) Extraordinary Items
The determination of extraordinary items under Singapore GAAP is currently much broader than
Australian GAAP. A revision to Singapore GAAP, SAS 8 (Revised), Net Profit or Loss for the Period,
Fundamental Errors and Changes in Accounting Policies, will take effect for financial statements
covering periods beginning 1 July 2000. For , this will take effect for reporting periods
beginning on or after 1 April 2001. Under the revision, only on rare occasions will an event or
transaction give rise to an extraordinary item.
(v) Cash Flow Statement
Under Optus Policies the Consolidated Cash Flow Statement is presented under the “direct”
method of presentation. Policies present the Consolidated Cash Flow Statement under the
“indirect” method of presentation. Further, in reconciling the operating results to net cash
provided by operating activities, Optus Policies disclose non-cash items such as “amounts set aside
to provisions” separately. In accordance with general practice in Singapore, Policies include certain
non-cash items such as “amounts set aside to provisions” within the “changes in working capital”.
In addition, under Optus Policies, cash flows from Operating Activities is net of interest receipts and
payments. Under Singapore GAAP, interest receipt from investments is classified separately under
Cash Flow from Investing Activities and interest expense from borrowings is classified as Cash
Flows from Financing Activities.
83
THE ACQUISITION OF OPTUS
The Directors
Singapore Telecommunications Limited The Directors
Australia Investment Limited 31 Exeter Singapore Telecommunications Limited
Road, Comcentre SINGAPORE 239732 Australia Investment Limited 31 Exeter
Road, Comcentre SINGAPORE 239732
Dear Sirs
We have prepared this report on historical financial information of Singapore Telecommunications Limited
(“”) for inclusion in a Bidder’s Statement dated on or about 18 May 2001 (the Bidder’s Statement) relating
to the proposed offer by Australia Investment Limited to acquire Cable & Wireless Optus Limited
(“Optus”).
Expressions defined in the Bidder’s Statement have the same meaning in this report.
Scope
You have requested PricewaterhouseCoopers and PricewaterhouseCoopers Securities Ltd to p repare an
Independent Accountant’s Report covering the unaudited Pro-forma Consolidated Financial Information
set out in Section 4.6 comprising the Pro-forma Consolidated Income Statements, Balance Sheets and
Cash Flow Statements of as if:
• Optus Shareholders holding 52.5% of the total Optus Shares outstanding accept the Offer (Scenario 1)
• Optus Shareholders holding 100% of the total Optus Shares outstanding accept the Offer (Scenario 2)
on the basis of the assumptions relating to the distribution of acceptances among the three Offer
Consideration Alternatives detailed under each Scenario, together with a limited sensitivity analysis of
variations to these assumptions.
This report has been prepared for inclusion in the Bidder’s Statement. We disclaim any assumption of
responsibility for any reliance on this report, or on the unaudited Pro-forma Consolidated Financial
Information to which it relates, for any purposes other than for which it was prepared.
Scope of review of historical financial information
The unaudited Pro-forma Consolidated Financial Information has been extracted from the historical
financial statements of and Optus, and incorporates such adjustments (“the Pro-forma
Adjustments”) as the Directors considered necessary to reflect:
(a) the differences arising as a result of preparing the financial statements of Optus under Singapore
GAAP and in accordance with ’s accounting policies. An initial assessment has been made of the
impact on Optus’ financial statements of the application of ’s accounting policies and Singapore GAAP.
A complete assessment has not been made as will not have available to it sufficient information on the
exact nature of Optus’ implementation of its accounting policies for this purpose unt il after completion of
the acquisition.
84
THE ACQUISITION OF OPTUS
(b) the impact of the acquisition and related costs under various possible scenarios. Each of these
scenarios is based on certain assumptions regarding the level of acceptance by Optus Shareholders of
the Offer, the distribution of acceptances among the three Offer Consideration Alternatives, the share
price and S$/A$ and S$/US$ exchange rates prevailing on the date of acquisition. The impact of the
acquisition will vary to the extent that the actual level and distribution of acceptances, and the actual
share price and exchange rates prevailing at the date of acquisition deviate from the above assumptions.
will record the identifiable assets and liabilities of Optus at their fair values as at the date of acquisition.
However, until conclusion of the Offer will not have sufficient information to enable it to ascertain the fair
values of these identifiable assets and liabilities, especially the identifiable assets for which there is no active
market. Accordingly, for the purposes of preparing the Pro-forma Consolidated Financial Information, the
excess of the Offer Consideration over ’s interest in the book values of Optus’ net assets have been
provisionally assigned to goodwill on consolidation until has full access to Optus’ Financial Information.
The Pro-forma Consolidated Financial Information is provided for illustrative purposes only. It does not
purport to represent what the actual results of operations or the financial position of would have been
had the acquisition of Optus occurred on the dates assumed, nor is it necessarily indicative of ’s future
consolidated operating results, financial position or cash flows.
The Directors are responsible for the preparation of the historical Pro-forma Consolidated Financial
Information, including determination of the Pro-forma Adjustments.
We have conducted our review of the historical financial information in accordance with Auditing
Standards applicable to review engagements. We made such inquiries and performed such procedures as
we, in our professional judgement, considered reasonable in the circumstances including:
• a review of work papers, accounting records, documentation required under the continuous
disclosure requirements of both the Australian and Singapore Stock Exchanges, and other documents
• a review of the Pro-forma Adjustments used to compile the unaudited Pro-forma Consolidated
Financial Information
• a comparison of consistency in application of the recognition and measurement principles in
Accounting Standards and other mandatory professional reporting requirements in Singapore, and
the accounting policies adopted by disclosed in Annexure 1 to the Bidder’s Statement, and
• enquiry of directors, management and others.
These procedures do not provide all the evidence that would be required in an audit, thus the level of
assurance provided is less than given in an audit. We have not performed an audit and, accordingly, we
do not express an audit opinion.
Review statement on historical financial information
Based on our review, which is not an audit, nothing has come to our attention which causes us to believe
that:
• the Pro-forma Adjustments do not form a reasonable basis for the preparation of the unaudited
Pro-forma Consolidated Financial Information
• the unaudited Pro-forma Consolidated Financial Information set out in Section 4.6 of the Bidder’s
Statement has not been properly prepared on the basis of the Pro-forma Adjustments.
Subsequent events
Apart from the matters dealt with in this Report, and having regard to the scope of our Report, to the
best of our knowledge and belief no material transactions or events outside of the ordinary business of
the and Optus (to the extent of publicly available information) have come to our attention that would
require comment on, or adjustment to, the information referred to in our Report or that would cause
such information to be misleading or deceptive.
Yours faithfully
85
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86
SECTION 5
ACCEPTANCE CONSIDERATIONS FOR
OPTUS SHAREHOLDERS
87
A C C E P TA N C E C O N S I D E R AT I O N S F O R O P T U S S H A R E H O L D E R S
88
ACCEPTANCE CONSIDERATIONS FOR OPTUS SHAREHOLDERS
89
A C C E P TA N C E C O N S I D E R AT I O N S F O R O P T U S S H A R E H O L D E R S
or unwilling to hold Optus Shares and may have to sell them on-market. With an
increase in selling activity and a possible decrease in buying activity (for the same
reasons), the price of Optus Shares may fall.
(d) Possible Compulsory Acquisition of your Optus Shares
If Australia becomes entitled to do so, Australia intends to exercise its right to
compulsorily acquire all remaining Optus Shares that were not accepted into the Offer.
If your Optus Shares are compulsorily acquired, you will receive the Offer Consideration
later than Optus Shareholders who accept the Offer during the Offer Period.
90
SECTION 6
RISK FACTORS
91
RISKFACTORS
6.1 OVERVIEW
Optus Shareholders who accept the Offer will receive Shares as part of the consideration
for their Optus Shares. Optus Shareholders who choose the Share, Cash and Bond
Alternative will also receive Bonds. The financial performance and operations of ’s
businesses within and outside Singapore, the price of Shares and Bonds, and the amount
and timing of any dividends that pays, will be influenced by a range of factors. Many of
these factors are beyond the control of and the Board. Many of these factors also affect
the businesses of other companies operating in the communications industry and in other
industries, both within and outside Singapore.
Optus Shareholders should consider carefully the risk factors set out below and the other
information contained in this Bidder’s Statement.
92
RISKFACTORS
The operations of ’s international businesses are also subject to highly competitive market
conditions. There is a regional and global market for many of the services that provides,
particularly international communications and data services offered to business customers.
The quality of and rates for these services such as IDD, leased lines, ISDN, switched data,
facilities management and other hubbing services, can affect a potential business
customer’s decision to subscribe to ’s services, locate or expand its offices or
communications facilities in Singapore or to use Singapore as a transit hub for its
communications. Prices for some of these services have shown significant declines in recent
years and are anticipated to continue to decline at similar rates as a result of capacity
additions and general price competition.
In addition, many of ’s international investments operate in highly competitive market
environments and are subject to similar risks.
93
RISKFACTORS
6.10 CONTROL OF
(a) Control by a single majority shareholder
Temasek currently owns approximately 78% of Shares. After the acquisition, depending
on the relative acceptance levels by Optus Shareholders of the different Offer
Consideration alternatives, Temasek’s shareholding in could be reduced to as low as
65%. At that level of share ownership, Temasek is able to control the approval of
corporate matters that require an ordinary resolution of Shareholders, including the
election of directors and the approval of dividends. Temasek may also be able to control
the approval of corporate matters that require a shareholder’s special resolution
(requiring approval by shareholders representing 75% of the shares present and voting
at a general meeting), including amendments to ’s Memorandum or Articles of
Association and a reduction in ’s share capital, share premium account or capital
redemption reserve fund, because even with a reduced shareholding of 65%, Temasek
may practically be in a position to control these matters at most general meetings of
Shareholders.
As described in Section 8.3(b), the Special Share, which is held by the Singapore
Minister for Finance (Incorporated), carries the right to approve or veto certain
resolutions, including any variation of the rights of any shares in the capital of which
has the effect of transferring the controlling interest in , the appointment of directors,
amendments to ’s Memorandum or Articles of Association which affect the rights
attached to the Special Share and any other matter that may affect the security
interests of Singapore.
94
RISKFACTORS
All rights attached to the Special Share will be surrended and the Special Share will be
converted into an ordinary Share with effect from the amendment of ’s Articles of
Association which is to be considered at the EGM (as described in Section 8.3(b)(ii)).
This surrender and conversion is not likely to affect significantly the ability of
Temasek to control .
Temasek also holds interests in certain companies which hold licences to operate
telecommunications services in Singapore and which compete with , including StarHub
and MobileOne.
(b) Change of control
There is no assurance that there will not be a change of control of or entry of another
major shareholder with the ability to exert significant influence on the strategic
direction or operations of , nor that ’s business, financial position and performance
would not adversely be affected by such a change in control or influence.
95
RISKFACTORS
96
RISKFACTORS
97
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98
SECTION 7
TAXATION
99
TAXATION
General comments
The tax implications arising from a transfer of Optus Shares from you to will
depend on the circumstances in which the Optus Shares are held by you. The
comments below consider the situation where you hold your Optus Shares as a capital
investment. It is recommended that where you hold your Optus Shares as trading stock
or as part of an income generating arrangement, you should seek independent
professional advice.
For CGT purposes, a “CGT event” will occur when you dispose of your Optus Shares to
under the Transfer Alternative. This should take place on the date of acceptance of the
Offer. Any capital gain or loss from the CGT event will be worked out by comparing the
“Capital Proceeds” received with the CGT cost base of the Optus Shares. The Capital
Proceeds received by you will be equal to the sum of the following:
• the A$ cash component of the Offer Consideration received (if any); and
• the market value (in A$) on the day of acceptance of the Offer of the US$ Cash
Alternative, Shares, Bonds and/or Unsecured Notes received (if any).
The Capital Proceeds received by you in respect of an Unsecured Note under the Share,
Cash and Bond Alternative will be A$1.48 (rather than the value of any cash, Bonds or
Shares which you receive on redemption of the Unsecured Note).
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TAXATION
After you work out the relevant capital gain or loss arising, the resulting tax implications
depend upon whether or not you are an Australian resident.
(i) Non-Australian residents
Capital gains or capital losses made by Optus Shareholders who are not residents
of Australia and who hold less than 10% of the issued Optus Shares (by value in the
five years prior to sale) will be disregarded. Non-resident shareholders holding more
than 10% of the issued Optus Shares will be subject to CGT. They will not be
eligible for CGT rollover relief (as described below), but could benefit from double
tax treaty relief in some circumstances.
(ii) Australian residents
If you acquired your Optus Shares before 21 September 1999, the cost base of
those shares may be indexed for inflation to 30 September 1999.
Alternatively, if you have held your Optus Shares for at least one year, you should be
entitled to a CGT concession. For individuals or trusts, this CGT concession is a 50%
discount, and for complying superannuation funds, the CGT concession is a 33%
discount. No CGT concession is available for companies.
It is anticipated that the Australian Taxation Office will confirm, in a Class Ruling,
that CGT rollover relief will be available for Optus Shareholders who choose the
Transfer Alternative and either the Share Alternative or the Share and Cash
Alternative, provided reaches the 80% ownership threshold. This CGT rollover
relief would apply to the Share component of the Offer Consideration and is
commonly termed “scrip-for-scrip” CGT rollover relief.
The requirements for scrip-for-scrip CGT rollover relief are:
• an Optus Shareholder exchanges an Optus Share for a Share;
• the exchange is in consequence of a “single arrangement” which results in
owning 80% or more of Optus and on the conditions that all Optus
Shareholders could participate in the arrangement on substantially the same
terms;
• the Optus Shares were acquired after 19 September 1985 (when CGT was
introduced to Australia);
• CGT rollover relief will not apply if a capital loss eventuates; and
• the Optus Shareholder chooses to obtain the scrip-for-scrip CGT rollover relief.
The consequences of CGT rollover relief are that:
• any capital gain made from accepting the Transfer Alternative is disregarded;
• the Optus Shareholder’s CGT cost base in its Optus Shares is transferred into the
Shares received in exchange;
• scrip-for-scrip CGT rollover relief is only available in respect of the Share
component (and not in respect of any cash component) of the Offer
Consideration. This has two implications:
– a capital gain or loss will still arise on the proportion of the Offer Consideration
that is not made up of Shares (that is, the cash component of the Offer
Consideration); and
– the Optus Shareholder’s CGT cost base which is transferred to the replacement
Shares is proportionately reduced by the amount of the cash component (as it
has already been “used up” in reducing the capital gain on the cash
component); and
• when CGT rollover relief is applied to the Shares, the date of acquisition of these
Shares in relation to the CGT discount factor, is the date of acquisition of the
original Optus Shares.
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TAXATION
It should be noted that CGT rollover relief will not be available for the Share, Cash
and Bond Alternative, as your Optus Shares are not exchanged for Shares but
rather for cash, Bonds and Unsecured Notes (although Shares may subsequently
be issued upon redemption of the Unsecured Notes).
(iii) Table 1 – Examples of the CGT implications under the Transfer Alternative
The following examples will illustrate the CGT consequences for you if you choose
the Transfer Alternative.
The calculations in the following examples have been based on opening prices
for Optus Shares and Shares and the S$/A$ exchange rate as at 8 May 2001. It is
recommended that each Optus Shareholder should review their own position
taking into account the current prices and exchange rates and their individual
circumstances.
Example 1 considers the position where you choose the Share Alternative.
Example 2 considers the position where you choose the Share and Cash Alternative.
An example based on the Share, Cash and Bond Alternative has not been provided.
If this Offer Consideration alternative is chosen, the assumptions used to calculate
these examples would change in respect of the value of the Offer Consideration.
Example 1 – Assumptions used
It is assumed for the purposes of this example that you choose the Share Alternative,
and that the Share Alternative is valued at A$2.95, based on opening prices for
Optus Shares and Shares and the S$/A$ exchange rate as at 8 May 2001.
Example 1 is based on the following assumptions.
Offer Consideration A$2.95
CGT cost base (ignoring indexation) A$1.85(1)
Tax rate for Australian resident individuals 48.5%(2)
Tax rate for Australian resident superannuation funds 15%
Tax rate for Australian resident companies 30%(3)
Dividend withholding tax rate – treaty country 15%
Dividend withholding tax rate – non-treaty country 30%
CGT concession for individuals holding Optus Shares for at least one year 50%
CGT concession for superannuation funds holding Optus Shares for at
least one year 33%
(1) This was the buy-in price for retail investors when Optus was floated in 1998.
(2) Includes Medicare levy of 1.5%.
(3) 34% if the settlement date is within the taxpayer’s 2001 year of income.
CGT implications
The following tables set out the Australian CGT implications for a range of Optus
Shareholders that do not choose to obtain scrip-for-scrip CGT rollover relief.
Individuals
AUSTRALIAN
(50% CGT AUSTRALIAN
CONCESSION – NO CGT
AVAILABLE) C ON C E S S I O N F OR E IG N
A$ A$ A$
Total Offer Consideration 2.95 2.95 2.95
Capital Gain 1.10 1.10 1.10
CGT 0.27 0.53 –
Net consideration retained 2.68 2.42 2.95
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TAXATION
Companies
F OR E IG N - O W N F OR E IG N - O W N
AUSTRALIAN > 10%(1) OF <10% OF
RESIDENT OPTUS SHARES OPTUS SHARES
A$ A$ A$
Total Offer Consideration 2.95 2.95 2.95
Capital Gain 1.10 1.10 1.10
CGT 0.33 0.33 –
Net consideration retained 2.62 2.62 2.95
(1) It is assumed that no Treaty protection is available in these circumstances. As it is possible that Treaty
protection from Australian CGT could apply, shareholders in these circumstances should seek their own
tax advice.
Superannuation Funds
AUSTRALIAN
(33% CGT AUSTRALIAN
CONCESSION – NO CGT
AVAILABLE) C ON C E S S I O N F OR E IG N
A$ A$ A$
Total Offer Consideration 2.95 2.95 2.95
Capital Gain 1.10 1.10 1.10
CGT 0.11 0.16 –
Net consideration retained 2.84 2.78 2.95
The capital gain will be disregarded for foreign Optus Shareholders holding less
than 10% of issued Optus Shares. However, the capital gain will be included in the
assessable income of Australian resident shareholders, subject to the availability of
any unrecouped capital losses carried forward and any applicable CGT concessions.
Scrip-for-scrip CGT rollover relief is chosen
In this situation, all of the capital gain of A$1.10 is disregarded as a result of scrip-
for-scrip CGT rollover relief. Also, the CGT cost base in your Optus Shares is
transferred to your replacement Shares.
Example 2 – Assumptions used
It is assumed for the purposes of this example that you choose the Share and Cash
Alternative, and that the Share and Cash Alternative is valued at A$3.67, based on
opening prices for Optus Shares and Shares and the S$/A$ exchange rate as at 8
May 2001. Example 2 is also based on the following assumptions.
Offer Consideration A$3.67
CGT cost base (ignoring indexation) A$1.85(1)
Tax rate for Australian resident individuals 48.5%(2)
Tax rate for Australian resident superannuation funds 15%
Tax rate for Australian resident companies 30%(3)
Dividend withholding tax rate – treaty country 15%
Dividend withholding tax rate – non-treaty country 30%
CGT concession for individuals holding Optus Shares for at least one year 50%
CGT concession for superannuation funds holding Optus Shares for at
least one year 33%
(1) This was the buy-in price for retail investors when Optus was floated in 1998.
(2) Includes Medicare levy of 1.5%.
(3) 34% if the settlement date is within the taxpayer’s 2001 year of income.
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TAXATION
CGT implications
The following tables set out the Australian CGT implications for a range of Optus
Shareholders that do not choose to obtain scrip-for-scrip CGT rollover relief.
Individuals
AUSTRALIAN
(50% CGT AUSTRALIAN
CONCESSION – NO CGT
AV A IL AB LE ) C ON C E S S I O N F OR E IG N
A$ A$ A$
Total Offer Consideration 3.67 3.67 3.67
Capital Gain 1.82 1.82 1.82
CGT 0.44 0.88 –
Net consideration retained 3.23 2.79 3.67
Companies
FOREIGN-OWN FOREIGN-OWN
AUSTRALIAN > 10% OF <10% OF
RESIDENT OPTUS SHARES OPTUS SHARES
A$ A$ A$
Total Offer Consideration 3.67 3.67 3.67
Capital Gain 1.82 1.82 1.82
CGT 0.55 0.55 –
Net consideration retained 3.12 3.12 3.67
Superannuation Funds
AUSTRALIAN
(33% CGT AUSTRALIAN
CONCESSION – NO CGT
AVAILABLE) CONCESSION FOREIGN
A$ A$ A$
Total Offer Consideration 3.67 3.67 3.67
Capital Gain 1.82 1.82 1.82
CGT 0.18 0.27 –
Net consideration retained 3.49 3.40 3.67
The capital gain will be disregarded for foreign Optus Shareholders holding less than
10% of Optus Shares. However, the capital gain will be included in the assessable
income of Australian resident shareholders, subject to the benefit of any unrecouped
capital losses carried forward and any applicable CGT concessions.
Scrip-for-scrip CGT rollover relief is chosen
Basically, the effect of scrip-for-scrip rollover relief is that any capital gain on the
proportion of the Offer Consideration representing the Share component is
disregarded.
Your CGT cost base in each Optus Share must be apportioned to reflect a
“non- Share proportion” and a “ Share proportion”. The “non- Share proportion” is
worked out as follows.
Non- Share component of Offer Consideration x Cost Base Total Offer
Consideration
Applying the assumed numbers above, the “non- Share proportion” (the cash
component) of the CGT cost base is A$1.13, calculated as follows:
2.25 x 1.85 = A$1.13
3.67
The capital gain on the “non- Share” cash component of the Offer Consideration
(that is ineligible for CGT rollover relief) is worked out as follows.
Non- Share Capital Proceeds – Non- Share CGT cost base Accordingly, the capital
gain to the Optus Shareholder is A$1.12 (A$2.25 – A$1.13).
The value of the Share in this example is A$1.42 (A$3.67 – A$2.25). The remaining
cost base of your Optus Share is A$0.72 (A$1.85 – A$1.13).
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TAXATION
The capital gain that is disregarded because of scrip-for-scrip CGT rollover relief is
A$0.70 (A$1.42 – A$0.72). Further, the “ Share proportion” of the original cost base in
your Optus Shares (A$0.72) is transferred to the replacement Shares. This will be
used in working out the CGT implications of a future disposal of Shares.
The tax implications for various Australian resident Optus Shareholders are set out
below. Please note that, as foreign shareholders are not entitled to CGT rollover relief,
their tax outcomes are as above.
Individuals
AUSTRALIAN
(5 0 % CGT AU S TR AL I AN
C O NC E S S IO N – NO CGT
AVA ILAB LE ) C ON C E S S I O N
A$ A$
Total Offer Consideration 3.67 3.67
Capital Gain on non-scrip component 1.12 1.12
CGT 0.27 0.54
Net consideration retained 3.40 3.13
Companies
AUSTRALIAN
RESIDENT
A$
Total Offer Consideration 3.67
Capital Gain on non-scrip component 1.12
CGT 0.33
Net consideration retained 3.34
Superannuation Funds
AUSTRALIAN
(3 3 % CGT AU S TR AL I AN
C O NC E S S IO N – NO CGT
AVA ILAB LE ) C ON C E S S I O N
A$ A$
Total Offer Consideration 3.67 3.67
Capital Gain on non-scrip component 1.12 1.12
CGT 0.11 0.17
Net consideration retained 3.56 3.50
General comments
If you choose the Buy-Back Alternative, Australia will act as your agent in transferring
your Optus Shares to Optus and in receiving payment of the A$ Equivalent of your
chosen Offer Consideration (less any Withholding Tax deducted by Optus).
Australia will then allocate this payment on your behalf to acquire the applicable
amounts of cash, Shares, Bonds and Unsecured Notes as provided in your chosen Offer
Consideration alternative.
The Buy-Back Consideration paid by Optus to you (irrespective of which Offer
Consideration alternative you have chosen) will contain a “capital return” component
and an “unfranked dividend” component.
It is proposed to treat a portion of the Offer Consideration payable under the Buy-Back
Alternative as a return of capital by Optus. That portion will be treated as the capital
return component of the Buy-Back Consideration, and the balance of the Buy-Back
Consideration will be treated as an unfranked dividend. The portion of the Buy-Back
Consideration to be treated as a return of capital by Optus will be the proportion that the
number of Optus Shares bought back by Optus represents of Optus’ total issued shares.
Discussions with the Australian Taxation Office indicate, but do not confirm, that the
proposed allocation between the capital return and unfranked dividend components
should generally be acceptable for Australian tax purposes, in which case the tax
consequences outlined below should result.
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TAXATION
Optus has requested an administratively binding advice from the Australian Taxation
Office to confirm that the proposed allocation between the capital return and
unfranked dividend components is appropriate for withholding tax purposes.
Shareholders should however obtain and rely on their own professional advice. You may
choose to seek a private binding ruling from the Australian Taxation Office specific to
your own circumstances, but you should consult with your professional adviser before
doing so.
(i) Unfranked dividend component
Australia has special tax rules setting out the tax implications that arise when a
company, in an “off-market” transaction, buys back shares in itself.
The Buy-Back by Optus will be regarded as an “off market” transaction as it is not
made in the ordinary course of stock exchange trading.
When the Buy-Back is carried out “off market”, Australian tax law deems the Buy-
Back Consideration to include a dividend component, with the sale still being
subject to CGT (with appropriate measures to ensure that no double taxation
occurs). In Optus’ case, this deemed dividend will be an unfranked dividend, so that
there is no franking credit available in respect of the tax payable by you on the
dividend component.
The dividend will be wholly taxable if you are an Australian resident. If you are a
non-resident of Australia, the dividend will be subject to the relevant dividend
Withholding Tax. The dividend Withholding Tax rate will depend on whether you
are a resident in a country with which Australia has negotiated a double tax treaty
(in which case dividend Withholding Tax is generally 15% of the total dividend), or
in a country with which Australia has not negotiated a double tax treaty (in which
case dividend Withholding Tax is generally 30% of the total dividend). Any
Withholding Tax will be deducted from your Buy-Back Consideration and will be
paid by Optus to the Australian Taxation Office on your behalf.
(ii) CGT implications
There are also CGT implications for Optus Shareholders who choose the Buy-Back
Alternative and hold their Optus Shares as a capital investment. It is recommended
that where you hold your Optus Shares as trading stock or part of an income
generating arrangement, you should seek independent professional advice.
The Australian CGT rules are structured so that they have a “catch-all” approach.
However, to avoid double taxation from this “catch-all” approach, there are
reconciliation provisions to reduce any calculated capital gains by any amounts
otherwise assessable as a deemed dividend.
The CGT rules provide that a capital gain or loss will generally arise (ignoring any
available inflation indexation benefits) equal to the difference between the capital
proceeds (in this case the Buy-Back Consideration) and the shareholder’s CGT cost
base in the Optus Shares bought back. Importantly, however, to avoid double
taxation, the deemed dividend component of the Buy-Back Consideration is
subtracted, reducing the amount of any capital proceeds (referred to above as the
capital return component). Capital gains or losses incurred are deemed to occur on
the date of the Buy-Back by Optus (that is, the Settlement Date).
The cost base for Shares, Bonds and US$ foreign currency is discussed in detail
below.
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TAXATION
(iii) Table 2 – Examples of the CGT implications under the Buy-Back Alternative
FOREIGN-
AUSTRALIAN TREATY FOREIGN-NO
RESIDENT COUNTRY TREATY
A$ A$ A$
Buy-Back Consideration 3.67 3.67 3.67
Taxable Dividend 2.26 2.26 2.26
Tax on dividend 1.10 0.34 0.68
CGT – – –
Net consideration retained 2.57 3.33 2.99
Companies
FOREIGN-
AUSTRALIAN TREATY FOREIGN-NO
RESIDENT COUNTRY TREATY
A$ A$ A$
Buy-Back Consideration 3.67 3.67 3.67
Taxable Dividend 2.26 2.26 2.26
Tax on dividend 0.68 0.34 0.68
CGT – – –
Net consideration retained 2.99 3.33 2.99
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Superannuation funds
FOREIGN-
AUSTRALIAN TREATY FOREIGN-NO
RESIDENT COUNTRY TREATY
A$ A$ A$
Buy-Back Consideration 3.67 3.67 3.67
Taxable Dividend 2.26 2.26 2.26
Tax on dividend 0.34 0.34 0.68
CGT – – –
Net consideration retained 3.33 3.33 2.99
In the examples above the Optus Shareholder made a capital loss of A$0.44 per
Optus Share. This capital loss is calculated as the amount by which the Optus
Shareholder’s CGT cost base of A$1.85 exceeds the capital proceeds component of
the Buy-Back Consideration. The capital proceeds component is A$1.41, being the
amount by which the total Buy-Back Consideration of A$3.67 exceeds the deemed
dividend component of A$2.26.
(c) Shares
Where you are an Australian tax resident and accept the Offer you will become a
shareholder in .
Taxation of dividends for Australian residents
The disposal of Shares will give rise to a capital gain or loss for Australian CGT
purposes.
If you accept the Offer and choose to obtain scrip-for-scrip CGT rollover relief
(if available) in respect of the Shares acquired in exchange for your Optus Shares
you will acquire the cost base and history of the Optus Shares. The cost base of the
Shares will represent an apportionment of the original cost of the Optus Shares
which is illustrated in the above example. The date of acquisition for CGT purposes
(in particular the CGT concession) is the date of acquisition of the Optus Shares.
If you accept the Offer and do not choose to obtain scrip-for-scrip CGT rollover relief
(or where it was not available), the date of acquisition is either the date of acceptance
of the Offer under the Transfer Alternative or the date of acceptance of the Buy -Back by
Optus (that is, the Settlement Date) under the Buy-Back Alternative. The cost base of
any Shares should be the market value of those Shares on that day (which is used to
calculate either your capital gain or Buy-Back Consideration).
The exception will be where an Optus Shareholder receives Unsecured Notes (upon
acceptance of the Share, Cash and Bond Alternative). The date of acquisition of Shares
acquired upon redemption of the Unsecured Notes will be the redemption date. The
CGT cost base of the Shares will be the portion of the Redemption Amount allocated to
acquire the Shares.
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TAXATION
(d) Bonds
Australian residents will be subject to Australian tax on interest received in respect of the
Bonds. The treatment under Singapore tax law of interest on the Bonds is discussed
in Section 7.2. If interest paid on the Bonds is exempt from Singapore tax when it is
received by a non-resident of Singapore and not subject to any Singapore withholding
taxes, there will be no foreign tax credit available for offset against your Australian tax
liability.
Future redemption of Bonds by Australian residents
Australian residents should have a cost base in the Bonds equal to the Bond Issue
Price (or the portion of the Unsecured Note Redemption Amount allocated to acquire
Bonds) at the relevant date of acquisition.
A capital gain or loss may arise to Australian resident holders of the Bonds on
redemption of the Bonds, based on movements in the A$/US$ exchange rate and the
redemption price.
It is not anticipated that the Bonds will be disposed of prior to redemption or will be
redeemed early. Holders who dispose of their Bonds prior to redemption or have
their Bonds redeemed early should seek independent professional advice in
relation to their own particular circumstances.
(e) Foreign currency
Foreign currency is treated as an asset for Australian CGT purposes. Australian resident
shareholders who choose to receive US$ as part of their Offer Consideration will
therefore hold a CGT asset. The cost base of the US$ should be the relevant A$ market
value of the US$ (or the portion of the Unsecured Note Redemption Amount allocated
to acquire US$) on the relevant date of acquisition. Therefore, disposal of the US$ at a
later time will give rise to a capital gain or loss.
(f) Unsecured Notes
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TAXATION
Optus Shareholders who are not tax residents of Singapore are advised to consult their own
tax advisers to take into account the tax laws of their respective countries of residence and
the existence of any double taxation agreement which their country of residence may have
with Singapore.
This summary is based on laws and their interpretation in effect as of the date of this
Bidder’s Statement, all of which are subject to change, possibly with retroactive effect.
(a) Shares
General
Singapore resident taxpayers, which broadly include individuals who are residing in
Singapore and companies which are controlled or managed in Singapore, are
subject to Singapore income tax on:
• income that is accrued in or derived from Singapore; and
• foreign income received or deemed to be received in Singapore.
The corporate tax rate in Singapore is 25.5% for the year of assessment 2001.
The corporate tax rate has been reduced to 24.5% for the year of assessment 2002.
The year of assessment 2002 relates to the calendar year ending 31 December 2001
for individuals and for corporations, their financial year ending in 2001.
Non-resident corporate taxpayers are broadly also subject to Singapore income tax
on the same income. Non-resident corporate taxpayers not located in Singapore
and with no permanent establishment in Singapore are not taxable on foreign
source income remitted to Singapore.
Non-resident individuals are (subject to certain exceptions) only subject to
Singapore income tax on income accruing in or derived from Singapore.
Gain on disposal of shares
Singapore currently does not have a capital gains tax regime. However, capital gains
may be construed to be income and subject to Singapore income tax if:
• they arise from activities properly regarded as the carrying on of a trade or
business in Singapore; or
• they are short term (that is, if the asset disposed of had been held for three years
or less) investment gains from the sale of real property or shares in unlisted
companies with substantial real property or real property related assets in
Singapore.
Any profits from the disposal of Shares are not taxable in Singapore unless the
seller is regarded as carrying on a trade in those shares in Singapore, in which
case, the disposal profits would be taxable as trading income.
Dividend distributions
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TAXATION
Dividends declared out of the tax-exempt profits of will be exempt from tax in the
hands of Shareholders who are Singapore tax residents. This would also generally
be the case for non-resident Shareholders. Both resident and non-resident
Shareholders should seek their own advice on the implications of receiving tax-
exempt dividends.
Where receives foreign dividends in Singapore and is allowed tax credit relief
against the Singapore tax payable, it is able to pay the net foreign dividends received
to its Shareholders as tax-exempt dividends. The tax-exempt dividends are exempt
from Singapore tax in the hands of both resident and
non-resident Shareholders. Non-resident Shareholders should, however, consult
their own tax advisers in relation to how such dividends will be treated in their
country of residence.
(ii) Stamp duty
Shares held by an individual, are subject to Singapore estate duty upon such
individual’s death, whether or not such individual is domiciled in Singapore.
(b) Bonds
Ordinarily, any interest in connection with the Bonds derived by any person would
be subject to tax in Singapore.
Where any payment of interest (and this may include a discount arising on bonds
issued and realised on maturity) which is chargeable to tax is made by a person in
Singapore to a person not known to be a resident in Singapore for tax purposes,
such payment would be subject to Singapore withholding tax (currently 24.5%).
However, if the interest is derived by a person not resident in Singapore from
sources other than its trade, business, profession or vocation carried on or exercised
in Singapore and is not effectively connected with any permanent establishment of
that person in Singapore, the withholding tax rate is 15%. The rate of 15% may be
reduced by applicable tax treaties.
As the issue of the Bonds is lead-managed by Morgan Stanley Dean Witter Asia
(Singapore) Pte, which is an Approved Bond Intermediary and Bonds are issued
during the period from 10 May 1999 to 27 February 2003, Bonds are “qualifying
debt securities”, subject to all conditions as prescribed under the Singapore Income
Tax Act (Chapter 134) (the “ITA”) and the regulations having been met. Two of the
conditions referred to in section 13(1)(a) of the ITA are as follows:
• the exemption from tax shall not apply to any interest derived by a permanent
establishment in Singapore; and
• includes in all offering documents a statement to the effect that where interest is
derived from any qualifying debt securities issued during the period from 27
February 1999 to 27 February 2003 by any person who is not resident in
Singapore and who carries on any operation in Singapore through a
permanent establishment in Singapore, the tax exemption shall not apply if such
person acquires such securities using funds from Singapore operations. Funds
from Singapore operations means, in relation to a person, the funds and profits
of that person’s operations through a permanent establishment in Singapore.
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TAXATION
112
TAXATION
Any gains in the nature of capital made from the sale of the Bonds will not be
taxable in Singapore. However, any gains from the sale of the Bonds derived by a
person as part of a trade or business carried on by that person may be taxable in
Singapore as such gains are considered revenue in nature.
(c) Unsecured Notes
The Unsecured Notes will not be transferable. Accordingly, no issue arises as to taxation
of any proceeds on transfer of the Unsecured Notes. The Unsecured Notes will be
converted into Shares, Bonds or cash, and no liability to Singapore income tax or
stamp duty is expected to arise on such conversion.
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SECTION 8
INFORMATION ON SHARES
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INFORMATION ON SINGTEL SHARES
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INFORMATION ON SINGTEL SHARES
• any issue of any shares ranking equally with, or in priority to, the Special Share;
• any variation of the rights of any Share which has the effect of transferring a
controlling interest in ;
• the appointment, reappointment, termination or removal of any director (or alternate
director);
• any disposal or any other matter which, in the opinion of the holder of the Special Share,
affects the security interests of the Republic of Singapore;
• the winding up or dissolution of ; and
• an issue of shares that would result in a person or a related group of persons (other than
Temasek) having, directly or indirectly, an interest in more than 15% of ’s issued share
capital for the time being.
A decision or opinion expressed by the holder of the Special Share is final, conclusive and binding
on all parties concerned and is not subject to judicial review.
(ii) Proposed conversion of Special Share
announced on 27 April 2001 that the holder of the Special Share had given written notice to of
the surrender of all rights attaching to the Special Share and the conversion of the Special Share into
an ordinary Share. This surrender and conversion take effect from the amendment of ’s Articles of
Association in accordance with the resolutions to be considered at the EGM.
(c) Issue of new shares
The Board may only issue new Shares with the prior approval of Shareholders. Shareholders may con fer
on the Board a general authority to issue new Shares. The SGX-ST Listing Manual restricts the
aggregate number of Shares which may be issued under such an authority to not more than 50% of
the number of Shares on issue for the time being, of which the aggregate number of Shares to be issued
other than on a pro rata basis to ’s Shareholders may not exceed 20% of the number of Shares on
issue for the time being.
On 25 September 2000, ’s Shareholders gave the Board a general authority to issue shares up to the
maximum permitted by the SGX-ST Listing Manual. The authority will lapse on the earlier of the
conclusion of the next annual general meeting or 30 August 2001 (being the date by which the next
annual general meeting is required by the Singapore Companies Act to be held).
The Board may issue new shares with such rights and restrictions as they may determine, provided
that:
• the issue is consistent with the SGX-ST Listing Manual (considered above), the Singapore
Companies Act and the rights attaching to existing shares;
• unless with the prior approval of the holder of the Special Share, no shares are issued to any
person or related group of persons (other than to Temasek) if, in the opinion of the Board, the
issue would result in such persons having, directly or indirectly, an interest in more than 15% of ’s
issued shares. (The rights attaching to the Special Share will be extinguished following the
approval of the resolutions to be considered at the EGM (see Section 8.3(b)(ii)), and the discretion
to approve such an issue will be conferred on the Board);
• no shares are to be issued which will result in the transfer of a controlling interest in without
prior approval of Shareholders in general meeting;
• no shares may be issued at a discount except in accordance with the Singapore Companies Act; and
• unless with the approval of Shareholders, any issue of shares for cash to holders of shares of any
class shall be offered pro rata to them in accordance with their shareholding.
(d) Bonus and rights issues
The Board may, with the approval of Shareholders, capitalise any reserves or profits and distribute
them as fully paid bonus shares to Shareholders pro rata in accordance with their shareholding. The
Board may, with the approval of Shareholders, also issue rights to take up additional shares to
Shareholders in proportion to their shareholdings. See Section 8.3(c) above on the existing general
authority conferred on the Board to issue new shares.
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INFORMATION ON SINGTEL SHARES
equal access scheme prescribed by the Singapore Companies Act. The mandate limits the maximum
price that may pay to purchase or acquire Shares.
Any Share purchased or acquired by is deemed cancelled immediately on purchase or acquisition.
All rights and privileges attached to that Share expire on cancellation.
Except in certain circumstances permitted by the Singapore Companies Act, may not provide
financial assistance for the acquisition or proposed acquisition of Shares.
Pursuant to the current mandate, has acquired 11,116,000 Shares by way of
on-market purchases transacted on the SGX-ST. The following table sets out details of the Shares
acquired by between 1 January 2001 and 30 April 2001.
TOTAL NUM BE R OF HIGHE S T PRICE LO WE S T PRICE TOTAL
DATE OF SHARES PER SHARE (S$) PER SHARE (S$) CONSIDERATION
TRANSACTION ACQUIRED (S$)
8 January 2001 1,300,000 2.57 2.57 3,343,855.98
26 March 2001 8,816,000 2.18 2.15 19,139,427.66
27 March 2001 1,000,000 2.09 2.09 2,091,717.53
11,116,000 2.57 2.09 24,575,001.17
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INFORMATION ON SINGTEL SHARES
The directors may convene an extraordinary general meeting whenever they think fit, and must do so
if a written request to call a meeting is made by Shareholders representing not less than 10% of
the total voting rights. In addition, two or more Shareholders holding not less than 10% of ’s issued
share capital may call a general meeting.
Voting at ’s general meetings is generally by ordinary resolution, requiring the approval of a simple
majority of the votes cast at the meeting. However, a special resolution, requiring the approval of at
least 75% of the votes cast at the meeting, is required for certain matters, including (but not limited
to) the following:
• voluntary winding up;
• amendments to ’s Memorandum of Association and Articles of Association;
• a change of corporate name; and
• a reduction in share capital, share premium account or capital redemption reserve fund.
must give at least 21 days’ notice in writing for every general meeting convened for the purpose of
passing a special resolution. Ordinary resolutions generally require at least 14 days’ notice in
writing. The notice must be given to every Shareholder who has supplied with an address in
Singapore for the giving of notices. Amendments are to be made to ’s Articles of Association (if
approved at the EGM) that require notices of general meetings to be given to ASX.
(l) Voting rights
A Shareholder is entitled to attend, speak and vote at any general meeting, in person or by proxy.
Proxies need not be a Shareholder. A Shareholder may appoint not more than two proxies to
attend and vote at the same general meeting except that this restriction does not apply to CPF,
and, if the amendments to be made to the Articles of Association are approved at the EGM, will not
apply to CDN.
A person who holds Shares through the SGX-ST book-entry settlement system will only be entitled to
vote at a general meeting as a Shareholder if his name appears in the depository register maintained
by CDP 48 hours before the general meeting.
Except as otherwise required by ’s Articles of Association or by law, two or more Shareholders must
be present in person or by proxy to constitute a quorum at any general meeting. Under ’s Articles of
Association:
• on a show of hands, every Shareholder present in person or by proxy has one vote; and
• on a poll, every Shareholder present in person or by proxy has one vote for each Share which he or
she holds or represents.
A poll may be demanded in certain circumstances, including:
• by the chairman of the meeting; or
• by any two Shareholders present in person or by proxy and entitled to vote; or
• by any Shareholder present in person or by proxy and representing not less than 10% of the total
voting rights of all Shareholders having the right to vote at the meeting; or
• by any Shareholder present in person or by proxy and holding shares conferring a right to vote at the
meeting, being shares on which an aggregate sum has been paid up equal to not less than one-
tenth of the total sum paid on all shares conferring that right.
However, no poll may be demanded on the question of the choice of a chairman or on a question of
the adjournment of the meeting. In the case of a tied vote, whether on a show of hands or a poll, the
chairman of the meeting shall be entitled to a casting vote.
To facilitate the listing of Shares on the ASX and the holding of Shares through CDN, it is proposed
that ’s Articles of Association be amended at the EGM to provide a mechanism to allow holders of
CDIs through CDN or their nominees to be appointed as proxies of CDN in respect of their CDIs as
shown in their CDN accounts as at a time not earlier than 48 hours before the time of the general
meeting. In respect of each CDI holder’s Shares, that CDI holder will be able to appoint himself or
herself as the first-named proxy and another person in his or her place, as the proxy of CDN in respect
of those shares. CDN will be entitled under these arrangements to appoint any number of proxies. This
will enable CDI holders to attend, speak and vote (both on a show of hands and on a poll) as
proxies of CDN at any general meeting.
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(m) Dividends
may, by ordinary resolution at a general meeting of Shareholders, declare dividends, but no dividend
may exceed the amount recommended by the Board. The Board may pay interim dividends without
approval from Shareholders.
Dividends may only be paid out of profits. However, it is provided in the Singapore Companies Act
that may capitalise its share premium account and apply it to pay dividends, if such dividends are
satisfied by the issue of shares to Shareholders.
Dividends are payable pro rata in proportion to the amount paid-up on each Share, unless the rights
attaching to any Share provide otherwise.
Pursuant to the listing of Shares on the ASX and the holding of Shares through CDN, it has
been proposed that ’s Articles of Association be amended at the EGM to deal with payment of
dividends in currencies other than S$.
(n) Substantial shareholdings
Under the Singapore Companies Act, a person has a substantial shareholding in if he or she has an
interest (or interests) in one or more Shares and the nominal amount of that share (or the aggregate
of the nominal amounts of those shares) is not less than 5% of the aggregate of the nominal amount
of all issued Shares. (An “interest” is a similar but not identical concept to “relevant interest” under
the Corporations Law.)
A person having a substantial shareholding in is required to make certain disclosures to under the
Singapore Companies Act, including the particulars of his or her interests and the circumstances by which
he or she has such interests. Legislation is proposed, which, if passed, would require disclosure, as a
matter of statutory duty, of these matters by substantial shareholders to the SGX-ST.
(o) Takeovers
The Singapore Companies Act and the Singapore Code on Takeovers and Mergers regulate the
acquisition of ordinary shares of public companies and contain certain provisions that may delay,
deter or prevent a future takeover or change in control of .
Any person acquiring an interest, either alone or together in concert with other parties (as defined in
the Singapore Code on Takeovers and Mergers), in 25% or more of the voting shares in must extend
a takeover offer for the remaining voting shares in accordance with the provisions of the Singapore
Code on Takeovers and Mergers.
An offer for consideration other than cash must be accompanied by a cash alternative at not less than
the highest price paid by the offeror or parties acting in concert with the offeror within the preceding
12 months. A person is also required to make a takeover offer if the person holds, either alone or
together with parties acting in concert, between 25% and 50% of the voting shares and acquires
additional voting shares representing more than 3% of the voting shares in any 12 month period.
(p) Liquidation or other return of capital
On a liquidation or other return of capital, Shareholders are entitled to participate in any surplus
assets in proportion to their shareholdings, subject to any special rights attaching to any other class of
shares.
(q) Minority rights
Section 216 of the Singapore Companies Act protects the rights of minority shareholders of
Singapore-incorporated companies by giving the Singapore courts a general power to make any
order, upon application by any Shareholder if:
• ’s affairs are being conducted or the powers of the Board are being exercised in a manner
oppressive to, or in disregard of the interests of, one or more Shareholders; or
• takes an action or threatens to take an action, or Shareholders pass or propose to pass a resolution
which unfairly discriminates against, or is otherwise prejudicial to, one or more Shareholders.
Singapore courts have wide discretion as to the relief they may grant to remedy such oppressive or
unfairly discriminatory conduct.
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INFORMATION ON SINGTEL SHARES
Options may be granted under the 1999 Scheme with an exercise price equal to, or at a discount of up
to 20% of, the average of the closing Share prices on the SGX-ST over the five consecutive trading
days preceding the grant of the option (the “Market Price”).
Options with an exercise price equal to the Market Price may be exercised after the first anniversary but
before the tenth anniversary (in the case of a person who is an employee at the date of grant of the
option) or the fifth anniversary (in respect of all other optionholders) of the grant of the option. Options
with an exercise price at a discount to the Market Price may be exercised after the second anniversary but
before the tenth anniversary (in the case of a person who is an employee at the date of grant of the
option) or the fifth anniversary (in respect of all other optionholders) of the grant of the option.
An option lapses immediately if not exercised by the end of the exercise period or if the holder becomes
bankrupt, disposes of the option, engages in misconduct or (unless otherwise determined by the
Compensation Committee administering the scheme) ceases to be an employee or a non-executive
director.
Except where optionholders are properly compensated, options may be exercised early in the event of a
takeover offer for Shares, the approval of a scheme for the reconstruction of or its amalgamation with
another company or a winding up resolution is passed.
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INFORMATION ON SINGTEL SHARES
• settlement cash flows are more predictable and settlement risks are reduced as a result of the
regulation of electronic transfers; and
• holders receive holding statements just like a bank statement.
The holding statement will set out the number of CDIs issued to (or subsequently transferred to or by)
each holder. The holding statement will also advise the holder of the holder reference number of their
holding. A holding statement will be provided to holders on a periodic basis if there is a ch ange in their
holding of CDIs.
A summary of the rights and entitlements of CDI holders is set out below. Further information about CDIs
is available from Computershare Investor Services Pty Limited (’s Australian share registry) or any
stockbroker.
(a) Number of CDIs issued in relation to Shares
Accepting Optus Shareholders will be issued with one CDI for every Share to which they become
entitled.
(b) Converting from a CDI holding to a CDP holding
A holder of CDIs may convert a holding of Shares to a holding in CDP by:
• if the CDIs are in an Issuer Sponsored Holding, notifying ’s Australian share registry
(Computershare Investor Services Pty Limited); or
• if the CDIs are in a CHESS Holding, notifying the Controlling Participant in relation to those
CDIs.
In both cases, once ’s Australian share registry has been notified of your wish to do this and
of the CDP securities account to which you wish to transmit the Shares, it will arrange for that
transmission to occur. A holder of CDIs wishing to take advantage of this will first need to establish a
securities account with CDP. A stockbroker in Singapore or an Australian stockbroker with arrangements
with a Singapore stockbroker will be able to inform you of the mechanism for achieving this.
All dealings in and transactions of the Shares in Singapore on the SGX-ST shall be effected for settlement
through the CDP system. Settlement of trades through the CDP system may be effected only by CDP
Depository Agents (usually stockbrokers) or through your own direct securities accounts with CDP, and
shall be made in accordance with the “Terms and Conditions for Operation of Securities Account
with CDP” as amended from time to time, copies of which are available from CDP.
(c) Converting to a certificated holding
is required by Singapore law to issue physical share certificates for all Shares issued by it. A
Shareholder who holds Shares through CDP will not receive physical share certificates for such
Shares because they are registered in the name of CDP and the physical share certificates are held
by or for CDP. The Shares to be issued as a result of acceptances of the Offer will be issued by to
CDP which will enter them in the depository register maintained by it in the name of CDN to
hold for and on behalf of accepting Optus Shareholders.
If an accepting Optus Shareholder (or any other person holding CDIs) converts that holding into a
holding through a securities account with CDP (as explained above), it is entitled by withdrawing
those shares from CDP to be registered directly on the share register. The ability to do this will be
governed by the rules of CDP.
(d) Trading on the ASX or the SGX-ST stock markets
The existing Shares (which are held through CDP) can currently only be traded on the SGX -ST stock
market. All traded Shares will be the subject of the application for listing on the ASX along with the
Shares issued (in CDI form) as a result of acceptances of the Offer. Accordingly, existing holders of
Shares will be able, by converting their holdings into CDIs, to trade on the ASX stock market. This will
be achieved by the holder instructing CDP to transmit the securities to CDN and informing them of
the relevant CHESS Holding in which they are to be held following transmission to CDN (or if there is
none, the CDIs will be held on ’s issuer sponsored
sub-register). Once that has occurred, those Shares will be tradeable in CDI form on the ASX.
Similarly, any holder of CDIs by converting the CDIs into a holding through a securities account with
CDP, will be able to trade the Shares on the SGX-ST stock market.
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126
SECTION 9
THE OFFER
127
THE OFFER
Australia invites you to dispose of all or any of your Optus Shares on the terms set out in this Offer.
(b) Shares issued after Register Date
This Offer extends to Optus Shares that are issued during the period from the Register Date to the
end of the Offer Period:
(i) due to the conversion of, or exercise of rights attached to, Optus Options which are on issue on
the Register Date; or
(ii) issued to participants in Optus Employee Share Plans in accordance with an announcement made
by Optus before 25 March 2001 or under the Q1 2001 Plan or the Q2 2001 Plan where Australia
has given its consent to the issue before the Instrument Date.
(c) Disposal includes Rights
If you dispose of any of your Optus Shares under this Offer, you also dispose of any Rights attached to
those Optus Shares.
(d) Optus Options
If you are a participant in the EOP or SPP and, in accordance with the EOP or SPP rules, Optus gives
you notice that you can exercise your Optus Options during the Offer Period, then you may accept
the Offer in respect of the Optus Shares you receive on exercise of your Optus Options.
9.2 CONSIDERATION
(a) Alternatives
You are invited to dispose of your Optus Shares for one of the following forms of consideration (the
“Offer Consideration”):
(i) 1.66 Shares for each Optus Share (the “Share Alternative”);
(ii) A$2.25 in cash (or the US$ Cash Alternative) and 0.8 Shares for each Optus Share (the “ Share
and Cash Alternative”); or
(iii) A$2.00 in cash (or the US$ Cash Alternative) plus A$0.45 worth of Bonds (determined by reference
to the Bond Issue Price) and 1 Unsecured Note (the “Share, Cash and Bond Alternative”).
You may choose only one of these Offer Consideration alternatives.
(b) US$ Cash Alternative
If you choose the Share and Cash Alternative or the Share, Cash and Bond Alternative, you may
choose to receive the US$ Cash Alternative in lieu of the A$ amount.
(c) If you do not make a choice
If you accept this Offer but do not indicate a choice of which of the Offer Consideration alternatives
you wish to receive, or you give conflicting indications, you will, subject to Section 9.11(b), be taken
to have chosen the Share and Cash Alternative (but not the US$ Cash Alternative).
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THE OFFER
9.3 SHARES
(a) Allotment
If you are registered as the holder of Shares on or before the Dividend Record Date, you will be
entitled to ’s final dividend for the year ended 31 March 2001.
(c) Listing
As required by Section 9.12(a)(v) (the Listing Condition), is applying for the admission to quotation
of the Shares to be issued under this Offer on the ASX. Permission for admission to quotation will not
be granted automatically but will depend on compliance with the requirements of the ASX. cannot
guarantee (and nothing in this Bidder’s Statement states or implies) that permission for admission
to quotation will be granted.
(d) CDIs
The Shares issued pursuant to this Offer will be issued in the name of CDP which will enter them in
the Depository Register maintained by it in the name of CDN. CDN will issue CDIs in respect of those
Shares and, if you accept this Offer, you will be sent a holding statement in respect of the CDIs so
issued in respect of your acceptance. For further information on CDIs see Section 8.7.
(e) Rounding
If you accept this Offer and the number of Shares to be issued to you is not a whole number, the
number of Shares which will be issued to you will be rounded up to the nearest whole number.
If Australia reasonably believes that an Optus shareholder’s holdings have been manipulated to take
advantage of this rounding up, or the rounding up under Section 9.4(b) then any fractional
element will be rounded down.
9.4 BONDS
(a) Terms
The principal terms and other features of the Bonds are summarised in Section 10 and the full text
of the terms and conditions of the Bonds will be substantially in the definitive form set out in
Annexure 3.
(b) Tranches, denomination and interest accrual
If you accept the Offer and choose the Share, Cash and Bond Alternative you will be issued with
Bonds from each of the two tranches identified in Section 10 (that is, Tranche A Bonds and Tranche B
Bonds).
The Bonds may be denominated in amounts of US$1,000 or US$1 to the extent required to
accommodate individual accepting Optus Shareholders. Amounts of less than US$1 will be rounded
up to the nearest whole US$ amount – that is, if the face value of a Bond to be issued to an Optus
Shareholder as a result of acceptance of the Offer by that shareholder is not a multiple of US$1, the
shareholder will be issued with a Bond with a face value of US$1 in respect of that
amount of less than US$1. (Note that Bonds issued pursuant to the Unsecured Note Provisions will be
rounded down to the nearest US$1 of face value.)
All Bonds, whether in Tranche A or Tranche B, will be issued at the Bond Issue Price, and accrue
interest at the same rate as the Bonds of that tranche which are issued on the First Settlement Date. Any
Bond issued after the First Settlement Date will accrue interest from (and including) the First Settlement
Date. The Bonds will be valued at the Bond Issue Price for the purpose of determining the extent to which
the Bond component of the Offer Consideration due to any Optus Shareholder has been fulfilled.
Interest will accrue on such Bonds from (and including) the First Settlement Date. With regard to Bonds
which are issued after the First
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THE OFFER
Settlement Date, no adjustment needs to be made to the Bond Issue Price to take into account
interest accruing between the First Settlement Date and the issue date of such Bonds.
(c) No listing
No application has been made for the listing of the Bonds on a stock market of a securities exchange,
either in Australia or elsewhere. will use reasonable endeavours to obtain credit ratings for the
Bonds from Standard & Poor’s and Moody’s Investors Service as soon as practicable, and in any event
within six months of the date on which the Bonds are issued. may explore a listing of the Bonds on
the London Stock Exchange or the Luxembourg Stock Exchange after such ratings are obtained.
However, and Australia do not represent or imply that the Bonds will be rated, or quoted on any
stock market, and this Offer is not conditional on any such rating or quotation.
(d) Clearing details
In order to choose the Share, Cash and Bond Alternative, you must give Australia the details of an
account with Euroclear or Clearstream in which you wish to hold the Bonds (see Section 9.8(e)(iv)).
will issue those Bonds so that they are credited to that account.
Clauses 3.4, 3.5, 3.5A, 3.5B and 3.6 of the Implementation Agreement (the “Unsecured Note
Provisions”) describe the operation and effect of the Unsecured Notes. The Unsecured Note
Provisions are incorporated into this Offer as if set out in full, including all clauses of the
Implementation Agreement which are:
(i) referred to in the Unsecured Note Provisions; or
(ii) otherwise necessary to give the same content to the Unsecured Note Provisions in this Offer as
that in the Implementation Agreement.
The Unsecured Note Provisions have been extracted in full from the Implementation Agreement and
are set out in Annexure 2.
The following provisions of this Section 9.5 do not limit the foregoing but rather expand on the rights
and obligations in respect of the Unsecured Notes.
(b) Obligations relating to Unsecured Notes
If you accept the Offer and choose the Share, Cash and Bond Alternative, you:
(i) subscribe for an Unsecured Note;
(ii) are bound by the Unsecured Note Provisions and the Unsecured Note Trust Deed as a holder of
Unsecured Notes;
(iii) agree to apply the Redemption Amount and any Partial Redemption Amount in accordance with
the Unsecured Note Provisions; and
(iv) agree that Australia will apply the Redemption Amount and any Partial Redemption
Amount in accordance with the Unsecured Note Provisions on your behalf.
(c) No listing
The Unsecured Notes will not be listed on a stock market of any securities exchange and are not
transferable.
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You have the choice to dispose of all or any of your Optus Shares by either:
(i) selling and transferring all or any of your Optus Shares to Australia (the “Transfer
Alternative”); or
(ii) subject to Section 9.6(c), appointing Australia as your agent and having Australia offer your Optus
Shares to Optus to be bought back (the “Buy-Back Alternative”).
You may choose the Transfer Alternative for some of your Optus Shares and the Buy-Back Alternative
for others.
(b) If you do not make a choice
If you accept this Offer, but you do not indicate a choice of either the Transfer Alternative or the
Buy-Back Alternative, or you give conflicting indications, you will be taken to have chosen the Transfer
Alternative.
(c) Foreign Shareholders
The Buy-Back Alternative is not available to Optus Shareholders resident in countries other than
Australia, Singapore, New Zealand, the United States, the United Kingdom, The Netherlands or
Hong Kong. Foreign Shareholders should also refer to Section 9.11(b).
Clauses 4.1 to 4.8 of the Implementation Agreement (the “Buy-Back Provisions”) describe the steps
by which Optus Shares in respect of which the Buy-Back Alternative is chosen are bought back by
Optus. As a result of those steps, if you choose the Buy-Back Alternative you will receive the Offer
Consideration alternative chosen by you under Sections 9.2 and 9.8 (subject to Section 9.11(b)) less
Withholding Tax (as applicable) deducted in accordance with the Buy-Back Provisions. The Buy-Back
provisions have been extracted in full from the Implementation Agreement and are set out in
Annexure 2.
(b) Effect of choosing the Buy-Back Alternative
If you accept this Offer and choose the Buy-Back Alternative, you irrevocably appoint Australia as
your exclusive agent, with irrevocable instructions to:
(i) prepare and enter into a Buy-Back Agreement on your behalf in respect of your Acceptance Shares
which you choose to be bought back;
(ii) present the Cheque which Australia will receive on your behalf pursuant to clause 4.5(b)(ii) of the
Implementation Agreement for purchase in accordance with clause 4.7 of the Implementation
Agreement;
(iii) as contemplated by clause 4.8(a) of the Implementation Agreement, subject to Sections 9.7(c)
and 9.11(b):
(A) pay to you from the proceeds of purchase of the Cheque (that is, the Subscription Funds) the
cash component (if any) of the Offer Consideration chosen by you less the amount of
Withholding Tax (if applicable); and
(B) apply the balance of the Subscription Funds on your behalf in subscribing for the relevant
number of Shares, Bonds and Unsecured Notes (as the case may be) chosen by you pursuant
to Sections 9.2 and 9.8 in accordance with clause 4.8 of the Implementation Agreement; and
(iv) perform all other actions on your behalf necessary to comply with the Buy-Back Provisions and
give effect to the terms of the Buy-Back Agreement and the presentation of the Cheque for
purchase.
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THE OFFER
If you accept this Offer, choose the Buy-Back Alternative and also choose the Share Alternative,
Australia will, on your behalf, pursuant to Section 9.7(b), only subscribe for that number of Shares
calculated by dividing the Subscription Funds by the A$ Equivalent of the Market Value of one Share,
rounded up to the nearest whole number of Shares. (If you are a Foreign Shareholder and you
choose the Share Alternative, the effect of this provision is that the Withholding Tax payable will be
deducted from the Offer Consideration and only the remaining part of the Offer Consideration will be
provided in the form of Shares.)
(d) Australia’s role as agent
Australia, in its role as your agent pursuant to Section 9.7(b), is permitted to perform actions which
will give a commercial benefit to Australia or .
You may accept this Offer for all or any of your Optus Shares. If you accept the Offer for some of your
Optus Shares you can still accept the Offer for more or all of your Optus Shares during the Offer
Period. You will be taken to have accepted the Offer for all of your Optus Shares if you do not specify
a lesser number in accordance with the instructions on the Acceptance Form.
(b) To choose the Transfer Alternative – CHESS Holdings
If you want to accept this Offer and choose the Transfer Alternative for Acceptance Shares which are
in a CHESS Holding, you must comply with the SCH Business Rules. To accept in accordance with
those rules, you must:
(i) instruct your Controlling Participant (usually your broker) to initiate acceptance of this Offe r under
rule 16.3 of the SCH Business Rules; or
(ii) if you are a Broker or a Non-Broker Participant, yourself initiate acceptance under that rule,
so as to be effective before the end of the Offer Period.
You may instead complete and sign the Acceptance Form and return it to the address on the reverse
side (you can use the addressed envelope provided). This will authorise Australia to instruct your
Controlling Participant to initiate acceptance of this Offer on your behalf. For return of the Acceptance
Form to be an effective acceptance of the Offer, you must ensure it is received by Australia in time for
Australia to give instructions to your Controlling Participant and your Controlling Participant to carry
out those instructions, before the end of the Offer Period.
(c) To choose the Transfer Alternative – Issuer Sponsored Holdings
If you want to accept this Offer and choose the Transfer Alternative for Acceptance Shares which are
held on Optus’ issuer sponsored sub-register, or of which at the time of acceptance you are entitled to
be registered as the holder, or to which at the time of acceptance you are otherwise able to give
good title, you must:
(i) complete and sign the Acceptance Form in accordance with the instructions on it; and
(ii) send the Acceptance Form together with all other documents required by the instructions on it to
the address specified on the Acceptance Form (you can use the addressed envelope provided) so
that, if posted, the envelope in which they are sent is post-marked before the end of the Offer
Period or, if otherwise delivered, they are received at that address before the end of the Offer
Period.
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If you want to accept this Offer and choose the Buy-Back Alternative, you must:
(i) ensure that your Acceptance Shares are in an Issuer Sponsored Holding (if they are in a CHESS
Holding, you must arrange with your Controlling Participant for your Acceptance Shares to be
converted to an Issuer Sponsored Holding);
(ii) complete and sign the Acceptance Form and indicate your choice of the Buy-Back Alternative, in
accordance with the instructions on it; and
(iii) send the Acceptance Form together with all other documents required by the instructions on it to
the address specified on the Acceptance Form (you can use the addressed envelope provided) so
that, if posted, the envelope in which they are sent is post-marked before the end of the Offer
Period or, if otherwise delivered, they are received at that address before the end of the Offer
Period.
(e) Choosing your Offer Consideration
Neither this Offer nor the Shares, Bonds or Unsecured Notes to be issued as Offer Consideration are
registered in any jurisdiction outside Australia (unless an applicable foreign law treats them as
registered as a result of the Bidder’s Statement being lodged with ASIC). It is your sole responsibility to
satisfy yourself that you are permitted by any foreign law applicable to you to accept this Offer and to
receive Shares, Unsecured Notes or Bonds (if any) as consideration.
(g) Optus Options
If you hold Optus Options under the EOP or SPP you should complete the Notice of Exercise on the
reverse of your Option certificate and send it to the Optus Registry together with, if you hold your
Optus Options under the EOP, your cheque for the exercise price of A$4.11 per option. When you
receive notice of the issue of your Optus Shares you should complete the Acceptance Form in
accordance with the instructions in this Section 9.8.
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Unless withdrawn or extended, this Offer is open for you to accept during the period that begins on
the date of this Offer and ends at 7.00 pm (Sydney time) on 3 July 2001.
(c) Automatic extension
If at the Unconditional Date, Australia is not entitled to proceed with compulsory acquisition of
Optus Shares under Part 6A.1 of the Corporations Law as modified by ASIC, then Australia will
extend the Offer Period by a period of not less than two weeks.
(e) Limitation to extensions
has agreed with Optus under the Implementation Agreement that, from the Unconditional Date, the
Offer Period will be extended by no more than three extensions of two weeks each. This does not
imply that the Offer Period will be extended.
By accepting this Offer in accordance with Section 9.8, or otherwise, you will have irrevocably:
(i) accepted this Offer in respect of your Acceptance Shares;
(ii) authorised Australia and its officers and agents to correct any errors in or omissions from the
Acceptance Form necessary to make it an effective acceptance of this Offer and, if you choose the
Transfer Alternative and your Acceptance Shares are not in a CHESS Holding, to enable the transfer of
your Acceptance Shares to Australia, and to ask Optus to reserve your Acceptance Shares for the
benefit of Australia;
(iii) if you choose the Transfer Alternative and your Acceptance Shares are in a CHESS Holding,
authorised Australia and its officers and agents to:
(A) instruct your Controlling Participant to initiate acceptance of this Offer in respect of your
Acceptance Shares under the SCH Business Rules; and
(B) give to your Controlling Participant on your behalf any other instructions in relation to your
Acceptance Shares under the sponsorship agreement between you and your Controlling
Participant;
(iv) if you choose the Transfer Alternative:
(A) agreed to transfer your Acceptance Shares to Australia in accordance with this Offer; and
(B) agreed to accept the Shares (in the form of CDIs), and the Bonds and Unsecured Notes (if
any) to which you become entitled by acceptance of this Offer, subject to the terms of this
Offer, the Memorandum and Articles of Association of , and the Trust Deeds constituting the
Bonds and Unsecured Notes (as applicable) and the provisions relating to the holding of those
Shares in the form of CDIs, and authorised appropriate entries to be placed in the relevant
register of holders (including CDN being entered in the Depository Register of CDP and CDP
being entered in the share register of in relation to those Shares);
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(xi) acknowledged and agreed that, except as permitted by and in accordance with applicable law,
you will not offer or resell in, or to persons in, the United States of America any Shares or the
Bonds which you acquire at any time, although that does not prohibit any sale on the ASX or SGX -
ST if neither you nor any person acting on your behalf knows, or has reason to know, that the sale
has been prearranged with, or that the purchaser is, a person in the United States of America;
and
(xii)instructed to issue the CDIs applicable to your acceptance of the Offer, if your Optus Shares are
in a CHESS Holding, with the same holder identification number as affects your Optus Shares; and
if your Optus Shares are held as an Issuer Sponsored Holding, on ’s issuer sponsored CDI sub-
register.
(b) Validation of otherwise ineffective acceptances
Except in relation to Optus Shares which are in a CHESS Holding, if you choose the Transfer
Alternative, Australia may in its absolute discretion treat the receipt by it of the Acceptance Form as a
valid acceptance although it does not receive the other documents required by the instructions on the
Acceptance Form or any of the other requirements for acceptance have not been complied with. If
Australia does so, then, subject to Section 9.11, Australia will not be obliged to make the
consideration available until it receives all those documents and all of the requirements for acceptance
referred to in Section 9.8 and in the Acceptance Form have been met.
If you do not give Australia all necessary transfer documents for the Acceptance Shares within one
month after the end of the Offer Period, Australia may avoid the contract that results from your
acceptance of this Offer.
Australia will provide, or procure the provision of, the Offer Consideration due for your Acceptance
Shares, subject to Section 9.7 (if you choose the Buy-Back Alternative) as follows:
(i) if you accept this Offer on or prior to the Unconditional Date, on the day which is seven days after
the Unconditional Date (the “First Settlement Date”);
(ii) if you accept this Offer after the Unconditional Date, on a date nominated by Australia to Optus
pursuant to clause 4.2(b) of the Implementation Agreement (“Second Settlement Date”)
which is no later than the earlier of:
(A) one month after the Unconditional Date; and
(B) 21 days after the end of the Offer Period.
Australia may nominate more than one Second Settlement Date under clause 4.2(b) of the
Implementation Agreement.
(b) Foreign Shareholders
(i) If you are (or are acting on behalf of) a citizen or a resident of a jurisdiction other than residents of
Australia, or (subject to paragraph 9.11(b)(iii)) New Zealand or Singapore or the United Kingdom,
or your address shown in Optus’ register of members is a place outside Australia and its external
territories or New Zealand or Singapore or the United Kingdom or you are acting on behalf of
such a person then, unless Australia otherwise determines (being satisfied that it is not prevented
from lawfully making the Offer to you and issuing you with Shares or Bonds or Unsecured Notes (“
Securities”) on acceptance of the Offer and that it is not unlawful for you to accept the Offer by the
law of that place), you will not be entitled to receive Securities as part of the consideration for your
Optus Shares by reason of your acceptance of this Offer and you will be a Restricted Foreign
Shareholder for the purposes of this Section 9.11(b).
(ii) Generally, if you are a United States Shareholder you will be a Restricted Foreign Shareholder for
the purposes of this Section 9.11(b). Furthermore, if you are such a United States Shareholder, the
Share, Cash and Bond Alternative does not form part of the Offer Consideration and if you purport
to choose the Share, Cash and Bond Alternative you will be deemed to have chosen instead the
Share and Cash Alternative (but not the US$ Cash Alternative).
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(iii) Optus Shareholders who are resident in New Zealand are Restricted Foreign Shareholders if they
choose the Share, Cash and Bond Alternative.
(iv) If you are a Restricted Foreign Shareholder with respect to Securities that you have chosen as
Offer Consideration under Sections 9.2 and 9.8, Australia will:
(A) arrange for the allotment to the Nominee of the number of Securities to be issued in
accordance with the Offer to which you and all other Restricted Foreign Shareholders would
have been entitled but for this Section 9.11(b);
(B) cause the Shares and Bonds so allotted (including any Shares or Bonds issued following the
redemption of Unsecured Notes pursuant to the Unsecured Note Provisions) to be offered for sale
in such manner, at such price and on such other terms and conditions as are determined by the
Nominee;
(C) pay to you the amount ascertained in accordance with the relevant formula:
for Shares:
Net Proceeds of Sale x NFS
TFS
where:
(I) Net Proceeds of Sale is the amount remaining after deducting from the proceeds of sale by
the Nominee the expenses of the sale;
(II) NFS is the number of Shares which would otherwise be issued to you; and
(III) TFS is the total number of Shares issued to the Nominee under this Section 9.11(b). for the
Bonds:
Net Proceeds of Sale x NFS
TFS
where:
(I) Net Proceeds of Sale is the amount remaining after deducting from the proceeds of sale by
the Nominee the expenses of the sale;
(II) NFS is the number of Bonds which would otherwise be issued to you; and
(III) TFS is the total number of Bonds allotted to the Nominee under this Section
9.11(b).
Payment will be made in A$. The Net Proceeds of Sale, if in a currency other than A$, will be
converted to A$ at the time of payment using the relevant exchange rate for value on the date
of payment.
(c) Cash payments generally
Payment of any cash amount to which you are entitled will be made by cheque in A$ or US$ if you
have chosen an Offer Consideration with a US$ component. The cheque will be sent to you by pre-
paid ordinary mail (or in the case of overseas shareholders, by airmail) to your address as shown on
the Acceptance Form or such other address as you may notify to Australia in writing before
despatch.
(d) Clearances for cash payments
If at the time you accept the Offer you are resident in, or a resident of, a place outside Australia to
which the Banking (Foreign Exchange) Regulations apply, you will not be entitled to receive any cash
consideration (including without limitation any amount payable under Section 9.11(b)) until al l
requisite authorities or clearances of the Reserve Bank of Australia (whether under the Regulations or
otherwise), or the Australian Taxation Office, have been obtained by Australia. Australia
undertakes to make prompt application for all such authorities or clearances. The Banking (Foreign
Exchange) Regulations currently apply to Iraq, Libya, Taliban, the government and governmental
authorities of Yugoslavia and the National Union for the Total Independence of Angola (and its senior
officials and their families and its members).
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Australia will pay all costs and expenses of the preparation and circulation of the Offer and the stamp
duty (if any) payable on transfers of Optus Shares to Australia or (if you choose the
Buy-Back Alternative) to Optus.
(f) Handling fee
A handling fee may be paid by Australia, at its expense and not as a deduction from the amount
payable to you, to any broker member of ASX whose stamp appears on the Acceptance Form in
respect of any Optus Shares other than those held by that broker.
9.12 CONDITIONS
(a) Defeating Conditions
This Offer and the contract resulting from its acceptance (the “Contract”) are subject to these
conditions:
(i) Foreign investment approval
Before the end of the Offer Period, notice in writing (either unconditional or subject only to
conditions that are acceptable to Australia (acting reasonably)) is issued by or on behalf of the
Australian Treasurer stating that the Treasurer consents, or that the Treasurer does not have
any objection, under the Australian Government’s foreign investment policy, to the acquisition by
Australia of all of the Optus Shares the subject of the Offer or the Placement, or the Treasurer
ceases to be entitled to make an order under Part II of the Foreign Acquisitions and Takeovers Act
regarding the acquisition of those shares.
(ii) Minimum acceptance
At any time during or at the end of the Offer Period, Australia receives acceptances in respect of
more than 50% (by number) of the Optus Shares the subject of the Offers.
(iii) No prescribed occurrences
None of the following events occurs during the period beginning on 26 March 2001 and ending
at the end of the Offer Period other than as strictly necessary to implement the Offers, each
Contract, the Buy-Back or the Placement:
(A) Optus converts all or any of its shares into a larger or smaller number of shares;
(B) Optus or a subsidiary of Optus resolves to reduce its share capital in any way;
(C) Optus or a subsidiary of Optus:
(I) enters into a buy-back agreement; or
(II) resolves to approve the terms of a buy-back agreement under section 257C(1) or 257D(1)
of the Corporations Law;
(D) Optus or a subsidiary of Optus issues shares (other than Optus Shares issued as the result of
the exercise of Optus Options or issued under Optus Employee Share Plans during the period
from the Register Date to the end of the Offer Period in accordance with an announcement
made by Optus before 25 March 2001 or under the Q1 2001 Plan or the Q2 2001 Plan where
Australia has given its consent to the issue before the Instrument Date) or grants an option
over its shares, or agrees to make such an issue or grant such an option;
(E) Optus or a subsidiary of Optus issues, or agrees to issue, convertible notes;
(F) Optus or a subsidiary of Optus disposes, or agrees to dispose, of the whole, or a substantial
part, of its business or property unless that disposal is associated with an upgrade of any part
of Optus’ networks and/or infrastructure;
(G) Optus or a subsidiary of Optus charges, or agrees to charge, the whole, or a substantial part,
of its business or property;
(H) Optus or a subsidiary of Optus resolves to be wound up;
(I) the appointment of a liquidator or provisional liquidator of Optus or of a subsidiary of Optus;
(J) a court makes an order for the winding up of Optus or of a subsidiary of Optus;
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Before the end of the Offer Period, notice in writing approving the acquisition of
Optus in accordance with the Offers is issued by or on behalf of:
(A) the Treasurer, in relation to any approval that is required under the Financial
Sector (Shareholdings) Act 1998; and
(B) the relevant Minister in relation to any approval that is required under the
Insurance Acquisitions and Takeovers Act 1991.
(v) ASX Listing Condition
Before the end of the Offer Period, ASX approves the listing of and quotation of
new Shares to be issued pursuant to the Offer.
(vi) Material adverse change
During the period beginning on 26 March 2001 and ending at the end of the Offer
Period:
(A) no change occurs in relation to the business, financial or trading position or
condition, or the assets, liabilities or profitability, of Optus or a subsidiary of
Optus which has or is likely to have one of the following effects:
(I) the net profit after tax and abnormal items of the consolidated Optus Group
for the 12 months ended 31 March 2001 is 25% or more lower than for the
12 months ended 31 March 2000 (as shown in Optus’ published audited
financial statements); or
(II) the net assets of the consolidated Optus Group are 10% or more lower than
net assets of the consolidated Optus Group as at 31 March 2000 (as shown
in Optus’ published audited financial statements) (the “2000 Net Assets”);
(B) neither Optus nor any subsidiary of Optus acquires (as defined in the ASX Listing
Rules) or disposes (as defined in the ASX Listing Rules) of:
(I) any single asset, or collection of assets (if the assets are acquired or disposed
of in what is in substance one transaction), where the book value or the
value of the consideration exceeds an amount which is 10% of the 2000 Net
Assets; or
(II) any business (whether by means of the acquisition or disposition of assets
and goodwill or a body corporate which conducts the business), where the
book value or the value of the consideration exceeds an amount which is 2%
of the 2000 Net Assets;
(C) neither Optus nor any subsidiary of Optus enters into any joint venture or
partnership which requires it to dedicate to the joint venture or partnership any
single asset or collection of assets having a book value exceeding an amount
which is 2% of the 2000 Net Assets or which commits it to expend an amount
exceeding an amount which is 2% of the 2000 Net Assets;
(D) the Optus Group taken as a whole does not make or commit to make capital
expenditure of more than A$150 million in excess of the capital expenditure
which it is committed or has planned (ie, approved in accordance with capital
planning governance procedures even though it is not yet committed) to make
as at 26 March 2001,
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in each case, except to the extent that or its officers, employees, agents or advisers
have actual knowledge at 25 March 2001 of the prospect of the event.
(vii) shareholder approval
Before the end of the Offer Period, a resolution to approve the performance by or
any of its subsidiaries of its obligation in connection with funding the Buy-Back for
the purpose of, and all procedures required under, section 76 of the Singapore
Companies Act (if it is required by law or any Government Agency or regulatory
authority) are passed and complied with.
(b) Nature of conditions
Each of the Defeating Conditions in each paragraph and each sub-paragraph of Section
9.12(a) is and must be construed as a separate, several and distinct condition. The
Defeating Condition in Section 9.12(a)(i) (the “FIRB Condition”) is a condition
precedent. The other Defeating Conditions are conditions subsequent, and so do not
prevent a contract resulting from acceptance of this Offer coming into effect, but any
breach or non-fulfilment of any of them entitles Australia, by notice to you, to rescind the
contract resulting from your acceptance of this Offer.
(c) The benefit of the Defeating Conditions
Subject to the Corporations Law, and until the end of the Offer Period, Australia alone
is entitled to the benefit of the Defeating Conditions or to rely on any
non-fulfilment of any of them.
(d) Offer declared free of conditions
(i) Subject to section 650F of the Corporations Law, Australia may declare the Offer
and each Contract free from all or any of the Defeating Conditions (other than the
Minimum Acceptance Condition and the FIRB Condition), generally or in relation
to any specific occurrence by giving notice in writing to Optus. Any such notice
must be given not less than seven days before the end of the Offer Period.
(ii) If, at the end of the Offer Period, the Defeating Conditions have not been fulfilled
and Australia has not declared the Offer and the Contracts (or they have not become)
free from those conditions, all Contracts will be automatically void.
(e) Statutory notice
The date for giving the notice on the status of the Defeating Conditions is 25 June 2001
(subject to extension in accordance with the Corporations Law if the Offer Period is
extended).
9.13 OFFEREES
(a) Registered holders
Australia is making an offer in the form of this Offer to:
(i) holders of Optus Shares on Optus’ register of members on the Register Date;
(ii) holders of Optus Shares issued during the period from the Register Date to the end
of the Offer Period, as a result of the conversion of, or exercise of rights attached to
Optus Options on Optus’ register of option holders on the Register Date; and
(iii) holders of Optus Shares issued under Employee Share Plans during the period
from the Register Date to the end of the Offer Period, in accordance with an
announcement made by Optus before 25 March 2001 or under the Q1 2001 Plan
or the Q2 2001 Plan where Australia has given its consent to the issue before the
Instrument Date.
An offer in the form of this Offer is being sent to holders of Optus Shares and Optus
Options on the Register Date and to participants in the Optus employee share plans
who will be issued with Optus Shares after the Register Date and before the end of the
Offer Period in accordance with an announcement made by Optus before 25 March
2001 or with the prior consent of Australia.
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142
SECTION 10
SUMMARY OF BOND TERMS
AND CONDITIONS
143
SUMMARY OF SINGTEL BOND TERMS AND CONDITIONS
10.1 SUMMARY
The following is a general summary of the terms of the Bonds. This summary is derived
from and should be read in conjunction with, the full text of the terms and
conditions of the Bonds (set out in Annexure 3), the Trust Deed (as defined in the “Terms
and Conditions of the Bonds”) and the Agency Agreement relating to the Bonds. The
terms and conditions set out in Annexure 3, the Trust Deed and the Agency Agreement
prevail to the extent of any inconsistency with the terms set out in this Section 10.
Issuer Singapore Telecommunications Limited.
Description Up to US$494 million Bonds due 2006 (the “Tranche A
Bonds”) and up to US$494 million Bonds due 2008 (the
“Tranche B Bonds”, and together with the Tranche A Bonds,
the “ Bonds”).
Issue Size The aggregate nominal amount of Bonds to be issued will be
determined by acceptance levels under the Share, Cash and
Bond Alternative of the Offer subject to a maximum issue size of
US$988 million, which is the equivalent of A$2.0 billion at a
fixed exchange rate of A$1.00 = US$0.4940.
Further Issues Subject to a maximum issue size of US$988 million,
may, from time to time, without the consent of Bondholders
(as defined in the “Terms and Conditions of the Bonds”),
create and issue additional Bonds having the same terms
and conditions as previous series of Bonds in all respects (save
for the date of issue) so that such additional Bonds shall be
consolidated and form a single series with the Bonds.
Bond Issue Price The Bonds will be issued at 100% of the principal
amount of the Bonds, subject to any rounding adjustment
made to the Interest Rate as determined below.
Interest Rate Tranche A Bonds: The Tranche A Bonds will bear interest at the
rate per annum (expressed as a percentage) equal to the sum
of (i) 80 basis points and (ii) the Reference Rate, as determined
by Morgan Stanley Dean Witter Asia (Singapore) Pte two
business days prior to the First Issue Date (as defined below).
Tranche B Bonds: The Tranche B Bonds will bear interest at the
rate per annum (expressed as a percentage) equal to the sum
of (i) 90 basis points and (ii) the Reference Rate, as determined
by Morgan Stanley Dean Witter Asia (Singapore) Pte two
business days prior to the First Issue Date.
Reference Rate Tranche A Bonds: The five year US$ swap mid-rate as
determined by Morgan Stanley Dean Witter Asia (Singapore)
Pte by reference to page 19901 of the Dow Jones Telerate
Service, at 3.00 pm (London time), two business days prior to
the First Issue Date.
Tranche B Bonds: The seven year US$ swap mid-rate as
determined by Morgan Stanley Dean Witter Asia (Singapore)
Pte by reference to page 19901 of the Dow Jones Telerate
Service, at 3.00 pm (London time), two business days prior to
the First Issue Date.
“business day” means a day on which commercial banks in
New York City and London are open or not authorised to close.
Interest Payment Dates Interest will be payable semi-annually in arrear, commencing
six months after the First Issue Date.
144
SUMMARY OF SINGTEL BOND TERMS AND CONDITIONS
Issue Date The first series of Bonds will be issued on the First Settlement
Date (as defined in Section 9.11(a)(i)) (the “First Issue Date”)
being seven days after the Unconditional Date (as defined in
Section 12.1). Further series of Bonds, if any, may be issued
with the same terms and conditions as the original issue of
Bonds at any time after the First Issue Date, with accrued
interest from the First Issue Date.
Arranger and Morgan Stanley Dean Witter Asia (Singapore) Pte
Lead Manager
Trustee Citicorp Trustee Company Limited
Principal Paying Agent Citibank, N.A., London Branch
Status of the Bonds The Bonds will constitute direct, unconditional and
unsecured obligations of and will rank pari passu and rateably
without any preference or priority among themselves, and pari
passu with all other present and future unsecured obligations
(other than subordinated obligations and priorities created by
law) of .
Negative Pledge So long as any of the Bonds remains outstanding (as
defined in the Trust Deed), shall not create or permit to subsist
any mortgage, charge, pledge, lien or other form of encumbrance
or security interest upon the whole or any part of the
undertaking, assets, property or revenues present or future of
to secure any Relevant Debt, or any guarantee or indemnity in
respect of any Relevant Debt; unless, at the same time or prior
thereto, ’s obligations under the Bonds and the Trust Deed:
(i) are secured equally and rateably therewith; or
(ii) have the benefit of such other security, guarantee,
indemnity or other arrangement as shall be approved by an
Extraordinary Resolution (as defined in the Trust Deed) of
the Bondholders.
“Relevant Debt” means any present or future indebtedness of
in the form of, or represented by, bonds, notes, debentures,
loan stock or other similar securities that are for the time
being, or are capable of being, quoted, listed or ordinarily dealt
in on any stock exchange, over-the-counter or other securities
market, having an original maturity of more than 365 days
from its date of issue and denominated, payable or optionally
payable in a currency other than S$.
Redemption Unless previously redeemed, or purchased and cancelled, the
Tranche A Bonds will be redeemed at their principal amount on
the fifth anniversary of the First Issue Date in 2006 and the
Tranche B Bonds will be redeemed at their principal amount on
the seventh anniversary of the First Issue Date in 2008. The
Bonds may not be redeemed, in whole or in part, prior to that
date other than for taxation reasons.
Optional Tax may redeem all (but not some only) of the
Redemption Bonds at their principal amount (together with interest accrued
to the date fixed for redemption), if:
(i) has or will become obliged to pay additional amounts as a
result of any change in, or amendment to, the laws (or any
regulations, rulings or other administrative pronouncements
promulgated thereunder) of Singapore or any political
subdivision or any authority thereof or therein
145
SUMMARY OF SINGTEL BOND TERMS AND CONDITIONS
146
SUMMARY OF SINGTEL BOND TERMS AND CONDITIONS
147
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148
SECTION 11
OTHER INFORMATION
149
OTHER INFORMATION
The information in this Section 11.2 is given to the knowledge of Australia based on
publicly available information concerning Optus.
There are at the date of this Bidder’s Statement:
• 3,786,766,521 Optus Shares; and
• 9,652,417 Optus Options, each of which, if exercisable and exercised, would result
in the issue of one Optus Share.
The maximum amount that Australia could be required to pay in cash for Optus Shares
if every holder of Optus Shares accepted the Offer in respect of the Optus Shares
referred to above, chose the Share and Cash Alternative (except CWAP which, for the
purposes of this calculation is assumed to choose the Share, Cash and Bond Alternative)
and elected to receive the cash in A$ is A$8,024,879,100.
In addition:
(i) if every holder of Optus Options referred to above exercised their options and
accepted the Offer in respect of those Optus Shares and chose the Share and Cash
Alternative and elected to receive the cash in A$; and
(ii) if all additional Optus Shares which may be issued during the period from the
Register Date to the end of the Offer Period under the Employee Share Plans are
issued (being 7,187,736 additional Optus Shares) and the holders of these Optus
Shares accepted the Offer in respect of those Optus Shares and chose the Share and
Cash Alternative,
an additional A$37,890,344 would be payable in cash by Australia in respect of the
Offer.
The maximum total amount payable by Australia in cash under the Offer based on
the assumptions set out above, would therefore be A$8,062,769,444. Based on
information provided by Optus, there are no Optus Shares or Optus Options which may
be issued or exercised during the Offer Period, other than as set out above.
Note that the amounts referred to above do not take into account that Optus
Shareholders may choose to receive the cash component in A$ or US$ under the Offer
Consideration alternatives under the terms of the Offer, and potential exchange rate
fluctuations until the close of the Offer.
150
OTHER INFORMATION
Australia will fund the cash consideration component payable for Acceptance Shares
using cash provided by . There are no conditions precedent to Australia drawing down
these funds from . will source these funds:
(i) firstly, from internal cash resources; and
(ii) secondly, under a bridge finance facility, being a non-revolving acquisition loan
facility of up to A$3 billion, with usual terms and conditions and conditions
precedent for drawdown. proposes that in due course the bridge finance facility
will be replaced by some form of debt issue in the capital market or by long term bank
debt. As at the date of this Bidder’s Statement, has not drawn down any amount
under the bridge finance facility. The following is a general summary (which does not
purport to be comprehensive or exhaustive) of the terms of the bridge finance
facility.
Borrower Singapore Telecommunications Limited.
Facility Amount Up to A$3,000,000,000.
Type of Facility A Non-Revolving Acquisition Loan Facility (“Facility”).
Purpose To partially finance the Borrower’s acquisition of Optus as
contemplated by the Offer.
Mandated Lead Citicorp Investment Bank (Singapore) Limited (“Citicorp”)
Arranger/ and/or Citibank, N.A. (“Citibank”) or any of its affiliates.
Coordinator/
Book-runner
Underwriters Citibank and/or any of its affiliates.
Lenders Citibank, and other financial institutions acceptable to the
Lead-Arranger to fund out of their respective branches in
Singapore.
Closing Date 11 May 2001.
Availability Period The Facility is available to be drawn at any time after the
satisfaction of all Conditions Precedent to the earlier of:
(a) 120 days after the Closing Date or such other date as
agreed with the group of banks to whom more than 50%
of the loan is owed or whose aggregate commitment to
the Facility is more than 50% of the Facility Amount; and
(b) the withdrawal of the Offer.
Any undrawn amount will be cancelled without premium
or penalty.
Interest Rates Interest is calculated by reference to a commercial margin over
the average bid rate for bank accepted bills of exchange as
published on the Reuters page “BBSY”.
Conditions Precedent Customary for financings of this nature, including but not
to First Advance limited to:
(a) board resolutions;
(b) legal opinions from counsel reasonably acceptable to the
Agent; and
(c) delivery of a certified copy of the announcement of the
Offer having become unconditional in all respects.
151
OTHER INFORMATION
Conditions Precedent (a) Certain representations and warranties are true and
to all Advances correct in all material respects on and as of the date of
the borrowing, as though made on and as of such date.
(b) No Event of Default or event, which with the giving of
notice or passage of time or both, would be an Event of
Default, has occurred and is continuing, or would result
from such borrowing.
Events of Default Customary for financings of this nature, including but not
limited to the following:
(a) failure to pay principal, interest or any other amount
payable under the legal documentation when due (with
cure periods where appropriate for technical default);
(b) representations or warranties materially incorrect when
made or deemed made (with cure periods for appropriate
incorrect representations or warranties which are capable
of cure);
(c) failure to comply with covenants (with cure periods where
appropriate which are capable of cure);
(d) reorganisation, liquidation, voluntary or involuntary
bankruptcy or insolvency proceedings;
(e) material unsatisfied judgment or order;
(f) cross default to other material debt of or Optus; and
(g) change resulting in a Material Adverse Effect (to be defined
in legal documentation).
Agent Citicorp Investment Bank (Singapore) Limited.
Governing Law English law.
C&W plc and Optus entered into the Separation Deed on 25 March 2001 to govern the
relationship between them on and from the date the C&W Group ceases to hold any
shares in Optus (the “Separation Date”).
(i) Agreements to continue after the Separation Date
The Separation Deed provides that all agreements between members of the Optus
Group and members of the C&W Group (other than the agreements referred to in
paragraph (ii) below) will continue to be in force after the Separation Date (the
“Continuing Agreements”). The Continuing Agreements include:
• Agreement for Australian Backhaul Capacity dated 15 November 2000 between
Optus Networks Pty Limited and Cable & Wireless Global Business Services Pty
Limited;
• Global Services Agreement and Side Letter dated 17 July 2000 between Optus
Networks Pty Limited and Cable & Wireless Global Business Services Pty Limited;
• Bilateral Interconnection Agreement for International Internet Gateway Service
dated 24 March 2000 between Optus Networks Pty Limited and Cable &
Wireless IDC INC;
• Construction and Maintenance Agreement – Asia Pacific Cable Network 2 dated
18 April 2000 between Optus Networks Pty Limited and Cable & Wireless Global
Network Limited and others;
152
OTHER INFORMATION
Unless Optus and C&W plc determine otherwise, the following agreements entered
into between Optus and C&W plc are to be terminated on and from the Separation
Date:
• General Services Agreement dated 28 September 1998 which relates to the
establishment of the framework for the provision of services by C&W plc and its
associated companies to Optus; and
• Secondment Agreement dated 28 September 1998 which relates to the
provision for the secondment of employees from C&W plc or its associated
companies to Optus or its associated companies.
153
OTHER INFORMATION
Optus has the right to use certain C&W plc names and trade marks (whether
registered or unregistered), names and logos and any trade marks, names and
logos licensed to Optus and its subsidiaries by a member of the C&W Group.
The use of these trade marks, names or logos will be terminated six months after
the Separation Date, unless Optus has a continuing right to use a trade mark
under a continuing agreement, or otherwise agreed between Optus or and C&W
plc.
• Domain names
Optus may use any Internet domain names including a C&W plc name or the
trade marks specified under the Separation Deed for a maximum period of six
months after the Separation Date. After that date, Optus must either transfer or
cancel the registration of the domain names specified.
• Change of name
Within six months after the Separation Date, Optus must change the name of
any Optus subsidiary whose name includes the words “Cable & Wireless” to a
name not including those words.
Within six months after the Separation Date, Optus must either remove, cancel
or transfer to C&W plc certain trade marks and business names registered in the
name of Optus’ subsidiaries.
Optus must not represent itself as being associated with the C&W Group after
the Separation Date, except as permitted by the Separation Deed.
• Information sharing systems
Optus and C&W plc must terminate computer information sharing systems
within three months after the Separation Date.
(iv) Employees
All secondments of either C&W plc or Optus’ employees will be terminated on the
Separation Date.
or Optus may offer employment to secondees of C&W plc on terms and
conditions determined by or Optus which are no less favourable to those
previously offered by C&W plc or which are acceptable to the employees.
Similarly, C&W plc may offer employment to secondees of Optus on terms and
conditions determined by C&W plc which are no less favourable to those previously
offered by Optus or which are acceptable to the employees.
(b) Implementation Agreement
Extracts from the Implementation Agreement between and Optus are set out in Annexure
2. The key terms of the Implementation Agreement are summarised below.
(i) Details and implementation of the Offer
The Implementation Agreement sets out the key terms of the Offer and contains
detailed provisions relating to its implementation, particularly the implementation of
the Buy-Back and the arrangements applicable to the issue and redemption of the
Unsecured Notes.
(ii) Placement
Australia may subscribe for shares in Optus on a one for one basis to replace the
Optus Shares bought back, and must do so if required by Optus (unless Australia is
proceeding with Compulsory Acquisition, or an insolvency event subsists in relation
to Optus).
154
OTHER INFORMATION
Each party must use all reasonable endeavours in good faith to provide such information
about itself to the other party as the other party reasonably requests to enable the other
party to prepare, complete, print and despatch documentation required of it before the
end of eight weeks after the date of the Implementation Agreement.
(iv) Co-operation in relation to due diligence
Each party must give the other access to, and the right to participate in, any due
diligence procedures or materials commissioned by the party to allow the other
party to verify that statements made by the other party regarding the first party in
any of the documents referred to in paragraph (iii) above are true and not
misleading.
(v) Co-operation in seeking regulatory approvals
Each party must co-operate with and provide assistance in good faith to the other
party in relation to obtaining all regulatory approvals required to implement the
Offer and associated transactions.
(vi) Conduct of Optus business
Optus must ensure that, from the date of the announcement of the Offer until the
end of the Offer Period, the Optus Group taken as a whole will conduct its business
in the ordinary course. Optus must co-operate and provide reasonable assistance in
good faith in obtaining consents or waivers under material contracts of Optus which
may be impacted by the transaction.
(vii) Cessation of negotiations and non-solicitation
During the six-month period after the date of the Implementation Agreement,
Optus must ensure that it and its directors, employees and officers:
• discontinue any negotiations or discussions; and
• do not, except with the prior written consent of , directly or indirectly solicit or
initiate any negotiations or discussions with respect to any potential expression of
interest, offer or proposal to acquire all or a substantial part of the business of
Optus or its share capital.
Optus may consider and respond to any new proposal if required by the fiduciary
duties of its directors or otherwise by law.
(viii) Provision of information
During the six-month period after the date of the Implementation Agreement, other
than in the ordinary course of business, Optus must not disclose any non-public
information concerning its business or affairs to any person who Optus knows or
should know (if it made reasonable enquiry) is a significant competitor of Optus or a
person who may make an offer or proposal to acquire all or a substantial part of the
business of Optus or its share capital.
Optus may disclose information if required by the fiduciary duties of its directors, by
law or if required in the ordinary course of the ordinary business of the Optus Group.
155
OTHER INFORMATION
For the year ended 31 March 2001, the aggregate compensation paid or accrued by to
or for the directors for services in all capacities was S$1,493,440. This compensation
was primarily in the form of fees for non-executive directors, and salaries and bonuses
for executive directors. Bonuses paid to executive directors are supervised by the
Compensation Committee.
The following table sets out the amounts paid to Directors with respect to the years
ended 31 March 2001 and 31 March 2000.
YE AR E NDE D YEA R END ED
31 M ARCH 2 001 31 MARCH 2000
S$ S$
Non-executive directors’ fees 413,750(1) 109,009
Executive directors’ salaries and benefits 614,690 567,955
Executive directors’ annual bonuses 465,000 312,950
Compensation for loss of office – –
(1) Subject to approval by Shareholders at the annual general meeting expected to be held in August
2001.
The following table sets out the remuneration during the year ended 31 March 2001 of
all of the directors in office as at that date.
TOTAL Y/E TOTAL Y/E 31
MARCH 31 MARCH
SALARY/FEES (1) BONUS BENEFITS 2001 (1) 2000
DIRECTOR S$ S$ S$ S$ S$
Mr Koh Boon Hwee 70,000 – – 70,000 20,000
Mr Lee Hsien Yang 612,710(2) 465,000 1,980 1,079,690 880,905
Mr Paul Chan
Kwai Wah 40,000 – – 40,000 3,671(3)
Dr Yogen K Dalal 14,583(3) – – 14,583 –
MG Lim Chuan Poh 37,500 – – 37,500 10,000
Mr Quek Poh Huat 45,000 – – 45,000 10,000
Mr Seah Kian Peng 40,000 – – 40,000 3,671(3)
Mr Jaspal Singh 40,000 – – 40,000 10,000
Mr Jackson Peter Tai 16,667(3) – – 16,667 –
Mr Keith Tay Ah Kee 55,000 – – 55,000 15,000
Total 971,460 465,000 1,980 1,438,440 953,247
(1) Non-executive directors’ fees are subject to approval by Shareholders at the annual general meeting
expected to be held in August 2001, other than the salary and bonus of the President and CEO, Mr Lee Hsien
Yang. Under a resolution of ’s Shareholders passed at its annual general meeting on 25 September 2000, the
maximum aggregate amount payable to ’s non-executive directors (as a group in relation
to their directorship in only, excluding any directorship in any subsidiary) is S$109,009. All directors
are non-executive directors, other than Mr Lee.
(2) Mr Lee’s salary is inclusive of monthly fixed allowances and employer’s CPF contributions.
(3) Fees are pro-rated for part year service only.
The following table sets out amounts paid to directors who resigned during the year
ended 31 March 2001.
TOTAL Y/E TOTAL Y/E 31
MARCH 31 MARCH
SALARY/FEES (1)
BO NUS BE NE FIT S 200 1 (1) 2000
DIRECTOR S$ S$ S$ S$ S$
Mr Wong Hung Khim 27,500 – – 27,500 15,000
Mr Lim Ho Kee 27,500 – – 27,500 15,000
Total 55,000 55,000 30,000
(1) Subject to approval by Shareholders at the annual general meeting expected to be held in August 2001.
Fees are pro-rated for part year service only.
156
OTHER INFORMATION
The following table sets out information as at 31 March 2001 with respect to the
interests (as defined in the Singapore Companies Act) in Shares held by directors (as
recorded in ’s Register of Directors’ Shareholdings as at that date) and executive
officers.
S HARE S S HA R ES D IRE CT
DE E ME D S UBJE CT TO O PT IO NS
DIRECTOR INTEREST INTEREST (DIRECT INTEREST)
Mr Koh Boon Hwee 31,820 1,690 –
Mr Lee Hsien Yang 2,333 1,690 2,120,000
Mr Paul Chan Kwai Wah 1,820 1,690 –
Dr Yogen K Dalal – – –
M G Lim Chuan Poh 1,490 – –
Mr Quek Poh Huat 1,820 1,690 –
Mr Seah Kian Peng 1,020 1,490 –
Mr Jaspal Singh 1,700 – –
Mr Jackson Peter Tai 30,000 – –
Mr Keith Tay Ah Kee 31,700 – –
Executive officers
Mr Chow Wing Keung 1,490 1,490 534,000
Ms Chua Sock Koong 4,190 1,820 1,031,500
Mr William Hope – – 555,000
Mr Lee Shin Koi 76,690 6,690 1,019,000
Mr Lim Chuan Poh 1,730 – 854,000
Mr Lim Shyong 54,700 1,490 648,000
Mr Lim Toon 64,640 1,690 1,426,000
Mr Sin Hang Boon 25,190 1,690 685,500
Mr William Tan Soo Hock 39,810 – 620,000
Total 372,143 23,120 9,493,000
(c) Corporate governance
currently applies the principles set out in the Best Practices Guide issued by the SGX-ST.
The Best Practices Guide provides guidance on the principles and best practices in
corporate governance and dealings by listed issuers and their directors and employees
in the securities of SGX-ST listed companies.
has established a formal system for financial monitoring and control. The system deals
with delegation of authorities and the provision of business and financial reports to
senior management and the Board.
The Board has established five principal committees, each of which is empowered to
make decisions on matters within its terms of reference and applicable limits of authority.
The Executive Committee comprises the Chairman of the Board and four non-
executive directors. The Executive Committee considers and approves major
investment projects of certain values, determines investment policies and manages the
group’s assets and liabilities in line with the Board’s policies and directives.
It reviews and approves, before Board approval, annual operating and capital
expenditure budgets.
The Audit Committee comprises four non-executive directors, the majority of whom
are independent directors. The Audit Committee meets regularly to receive and review
reports from the internal audit department, the external auditors and management.
It has full access to and the co-operation of the management and the external auditors.
The internal audit department reports functionally to the Audit Committee. The
department assists management in achieving and maintaining sound managerial
controls over the assets of . It also works closely with operations in enhancing business
and work processes and reviews processes and systems.
The Nominations Committee comprises the Chairman of the Board and a non-
executive director. The Nominations Committee reviews and assesses candidates
for appointment as a director (including executive directors) before recommendation to
the Board for appointment. It ensures that the Board has an appropriate balance of
independent directors as well as directors with the right profile of expertise, skills,
attributes and ability.
157
OTHER INFORMATION
The Compensation Committee comprises the Chairman of the Board and two
non-executive directors. This Committee sets and reviews policies concerning the
compensation and promotion of top management officers of as well as personnel
policies and human resource matters. The Compensation Committee also
administers the Singapore Telecom Executives’ Share Option Scheme and the Singapore
Telecom Share Option Scheme 1999.
The Management Committee comprises the President and Chief Executive Officer, the
Chief Operating Officer, the Chief Financial Officer, the Executive Vice-Presidents and
certain Vice-Presidents. The Management Committee directs management and
operational policies and activities.
158
OTHER INFORMATION
11.7 LITIGATION OF
Save as disclosed in this Bidder’s Statement neither nor any of its subsidiaries is, or has been,
involved in any legal or arbitration proceedings (including any such proceedings which are
pending or threatened, of which is aware) which may have, or have had, in the 12 months
preceding the day immediately prior to the date of this Bidder’s Statement, a material
adverse effect on the financial position or business of taken as a whole.
(a) Compensation payments from the IDA
The IDA has made two payments to to compensate for the modifications to its original
licence for the accelerated liberalisation of the telecommunications market. The IDA
paid S$1.5 billion in 1997 and S$859 million in 2000.
accounts for these payments as deferred income in the balance sheet, and recognises
them on a straight line basis over seven years from 1 April 2000, reflecting the period
by which ’s original monopoly licence period was shortened.
The Inland Revenue Authority of Singapore has informed and the IDA that the
compensation payments are not subject to income tax. The IDA has claimed that the
first compensation payment was calculated on the basis that it would be taxable and
that the assumed tax component was S$388 million. The IDA has asked to repay the
amount of that assumed tax component. has sought appropriate legal advice on the
merits of the claim and disputes the IDA’s claim. Pending resolution of the dispute, has
not made any provision in its financial statements regarding the IDA’s claim. The dispute
does not affect the second payment of S$859 million.
(b) ThreeSixty pacific (Barbados) Inc.
C2C is currently in dispute with ThreeSixty pacific (Barbados) Inc. (“360 Pacific”), a
subsidiary of 360 networks Inc. in relation to various issues relating to C2C’s agreement
to supply fibre optic capacity on the C2C cable network to 360 Pacific for a purchase
price of US$800 million. 360 Pacific has paid US$140 million to C2C but has failed to
pay instalment payments that are past due amounting to US$100 million. The parties
are in dispute about whether the instalments are due and payable and whether C2C
has performed certain obligations concerning provision of information and timely
delivery of the C2C cable network. If the matter cannot be resolved amicably, the
parties may refer the dispute to arbitration.
159
OTHER INFORMATION
As at the date of this Bidder’s Statement, the following regulatory and other approvals
have been obtained in respect of the Offer:
(i) IDA
The IDA has confirmed that it has no objections to the manner in which has
structured its purchase payment for the acquisition of Optus and the corresponding
change in the shareholders of resulting from acceptance of the Offer.
(ii) SGX-ST
The SGX-ST has granted in principle approval for the listing and quotation of new
Shares issued pursuant to acceptance of the Offer. Such approval should not be
taken as an indication of the merits of acceptance of the Offer, nor of the merits of
the Shares or the Optus Shares.
(b) Approvals required
The Offer is subject to various Australian and Singapore regulatory and other approvals
which as at the date of this Bidder’s Statement have yet to be obtained.
(i) Foreign Investment Review Board
The Foreign Acquisitions and Takeovers Act 1975 regulates (among other matters) the
acquisition of shares in certain Australian corporations where the acquisition results
in a change in the identity of the foreign controllers of the corporation.
The Offer is subject to approval or non-objection by the Australian Treasurer under
Part II of the Foreign Acquisitions and Takeovers Act 1975 regarding the acquisition of
those shares by Australia (see Section 9.12(a)(i)).
lodged an application with the Foreign Investment Review Board (“FIRB”) on 15
May 2001. In connection with that application, has discussed its proposed
acquisition of Optus in meetings with the Commonwealth Department of Defence
and other interested Commonwealth Government departments and agencies. has
also held discussions with relevant US Government agencies about issues relating
to Optus’ satellites. These discussions have progressed well, and does not believe
that there are any issues that cannot be resolved. However, no assurance can be
given as to the outcome of the application to FIRB.
(ii) Financial Sector (Shareholdings) Act 1998
The Financial Sector (Shareholdings) Act 1998 regulates ownership and acquisitions of
prudentially regulated institutions in Australia.
160
OTHER INFORMATION
The Offer is subject to the Australian Treasurer or his representative issuing any
approval required under the Financial Sector (Shareholdings) Act 1998 before the end
of the Offer Period.
(iii) Insurance Acquisitions and Takeovers Act 1991
The Insurance Acquisitions and Takeovers Act 1991 regulates ownership and control of
Australian-registered insurance companies.
The Offer is subject to the relevant Minister or his representative issuing any approval
required under the Insurance Acquisitions and Takeovers Act 1991 before the end of the
Offer Period.
(iv) ASX
The Offer is subject to the ASX approving the listing and quotation of the new
Shares issued pursuant to acceptance of the Offer. will apply for listing on the ASX
and for quotation on the ASX’s stock market of Shares (other than those now held
by Temasek, for so long as those Shares are held by Temasek).
(v) Shareholder approval
The Offer is subject to, before the end of the Offer Period, a resolution to approve
performance by or any of its subsidiaries of its obligations in connection with funding
the Buy-Back for the purpose of, and all procedures required under, section 76 of
the Singapore Companies Act (if it is required by law or by any Government Agency
or regulatory authority) being passed and complied with.
If the special resolution approving the financial assistance proposed to be given by
to Optus in connection with the Buy-Back Alternative is passed by Shareholders at
the EGM on 29 May 2001, will be required by the Singapore Companies Act
to publish a notice setting out the terms of the resolution in a daily newspaper
circulating generally in Singapore within 21 days after the date of the EGM.
intends to publish the required notice on 30 May 2001 or shortly thereafter if
the special resolution is passed. The Singapore Companies Act provides that certain
specified persons (including Shareholders and ’s creditors) may apply to the
Singapore courts to oppose the giving of such financial assistance within 21 days
after publication of the notice. Accordingly, the procedure for the approval of the
financial assistance will be completed after the expiry of that 21 day period if no
court application is made to oppose the giving of financial assistance.
161
OTHER INFORMATION
(e) to provide that an acquisition by Australia of a relevant interest in Optus Shares arising
from acceptance of the Offer and election of the Buy-Back Alternative and the issue of
Optus Shares to Australia equal to the maximum number of Optus Shares bought back
by Optus (i.e. the Placement) are within the exemptions to the prohibition against
acquisition of certain relevant interests in voting shares of Optus;
(f) to amend the definition of “associate” in section 9 of the Corporations Law for the
purposes of its application in Chapter 6, 6A and 6C;
(g) to resolve certain ambiguities in the application of the Corporations Law resulting from
anomalies created by the Corporate Law Economic Reform Program Act 1999;
(h) to allow notices of variation of the Offer required under section 650D(3) to be signed
by an agent of Australia;
(i) to allow technical information relating to the Offer required by section 636(1)(g) of the
Corporations Law to be lodged with ASIC and incorporated by reference in the Bidder’s
Statement;
(j) to allow Australia to extend the Offer to Optus Shares issued during the period from the
Register Date to the end of the Offer Period under the Employee Share Plans, where the
proposal for issue was announced by Optus before 25 March 2001 or the issue is made
under the Q1 2001 Plan or Q2 2001 Plan where Australia has given its consent to
the issue before the Instrument Date;
(k) to exempt Australia from the requirement in section 636(3) of the Corporations Law
that it obtain the consent of a person before a statement made by that person is
included in, or accompanies the Bidder’s Statement in respect of certain statements
contained in public documents or made by an official person;
(l) to exempt Australia from compliance with section 621(3) and 636(1)(h) of the
Corporations Law (which relate to certain acquisitions of Optus securities by Australia
and its associates in the four month period prior to the date of the Offer) in respect of any
purchase or agreement by (each a “Foreign Associate”):
• a related body corporate of Australia which is operated and managed outside
Australia, is an associate of Australia only because of paragraph (2) of the definition of
“associate” in section 9 of the Corporations Law and is not involved in the planning
or progress of the Offer (excluding and its subsidiaries); or
• a subsidiary of which is operated and managed outside Australia, is an associate of
Australia only because of paragraph (a) of the definition of “associate” in section 9 of
the Corporations Law and is not involved in the planning or progress of the Offer
(“Downstream Foreign Associates”),
by reason of a decision made and implemented by a Foreign Associate who acted
independently and without direction from or any subsidiary. The exemption does not
apply where the aggregate number of Optus Shares in which related bodies corporate
of Australia, during the four month period before the date of the Offer, had a relevant
interest (other than under the Pre-Bid Agreement) exceeding 5% of the issued Optus
Shares or in respect of any relevant purchase or agreement by a Downstream Foreign
Associate of which Australia had actual knowledge prior to lodgment of this Bidder’s
Statement;
(m) to exempt Australia from section 636(1)(k) and 636(1)(l) of the Corporations Law in
respect of any Optus securities in which Australia has a relevant interest because a
Foreign Associate has, or commences to have, a relevant interest by means of a decision
made and implemented by a Foreign Associate which acted independently and without
direction from or any subsidiary. The exemption does not apply where the aggregate
number of Optus Shares in which related bodies corporate of Australia, during the four
month period before the date of the Offer, had a relevant interest (other than under
the Pre-Bid Agreement) exceeding 5% of the issued Optus Shares or in respect of any
relevant interest of a Downstream Foreign Associate of which Australia had actual
knowledge prior to lodgment of this Bidder’s Statement;
(n) to disregard for the purposes of the requirements contained in Part 6C.1 of the
Corporations Law regarding substantial shareholding notices, relevant interests which
162
OTHER INFORMATION
related bodies corporate of , which are operated and managed outside Australia, are an
associate of only because of paragraph (a) of the definition of “associate” in Section 9
and are not involved in the planning or progress of the Offer, have in Optus
Shares; and
(o) to exclude from the prohibition contained in the Corporations Law on defeating
conditions the fulfilment of which are in the control of the Australia or its
associates the condition of the Offer relating to shareholder approval required under
section 76 of the Singapore Companies Act.
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OTHER INFORMATION
On 25 March 2001, entered into the Pre-Bid Agreement with C&W plc and CWAP
under which CWAP agreed that CWAP will (unless the agreement has been terminated)
accept the Offer in respect of 751,038,234 Optus Shares (representing 19.8% of the
issued Optus Shares) (the “CWAP Acceptance Shares”) held by CWAP. As the bidder
making the Offer, Australia has agreed to be bound by the obligations of under, and
otherwise to act in accordance with, the Pre-Bid Agreement.
Under the Pre-Bid Agreement, Australia may require CWAP to make payments to it
in relation to the CWAP Acceptance Shares as follows:
(i) If all the specified conditions are fulfilled (being essentially regulatory approvals) and
certain other matters are satisfied, and if CWAP does not accept the Offer in respect
of all the CWAP Acceptance Shares and other Optus Shares held by CWAP other
than the CWAP Acceptance Shares (“Free Shares”), Australia may, within four
months after the specified conditions have been fulfilled, require CWAP to sell to
Australia the CWAP Acceptance Shares for consideration of A$3.95 per Share or pay
to Australia the sum of US$100 million or both.
(ii) In addition, CWAP must notify Australia in writing if it disposes of Free Shares to
any person other than pursuant to the Offer (“Competing Offer”) within two
business days of that disposal, if the disposal occurs within eight months after the
date of the Pre-Bid Agreement. Australia may, within five business days after delivery
of any such notice, require CWAP to do one or other or both of the things in
paragraphs (A) and (B) below.
(A) Unless Australia has already given a notice under paragraph (i) above requiring
CWAP to sell the CWAP Acceptance Shares to Australia, Australia may require
CWAP:
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OTHER INFORMATION
(I) to sell the CWAP Acceptance Shares to Australia for a consideration of A$3.95
per share in accordance with paragraph (i) above; or
(II) to sell the CWAP Acceptance Shares into the Competing Offer and pay to
Australia the difference (if positive) between:
• the price per Optus Share received by CWAP for the CWAP Acceptance
Shares from the offeror under the Competing Offer (or where such
consideration is not wholly comprised of cash, its A$ cash equivalent); and
• A$3.95,
multiplied by the number of CWAP Acceptance Shares as soon as practicable
upon receipt of the consideration in respect of the disposal of the CWAP
Acceptance Shares under the Competing Offer.
(B) Australia may require CWAP to pay to Australia the greater of:
(I) US$100 million; and
(II) 50% of the difference (if positive) between:
• the price per Optus Share received by CWAP for Free Shares disposed of
pursuant to the Competing Offer to the offeror under the Competing
Offer and where such consideration is not wholly comprised of A$ cash,
its A$ cash equivalent; and
• A$3.95,
multiplied by the number of Free Shares disposed of pursuant to the
Competing Offer to the offeror of the Competing Offer as soon as practicable
upon receipt of the consideration in respect of the disposal.
The Pre-Bid Agreement may be terminated in certain circumstances, including if does not
comply in a material respect with certain of its obligations under the Pre-Bid Agreement or
the Implementation Agreement.
(b) Other dealings
Neither Australia nor any associate of Australia has provided, or agreed to provide
consideration for an Optus Share in the four months before the date of this Bidder’s
Statement, except pursuant to the Pre-Bid Agreement.
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OTHER INFORMATION
11.20 MISCELLANEOUS
Copies of certain documents have been lodged by Australia with ASIC – Memorandum of
Articles of Association of (see Section 8.3), Separation Deed (see Section 11.3(a)),
Implementation Agreement (see Section 11.3(b)), Pre-Bid Agreement (see Section 11.5(a)),
Trust Deed relating to the Bonds (see Section 10), and Trust Deed relating to the Unsecured
Notes (see Annexure 2) and the modifications and exemptions obtained from ASIC (see
Section 11.11).
Australia will provide a copy of those documents free of charge upon request during the
Offer Period. The documents may be obtained at the registered office of in Singapo re and
also at Level 9, 55 Hunter Street, Sydney NSW 2000 Australia.
166
SECTION 12
DEFINITIONS AND INTERPRETATION
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D E F I NI TI O NS AND I NTE RP RE TATI O N
12.1 DEFINITIONS
The following definitions apply in this Bidder’s Statement and each Acceptance Form,
unless the context otherwise requires.
“Acceptance Form” means the acceptance form accompanying this Bidder’s Statement.
“Acceptance Shares” means those of your Optus Shares that are the subject of an
acceptance of the Offer.
“acquisition of Optus” means the acquisition by Australia of a majority
shareholding in Optus as a result of acceptances of the Offer.
“Agency Agreement” means the agency agreement relating to the Bonds entered into
between and the agents for the Bonds.
“Announcement Date” means 26 March 2001.
“Announcement Exchange Rate” means A$1 = US$0.4940.
“ASIC” means the Australian Securities & Investments Commission.
“Associated Company” refers to associated and joint venture companies of (as
disclosed under note 31 of the financial statements in Annexure 1).
“ASX” means Australian Stock Exchange Limited.
“ASX Listing Rules” means the Listing Rules of ASX.
“Australian GAAP” means accounting principles generally accepted in Australia.
“A$” means Australian dollars.
“A$ Equivalent” means the amount of A$ calculated on a Settlement Date by converting
(as the case may be):
(a) the US$ Cash Alternative;
(b) the US$ amount of the Bond Issue Price (calculated by applying the Announcement
Exchange Rate) of the Bond component of the Offer Consideration; or
(c) the Market Value of the Shares component of the Offer Consideration,
to A$ by applying the US$/A$ exchange rate expressed as the amount of A$ per US$1 as
set on Reuters HSRA page at 9.47am Sydney time on the day prior to the relevant
Settlement Date.
“Bef” means Belgian francs.
“Bidder” means Australia.
“Bond Issue Price” in respect of a Bond means the amount (expressed in A$ by applying
the Announcement Exchange Rate) of:
(a) where there is no rounding down of the interest rate on that Bond from the
Formula Rate in accordance with bond market convention, the face value of that
Bond; and
(b) where there is a rounding down of the interest rate on the Bond from the Formula
Rate in accordance with bond market convention (the “Rounded Rate”), the
principal amount on which interest at the Formula Rate for the term of that Bond will
equal interest on the face value of that Bond for the term of that Bond at the
Rounded Rate.
“Broker” means a person who is a share broker and a participant in CHESS.
“Buy-Back” means a selective off market buy-back of Optus Shares to be implemented in
compliance with Division 2 of Part 2J.1 of the Corporations Law.
“Buy-Back Agreement” means an agreement in the form set out in Schedule 4 to the
Implementation Agreement between Optus and each Optus Shareholder who accepts the
Offer and chooses the Buy-Back Alternative and which will be entered into and formed
upon acceptance by Optus of that shareholder’s Buy-Back Offer.
“Buy-Back Alternative” is defined in clause 3.7(a)(ii) of the Implementation Agreement.
“Buy-Back Consideration” is defined in clause 4.5(a) of the Implementation Agreement.
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D E F I NI TI O NS AND I NTE RP RE TATI O N
“Buy-Back Offer” means an offer made by an Optus Shareholder to Optus to sell all or any of
its Optus Shares to Optus on the terms of the Buy-Back Agreement which offer is constituted
by that shareholder’s acceptance of the Offer and election of the Buy-Back Alternative.
“Buy-Back Provisions” is defined in Section 9.7(a).
“CDI” means CHESS Depository Instruments.
“CDN” means CHESS Depository Nominees Pty Limited.
“CDP” means The Central Depository (Pte) Limited, a company which operates the
computerised central depository system for securities listed on the SGX-ST whereby:
(a) documents evidencing title in respect of the listed securities are deposited with the CDP
and are registered in the name of CDP or its nominee;
(b) accounts are maintained by CDP in the names of the depositors so as to reflect the title
of the depositors to the book-entry securities; and
(c) transfers of the book-entry securities are effected electronically by CDP making an
appropriate entry in the Depository Register of the book-entry securities that have been
transferred.
“CGT” means capital gains tax under Australian taxation laws.
“CHESS” means the ASX’s Clearing House Electronic Sub-Register System, the central
register for electronic transfer of share ownership.
“CHESS Holding” means a holding of Optus Shares on CHESS.
“Cheque” means a cheque drawn on Optus’ Account.
“Compulsory Acquisition” means compulsory acquisition of Optus Shares under Part 6A.1
of the Corporations Law as modified by ASIC.
“Controlling Participant” means the Broker or Non-Broker Participant who is designated
as the controlling participant for shares in a CHESS Holding in accordance with the SCH
Business Rules.
“Corporations Law” means the Corporations Law as it applies in New South Wales.
“CPF” means the Singapore Government-administered Central Provident Fund, which
provides social security and financial protection benefits mainly to employees in Singapore
businesses. Individual employee benefits are funded by regular contributions of a
prescribed percentage of the employee’s employment income.
“CWAP” means Cable & Wireless Australia & Pacific Holdings BV, a company incorporated
in the Netherlands.
“C&W Group” means C&W plc and its subsidiaries.
“C&W plc” means Cable and Wireless plc.
“Defeating Condition” is defined in Section 9.12(b).
“Depository Register” means a register maintained by CDP in respect of the book-entry
securities.
“Dividend Record Date” means a date in September 2001.
“EBITDA” means earnings before interest, tax, depreciation and amortisation, but after
attribution of compensation from the IDA and after share of results of associated and joint
venture companies.
“EGM” means the extraordinary general meeting of Shareholders to be held on 29 May
2001.
“Employee Share Plans” means:
(a) the Q1 2001 Plan;
(b) the Q2 2001 Plan;
(c) Cable & Wireless Optus Special Incentive Scheme;
(d) Cable & Wireless Optus Employee Share Offer 2001; and
(e) Cable & Wireless Optus Global Senior Management Performance Share Plan.
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D E F I NI TI O NS AND I NTE RP RE TATI O N
“EOP” means the Cable & Wireless Optus Executive Option Plan under which Optus has
granted Optus Options to plan participants at an exercise price of A$4.11.
“First Settlement Date” is defined in Section 9.11(a)(i).
“Foreign Shareholder” means an Optus Shareholder who is resident outside Australia and
its external territories.
“Formula Rate” of a Bond is the interest rate (expressed as a percent per annum)
determined in accordance with Schedule 7 to the Implementation Agreement.
“GDP” means Gross Domestic Product.
“Government Agency” means:
(a) a government or government department or other body;
(b) a governmental, semi-governmental or judicial person; or
(c) a person (whether autonomous or not) who is charged with the administration of a law.
“HK$” means Hong Kong dollars.
“IDA” means the Info-communications Development Authority of Singapore.
“Implementation Agreement” means the agreement between and Optus dated 25
March 2001 as amended, extracts from which are set out in Annexure 2.
“Instrument Date” means the date on which the instrument described in Section 11.11(j)
was granted by ASIC.
“Interim Maturity Date” is defined in clause 3.6 of the Implementation Agreement.
“Issuer Sponsored Holding” means a holding of Optus Shares on Optus’ issuer sponsored
sub-register.
“Listing Condition” means the condition referred to in Section 9.12(a)(v).
“Market Day” means a day on which the SGX-ST is open for trading of securities.
“Market Value” means the US$ market value of a Share on a Settlement Date calculated
by reference to the S$ closing price of Shares on the SGX-ST on the day prior to the relevant
Settlement Date and converting S$ to US$ by applying the S$/US$ exchange rate expressed
as the amount of S$ per US$ as set on Reuters page ABSIRFIX1 at
11.0 am Singapore time on the day prior to the relevant Settlement Date.
“Minimum Acceptance Condition” means Australia having at any time during or at the
end of the Offer Period received acceptances in respect of more than 50% (by number) o f
all Optus Shares.
“MSCI Singapore Index” means the Morgan Stanley Capital International Singapore (Free)
Index which consists primarily of stocks traded on the SGX-ST, and is the “free” version of
the Singapore country index. Morgan Stanley Capital International “free” indices reflect
actual investable opportunities by taking into account local market restrictions on share
ownership by foreigners.
“MSCI World Diversified Telecom Services Index” means the Morgan Stanley Capital
International World Diversified Telecom Services Index which captures diversified
telecommunications services companies in 23 developed markets within the
telecommunications services industry group.
“Non-Broker Participant” means a Non-Broker Participant under the SCH Business Rules.
“Offer” means the offer constituted by Section 9 of this Bidder’s Statement which is made
to each and every eligible Optus Shareholder (or, if the context so requires, Section 9 of
this Bidder’s Statement itself) and includes a reference to that offer as varied in accordance
with the Corporations Law).
“Offer Consideration” is defined in Section 9.2.
“Offer Period” means the period referred to in Section 9.9.
“Optus” means Cable & Wireless Optus Limited ACN 052 833 208 of 101 Miller Street,
North Sydney NSW 2060.
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D E F I NI TI O NS AND I NTE RP RE TATI O N
“Optus Financial Information” means the financial information of Optus prepared under
Australian GAAP based on the significant accounting policies disclosed in the Target’s
Statement, and used in preparation of the Pro-forma Consolidated Financial Information.
“Optus Group” means Optus and its subsidiaries.
“Optus Options” means options to subscribe for Optus Shares, issued by Optus on or
before the Register Date and, in relation to options issued under the EOP and SPP before
the Register Date in the circumstances described in Section 4.4(a), means options to accept
Shares in satisfaction and discharge of the exercise of any option rights.
“Optus Share” means a fully paid ordinary share in Optus.
“Optus Shareholder” means a holder of Optus Shares.
“Partial Redemption Amount” means, in respect of any Unsecured Note, any amount
paid on the Interim Maturity Date under clause 3.5A(a) of the Implementation Agreement
in respect of that Unsecured Note.
“Placement” means an issue of Optus Shares to Australia for each Optus Share
bought back under a Buy-Back Agreement, under the Implementation Agreement
(see Section 11.3(b)(i)).
“PP” means Philippines pesos.
“Pre-Bid Agreement” means the agreement entered into by , C&W plc and CWAP on 25
March 2001.
“Pro-forma Consolidated Financial Information” means the unaudited pro-forma
consolidated financial information provided in Section 4.6.
“Q1 2001 Plan” means Cable & Wireless Optus Employee Share Acquisition Plan 2001/Q1.
“Q2 2001 Plan” means Cable & Wireless Optus Employee Share Acquisition Plan 2001/Q2.
“Redemption Amount” means, in respect of an Unsecured Note:
(a) if no Partial Redemption Amount has been paid in respect of that Unsecured Note, the
Initial Redemption Amount; or
(b) otherwise, the difference between the Initial Redemption Amount and the Partial
Redemption Amount.
“Register Date” means 19 May 2001 which is the date set by Australia under section
633(2) of the Corporations Law.
“Restricted Foreign Shareholders” is described in Section 9.11(b).
“Rights” means all accretions and rights attaching to Optus Shares after the date of the
Offer (including, but not limited to, all rights to receive dividends and other distributions
declared or paid and to receive or subscribe for shares, notes or options issued by Optus).
“Rp” means Indonesian rupiah.
“SBA” means the Singapore Broadcasting Authority.
“SCH Business Rules” means the business rules of the Securities Clearing House, the body
which administers the CHESS system in Australia.
“Second Settlement Date” is defined in Section 9.11(a)(ii).
“Settlement Date” means the First Settlement Date or any of the Second Settlement Dates.
“SGX-ST” means the Singapore Exchange Securities Trading Limited.
“SGX-ST Listing Manual” means the listing manual of SGX-ST.
“Share Alternative” is defined in Section 9.2(a)(i).
“Share and Cash Alternative” is defined in Section 9.2(a)(ii).
“Share, Cash and Bond Alternative” is defined in Section 9.2(a)(iii).
“Singapore Companies Act” means the Companies Act of Singapore (Chapter 50).
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D E F I NI TI O NS AND I NTE RP RE TATI O N
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D E F I NI TI O NS AND I NTE RP RE TATI O N
“US$ Cash Alternative” means the amount of US$ calculated by converting the A$ cash
component of the Offer Consideration to US$ by applying the Announcement Exchange Rate.
“Virgin Group” means Virgin Management Limited and Virgin (Asia) Management Limited,
both members of the Virgin group of companies of the United Kingdom.
“Withholding Tax” means, in respect of a payment to an Optus Shareholder or its agent,
amounts required to be paid to the Australian Taxation Office pursuant to Part 2-5 of
Schedule 1 of the Taxation Administration Act 1953 and other amounts required to be
withheld from any payment in accordance with a provision of the Taxation Administration
Act 1953, the Income Tax Assessment Act 1997 or the Income Tax Assessment Act 1936.
“your Optus Shares” means Optus Shares:
(a) as to which you are registered on Optus’ register of members on the Register Date;
(b) issued to you during the period from the Register Date to the end of the Offer Period,
as a result of the conversion of, or exercise of rights attached to Optus Options on
Optus’ register of option holders on the Register Date;
(c) issued to you during the period between from the Register Date to the end of the Offer
Period, under Optus Employee Share Plans in accordance with an announcement made
by Optus before 25 March 2001 or under the Q1 2001 Plan or Q2 2001 Plan where
Australia has given its consent to the issue before the Instrument Date; or
(d) as to which you are able to give good title, in accordance with section 653B of the
Corporations Law, at the time you accept this Offer.
12.2 GLOSSARY
Terms referred to in this Bidder’s Statement and commonly used in the communications
industry are set out below.
“2G” means second generation mobile wireless technologies.
“3G” means third generation mobile wireless technologies.
“ADSL” means Asymmetric Digital Subscriber Line, a technology that allows combinations
of services including voice, data and one way full motion video to be delivered over
existing copper feeder distribution and subscriber lines.
“APCN” means the Asia Pacific Cable Network.
“APCN2” means the Asia Pacific Cable Network 2.
“ARPU” means average revenue per user.
“ATM” means Asynchronous Transfer Mode, a transfer mode in which the information
(voice, data and video signals) are organised into cells for transmission.
“backbone” means the part of a communications network that connects main nodes,
central offices, or LANs. The backbone usually has its own high-speed protocol, such as
switched token ring for LAN interconnections and SDH for central-office and main-node
interconnections.
“bandwidth” means the capacity of a communications link.
“CDMA” means Code Division Multiple Access.
“churn” means the transfer of a customer’s telecommunications service from one supplier
to another.
“Direct Exchange Lines” means telephone lines connected directly to a telephone switch.
“domestic backhaul” means the domestic transmission links connecting frontier stations
(submarine cable stations and satellite earthstations) to the domestic network or between
the frontier stations.
“DSL” means digital subscriber line.
“dual band” means the capability of mobile network infrastructure and handsets to
operate across two frequency bands.
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D E F I NI TI O NS AND I NTE RP RE TATI O N
“FBO” means a person licensed by the IDA as a facilities-based operator to deploy one or
more forms of communications network, system or facility to offer communications
switching, transmission capacity or communications services to other licensed
communications operators, corporates or consumers.
“fibre optic” means a cable made up of strands of extremely fine glass fibres through
which signals are transmitted as pulses of light.
“Gbps” means gigabits per second.
“GPRS” means General Packet Radio Service, a non-voice value-added service that allows
information to be sent and received across a mobile network.
“GSM900” means Global System for Mobile Communications 900, a mobile telephone
system based on digital transmission, using a bandwidth of 900Hz.
“GSM1800” means Global System for Mobile Communications 1800, a mobile telephone
system based on digital transmission, using a bandwidth of 1800Hz.
“HFC” means hybrid fibre coaxial cable, a system that has the potential to deliver voice,
video and data via fibre optic cable for long haul transmission and via coaxial cable for
short haul transmission.
“hub” means a collection centre located in an area where telecommunications traffic can
be aggregated at a central point for transport and distribution.
“IDD” means international direct dial.
“INMARSAT” means International Maritime Satellite Organisation.
“INTELSAT” means International Telecommunications Satellite Consortium.
An international cooperative of more than 135 member nations, it is the world’s largest
supplier of commercial satellite services with more than 20 satellites in orbit.
“Internet data centre” means a managed centre for customers to house their data
equipment. The data centre provider normally provides round the clock maintenance for
the housed equipment.
“IP” means Internet Protocol.
“ISDN” means Integrated Services Digital Networks, providing switched and dedicated
integrated access to voice, data and video.
“ISP” means Internet Service Provider, a company that provides access to the Internet for
corporate and residential customers by providing the interface to the Internet backbone.
“JPIX” means Japan Internet Exchange.
“Kbps” means kilobits per second.
“LAN” means local area network.
“LINX” means London Internet Exchange.
“Mbps” means megabits per second.
“MDF” means Main Distribution Frames.
“MVNO” means mobile virtual network operator.
“NMT 900” means Nordic Mobile Telephone System using the 900MHz band.
“PAIX” means Palo Alto Internet Exchange.
“SBO” means a person licensed by the IDA as a services-based operator to lease
communications network elements (such as transmission capacity, switching services, ducts
and fibre) from FBOs to provide communications services to third parties or to resell the
communications services by FBOs.
“SDH” means Synchronous Digital Hierarchy, a standard technology for synchronous data
transmission on optical media.
“SEA-ME-WE2” and “SEA-ME-WE3” are cable networks in which participates, and which
provide connectivity between landing points in South East Asia, the Middle East and Western
Europe.
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D E F I NI TI O NS AND I NTE RP RE TATI O N
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D E F I N I T I O N S AND I N TE R PR E T A TION
12.4 INTERPRETATION
The following interpretation rules apply in this Bidder’s Statement unless the contrary
intention appears.
(a) Words and phrases which are defined by the Corporations Law as modified by ASIC for
the purposes of the Offer have the same meaning in this document and the Acceptance
Form and, if a special meaning is given for the purposes of Chapter 6 or 6A or a
provision of Chapter 6 or 6A of the Corporations Law, have that special meaning.
(b) Headings are for convenience only and do not affect interpretation.
(c) The following rules also apply in interpreting this Bidder’s Statement and each
Acceptance Form, except where the context makes it clear that a rule is not intended to
apply.
(i) A singular word includes the plural, and vice versa.
(ii) A word which suggests one gender includes the other genders.
(iii) If a word is defined, another part of speech has a corresponding meaning.
(iv) References in this Bidder’s Statement to Sections are to Sections of this Bidder’s
Statement.
(v) References in this Bidder’s Statement to annexures are to annexures to this Bidder’s
Statement.
(vi) A reference to a person includes a reference to a corporation.
(vii) Annexures to this Bidder’s Statement form part of it.
176
ANNEXURE 1
CONSOLIDATED FINANCIAL STATEMENTS
179
CONSOLIDATED FINANCIAL STATEMENTS
The following audited consolidated financial statements together with the report of
PricewaterhouseCoopers thereon are included in this Appendix.
Report of Independent Auditors
Audited financial statements for the years ended, and as of, 31 March 2001,
31 March 2000 and 31 March 1999
Consolidated income statements
Consolidated balance sheets
Consolidated statements of changes in equity
Consolidated cash flow statements
178
REPORT OF INDEPENDENT AUDITORS
PricewaterhouseCoopers
Certified Public Accountants
Singapore
10 May 2001
179
AUDITED FINANCIALSTATEMENTS
180
AUDITED FINANCIALSTATEMENTS
Current assets
Cash and cash equivalents 16 4,095.4 4,330.8 4,905.1
Short term investments 17 2,533.3 1,578.8 1,475.5
Trade and other debtors 18 1,228.7 890.1 859.5
Inventories 19 105.0 96.3 110.0
7,962.4 6,896.0 7,350.1
Non-current assets
Property, plant and equipment (net) 20 5,475.8 4,435.6 4,549.1
Associated companies 21 1,637.2 1,292.1 492.0
Joint venture companies 22 231.0 58.1 28.6
Long term investments 23 782.2 1,167.9 457.9
Other non-current assets 24 64.0 67.1 58.8
8,190.2 7,020.8 5,586.4
Total assets 16,152.6 13,916.8 12,936.5
Current liabilities
Trade and other creditors 25 2,570.6 1,662.1 1,738.3
Borrowings (unsecured) 26 – 100.1 0.1
Current income tax 10 596.5 635.3 552.3
Proposed final dividend 27 640.0 633.1 620.7
3,807.1 3,030.6 2,911.4
Non-current liabilities
Borrowings (unsecured) 26 1,000.0 – 100.0
Deferred income tax 10 778.1 768.2 798.4
Deferred income 28 2,051.4 1,513.2 1,514.3
3,829.5 2,281.4 2,412.7
Total liabilities 7,636.6 5,312.0 5,324.1
Net assets 8,516.0 8,604.8 7,612.4
Share capital and reserves
Share capital 29 2,312.0 2,321.0 2,287.5
Reserves 5,753.7 6,248.7 5,285.6
Interests of shareholders of the Company 8,065.7 8,569.7 7,573.1
Minority interests 450.3 35.1 39.3
8,516.0 8,604.8 7,612.4
The accompanying notes on pages 185 to 221 form an integral part of these financial statements.
Auditors’ Report – Page 179
181
AUDITED FINANCIALSTATEMENTS
The accompanying notes on pages 185 to 221 form an integral part of these financial statements.
Auditors’ Report – Page 179
182
AUDITED FINANCIALSTATEMENTS
183
AUDITED FINANCIALSTATEMENTS
A C Q U IS I T I O N D IS P O S A L
S$ MIL L I ON S$ M IL L IO N
Fair values of identifiable net assets of the
subsidiary acquired/disposed
Non-current assets – (6.1)
Cash 4.4 (35.4)
Current assets 1.8 (9.8)
Current liabilities (0.7) 5.1
5.5 (46.2)
Less:
Minority interest (1.5) 10.4
Share of net assets retained in Group – 44.3
4.0 8.5
Goodwill 0.6 (8.5)
Total consideration – paid in cash 4.6 –
Less: Cash in subsidiary acquired/disposed (4.4) 35.4
Outflow of cash 0.2 35.4
The accompanying notes on pages 185 to 221 form an integral part of these financial statements.
Auditors’ Report – Page 179
184
AUDITED FINANCIALSTATEMENTS
185
AUDITED FINANCIALSTATEMENTS
(iv) Goodwill
Goodwill represents the excess of fair value of the consideration given over the
fair value of the identifiable net assets of subsidiary, associated and joint venture
companies when acquired. Goodwill is adjusted against shareholders’ equity.
Upon disposal of the subsidiary, associated and joint venture companies, the
corresponding goodwill is transferred to the income statement and recognised
as part of the gain or loss on disposal.
186
AUDITED FINANCIALSTATEMENTS
187
AUDITED FINANCIALSTATEMENTS
188
AUDITED FINANCIALSTATEMENTS
(k) Investments
Quoted and unquoted investments that are intended to be held for the long term
are stated in the financial statements at cost less provision. Provision is made in
recognition of a diminution in value of the investments which is other than
temporary, determined on an individual investment basis.
Quoted investments held as current assets are stated at the lower of cost and market
value on a portfolio basis. Cost is determined using the weighted average method.
Gain or loss on disposals of and provision for non-current investments, including
subsidiary, associated and joint venture companies, are taken to the income
statement as extraordinary items.
(l) Leases
189
AUDITED FINANCIALSTATEMENTS
(ii) Where a group company is the lessor – Indefeasible rights of use (IRUs)
The Group has entered into certain indefeasible rights of use (“IRU”) agreements.
An IRU is a right to use a specified amount of capacity for a specific time period
that cannot be revoked or voided. Such agreements are accounted for either as
lease or service transactions.
Those IRU agreements that provide the lessee with exclusive right to the
purchased capacity and limit the purchased capacity to a specified fibre, are
accounted for as lease transactions. Other IRUs are accounted for as service
contracts.
IRU agreements that transfer substantially all the risks and rewards of ownership
to the lessee, and provide for the transfer of ownership of the asset to the lessee
by the end of the lease term at a nominal price, are classified as sales-type
leases. All other IRU leases are classified as operating leases.
Revenue from sales-type leases is recognised in the period that the IRUs are
transferred and capacity is available for service. The costs attributable to
capacity sold under sales type lease contract is accordingly recognised as cost
of goods sold.
Revenue from operating leases or service contracts are recognised over the term
of the lease or the contracts. Costs of the network relating to operating leases or
service contracts are included as property, plant and equipment and depreciated
over the economic useful life of the network.
190
AUDITED FINANCIALSTATEMENTS
191
AUDITED FINANCIALSTATEMENTS
3 OPERATING REVENUE
Operating revenue comprised:
International telephone 1,203.1 1,644.7 1,843.7
Public data and private network 1,065.0 763.0 620.6
Mobile communications 885.5 851.3 880.0
National telephone 588.0 572.7 546.6
Information technology and engineering services 480.1 383.5 340.9
Postal services 341.0 322.6 307.9
Sale of equipment 166.7 149.9 138.2
Directory advertising 107.2 97.1 125.8
Others 88.9 81.0 79.8
4,925.5 4,865.8 4,883.5
4 OPERATING EXPENSES
Operating expenses comprised:
Traffic expenses 665.4 700.8 813.1
Staff costs 666.6 595.3 622.3
Depreciation of property, plant and equipment 624.1 782.8 521.7
Selling and administrative costs 591.5 525.8 556.7
Cost of goods sold 461.8 352.6 358.5
Repair and maintenance 83.9 87.5 66.6
Recoveries (56.4) (31.7) (28.5)
3,036.9 3,013.1 2,910.4
192
AUDITED FINANCIALSTATEMENTS
5 OPERATING PROFIT
Operating profit is arrived at after charging/(crediting):
Auditors’ remuneration:
– Auditors of the Company 0.8 0.6 0.5
– Other auditors 0.2 0.2 0.1
Non-audit fees paid to:
– Auditors of the Company 1.3 1.4 0.7
– Other auditors 0.1 0.1 0.1
Bad trade debts written off 0.7 4.2 0.2
Directors’ remuneration (Note 15)
– Paid by the Company 1.5 1.0 0.9
– Paid by subsidiary companies 0.1 0.1 0.1
Provision/(Writeback of provision) for doubtful debts
– third parties (trade) 40.1 57.6 87.2
– third parties (non-trade) 0.3 (0.6) 19.4
– associated and joint venture companies (0.3) 0.1 1.5
Provision/(Writeback of provision) for inventory obsolescence 0.8 (1.6) 10.5
Research and development expenses written off * 0.9 0.2
Inventories written off 0.9 2.2 6.3
Rental expenses (for operating leases) 34.4 27.6 20.8
* denotes amounts of less than S$50,000.
6 OTHER INCOME/(LOSS)
Amortisation of gain on sale and leaseback arrangement 1.6 1.1 0.4
Bad trade debts recovered 1.8 1.6 1.3
Gain on disposal of property, plant and equipment 48.3 17.4 2.6
Rental income 24.2 18.1 17.1
Property, plant and equipment written off (0.1) (1.4) (0.8)
Loss on disposal of property, plant and equipment (17.7) (17.6) (7.8)
Net exchange (loss)/gain (trade related) (3.6) 10.2 (3.6)
Others 38.7 5.8 22.6
93.2 35.2 31.8
193
AUDITED FINANCIALSTATEMENTS
9 INTEREST ON BORROWINGS
Interest expense incurred
– bank loans – * 0.4
– bonds 5.6 5.0 5.0
– loan from a minority shareholder 3.5 3.1 3.0
– others – – 0.4
9.1 8.1 8.8
* denotes amounts of less than S$50,000.
10 TAXATION
(a) Tax expense
Tax expense attributable to profit is made up of:
Current income tax
– Singapore 523.9 545.2 492.1
– Foreign 3.2 1.4 3.0
527.1 546.6 495.1
Deferred income tax
– As reported 40.0 (19.8) 85.7
– Prior year adjustment (Note 2) – 13.4 42.6
40.0 (6.4) 128.3
567.1 540.2 623.4
Adjustment in respect of preceding financial year
Current income tax
– 10% corporate tax rebate – – (57.9)
– others – – 0.6
Deferred income tax
– change in corporate tax rate (30.1) (5.6) –
– others – (18.2) –
537.0 516.4 566.1
Share of taxes of associated companies 174.7 143.6 104.1
Share of taxes of joint venture companies 3.4 1.5 0.1
715.1 661.5 670.3
The income tax expense on the results of the Group for the year differs from the amount of
income tax determined by applying the Singapore standard tax rate of 24.5% (2000: 25.5%,
1999: 26%) to profit before tax due to certain items not being taxable, offset by higher tax rates
in the jurisdiction of some of the companies in which the Group operates.
As at 31 March 2001, the Group has estimated unutilised tax losses of approximately
S$31.8 million (2000: S$31.8 million, 1999: S$125.1 million) and unutilised wear and tear
allowances of approximately S$15.6 million (2000 and 1999: Nil) available for set off against
future taxable income, subject to the provisions of the income tax regulations of the respective
countries in which the Group operates.
194
AUDITED FINANCIALSTATEMENTS
10 TAXATION (CONTINUED)
The deferred tax benefit amounting to S$14.2 million (2000: S$8.1 million, 1999: S$32.5 million)
of the unutilised tax losses and wear and tear allowances has not been recognised in the financial
statements.
During the financial year, certain carryforward tax losses of subsidiary companies not recognised
previously in the financial statements were utilised, resulting in tax savings of approximately
S$4.4 million (2000: S$23.8 million, 1999: S$3 million).
2001 2000 1999
S$ MIL L I ON S$ MIL L I ON S$ M IL L IO N
11 EXTRAORDINARY ITEMS
The extraordinary items (“EI”) comprise:
Profit on sale of non-current investments 23.3 781.9 138.8
Provision for diminution in value of non-current investments (426.1) (112.0) (77.1)
Writeback of provision for diminution in value of
non-current investments 36.7 107.2 –
Gain on deemed disposal of associated companies 28.7 – 25.3
Recovery of investment in subsidiary previously written off 22.0 – –
Share of joint venture’s EI (2.5) – –
(317.9) 777.1 87.0
Less: Foreign tax on profit on sale of non-current
investments – (76.1) –
(317.9) 701.0 87.0
Non-current investments referred to above comprise investments in associated and joint venture
companies and long term investments.
195
AUDITED FINANCIALSTATEMENTS
196
AUDITED FINANCIALSTATEMENTS
197
AUDITED FINANCIALSTATEMENTS
198
AUDITED FINANCIALSTATEMENTS
19 INVENTORIES
Inventories at cost:
Consumable stores and raw materials 22.0 22.9 30.7
Equipment held for resale 34.3 57.6 71.9
Work-in-progress (information technology projects) 50.8 14.6 12.3
Directories in process of publication 1.1 6.0 7.2
Published directories 5.3 6.2 6.7
113.5 107.3 128.8
Less: Provision for inventory obsolescence (8.5) (11.0) (18.8)
105.0 96.3 110.0
The movements in the provision for inventory
obsolescence during the financial year are as follows:
Balance as at 1 April 11.0 18.8 25.1
Provision/(writeback of provision) for the year 0.8 (1.6) 10.5
Less: Amount written off against provision (3.3) (6.2) (16.8)
Balance as at 31 March 8.5 11.0 18.8
199
TRANSMISSION CAPITAL
FREEHOLD LEASEHOLD PLANT AND SWITCHING POSTAL OTHER WORK-IN-
LAND LAND BUILDINGS EQUIPMENT EQUIPMENT EQUIPMENT FIXED ASSETS PROGRESS TOTAL
2001 S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION
Total as at 31 March 2001 – 53.0 184.3 1,519.8 858.3 22.9 698.1 – 3,336.4
Net book value as at
31 March 2001 2.3 552.2 888.1 1,581.8 686.0 76.9 409.7 1,278.8 5,475.8
200
TRANSMISSION CAPITAL
A U D I T E D F I N AN C IA L S TAT E M E N T S
FREEHOLD LEASEHOLD PLANT AND SWITCHING POSTAL OTHER WORK-IN-
LAND LAND BUILDINGS EQUIPMENT EQUIPMENT EQUIPMENT FIXED ASSETS PROGRESS TOTAL
2000 S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION
Total as at 31 March 1999 – 41.5 126.5 1,188.1 608.7 2.8 529.2 – 2,496.8
Net book value as at
31 March 1999 2.3 534.2 623.2 1,413.0 711.3 87.7 340.1 837.3 4,549.1
Included in the property, plant and equipment of the Group are certain telecommunications equipment with net book value of S$ 344.5 million (2000: S$263.4 million,
1999: S$318.7 million) which were sold and leased back.
As part of its annual review process, the Group assessed the recoverable amounts of certain transmission plant and equipment and switching equipment in the light of
technological improvements and changing business trends. After taking into account the replacement costs or the expected future cash flows from these assets discounted to
their present values, a one-off accelerated depreciation charge of S$50.3 million (2000: S$245.4 million, 1999: S$89.7 million) for the Group was made and included in the
depreciation expense for the year.
202
AUDITED FINANCIALSTATEMENTS
21 ASSOCIATED COMPANIES
(a) Investments:
Quoted equity shares, at cost 961.4 877.1 854.2
Market value: S$1,639.5 million
(2000: S$2,050.0 million, 1999: S$1,178.2 million)
Unquoted equity shares, at cost 2,541.6 1,562.3 956.7
Shareholder’s loans 39.8 – 43.7
3,542.8 2,439.4 1,854.6
Goodwill on consolidation taken to shareholders’ equity (2,223.0) (1,381.3) (1,464.6)
Currency translation adjustments (138.9) (53.1) (28.5)
Share of post acquisition reserves
(net of dividends received) 456.3 297.1 146.1
1,637.2 1,302.1 507.6
Less: Provision for diminution in value – (10.0) (15.6)
1,637.2 1,292.1 492.0
The shareholder’s loans to associated companies are unsecured, interest free and include an
amount of S$39.5 million (2000 and 1999: Nil) which will be converted to equity shares in an
associated company within the next 12 months upon completion of restructuring of the
associated company.
203
AUDITED FINANCIALSTATEMENTS
204
AUDITED FINANCIALSTATEMENTS
26 BORROWINGS (UNSECURED)
Current
Bonds – 100.0 –
Long term bank loans due within one year – – 0.1
Bank overdrafts – 0.1 –
– 100.1 0.1
Non-current
bonds 1,000.0 – –
Bonds – – 100.0
1,000.0 – 100.0
On 15 March 2001, the Company issued a five-year fixed interest unsecured bond of S$1 billion
(“ bond”) due 2006, carrying interest at 3.21% per annum.
The unsecured bonds as at 31 March 2000 and 31 March 1999 carried interest at 4 31/32% per
annum for both years and were redeemed on 1 February 2001.
27 DIVIDENDS
Ordinary dividends proposed
Final proposed of 5.5 cents (2000 and 1999: 5.5 cents)
per share, proposed net of tax at 24.5% (2000: 25.5%,
1999: 26%) 640.0 633.1 620.7
Adjustment
Writeback of overprovision of final dividend proposed
in the prior year as a result of share repurchase (1.1) – –
638.9 633.1 620.7
Special dividends paid
Special dividend of 7.5 cents (2000: 12 cents, 1999: Nil)
per share, paid net of tax at 25.5% (2000: 26.0%) 861.8 1,374.1 –
1,500.7 2,007.2 620.7
28 DEFERRED INCOME
Deferred IDA compensation at 31 March (Note 7) 2,022.0 1,500.0 1,500.0
Gain on sale and leaseback arrangement
Balance as at 1 April 13.2 14.3 4.9
Amount deferred during the year 17.8 – 9.8
Amount recognised as income during the year (1.6) (1.1) (0.4)
Balance as at 31 March 29.4 13.2 14.3
Total deferred income 2,051.4 1,513.2 1,514.3
Gain on sale and leaseback of certain telecommunications equipment is recognised as income over
lease periods of 11 to 16 years.
205
AUDITED FINANCIALSTATEMENTS
29 SHARE CAPITAL
Authorised:
33,333,333,330 ordinary shares of S$0.15 each and
1 Special Share of S$0.50 5,000.0 5,000.0 5,000.0
Issued and fully paid:
Ordinary shares at S$0.15 each (“Shares”)
Balance as at 1 April
15,473,154,226 (2000: 15,249,938,788,
1999: 15,249,816,788) Shares 2,321.0 2,287.5 2,287.5
Issue of 787,900 (2000: 223,932,438,
1999:122,000) Shares 0.1 33.6 *
Repurchase of 60,778,000 (2000: 717,000,
1999: Nil) Shares (9.1) (0.1) –
Balance as at 31 March 2,312.0 2,321.0 2,287.5
15,413,164,126 (2000: 15,473,154,226,
1999: 15,249,938,788) Shares
1 Special Share at S$0.50 * * *
2,312.0 2,321.0 2,287.5
* denotes amount of less than S$50,000
Share repurchase
On 29 September 1999, the shareholders at the Extraordinary General Meeting of the Company
approved the mandate for the Company to purchase or acquire its issued ordinary shares, subject to
certain conditions as detailed in the Company’s circular to Members dated 13th August 1999 (the
“Share Purchase Mandate”). The Group believes that share repurchase is an expedient, effective and
cost-effective way for the Company to return surplus cash which is in excess of the financial and
possible investment needs of the Group to shareholders.
During the financial year, the Company repurchased 60,778,000 (2000: 717,000, 1999: NIL) of its
issued ordinary shares of S$0.15 each at average market price of S$2.34 (2000: S$2.44, 1999: NIL)
per share from the open market. The repurchase transactions were financed by internally generated
funds. The total cash paid for the ordinary shares of S$142.3 million (2000: S$1.8 million, 1999: NIL)
was credited against revenue reserve (Note 30). These shares are deemed to be cancelled and an
amount equivalent to their nominal value was transferred to the capital redemption reserve in
accordance with Section 76G of the Singapore Companies Act.
Special Share
The Special Share enjoys all the rights attached to ordinary shares. In addition, pursuant to Article 4 of
the Articles of Association, no resolution may be passed on certain matters without the prior written
approval of the Special Member.
Subsequent to the financial year-end, the Special Member served a written notice to the Company of
its intention to surrender all its rights attached to the Special Share. The Special Share will be
converted at its nominal amount into one ordinary share of S$0.15 in the capital of the Company
once the Articles of the Company are modified.
206
AUDITED FINANCIALSTATEMENTS
30 RESERVES
Currency translation account
Balance as at 1 April (47.5) (24.9) (52.7)
Net exchange (losses)/gains during the financial year (61.8) (21.4) 29.6
Exchange differences realised upon sale of
non-current investments – (1.2) (0.4)
Exchange differences reversed on provision for
diminution in value of non-current investments – – (1.4)
Balance as at 31 March (109.3) (47.5) (24.9)
207
AUDITED FINANCIALSTATEMENTS
COUNTRY OF PERCENTAGE OF
INCORPORATION EFFECTIVE EQUITY
NAME OF AND PLACE OF HELD BY THE GROUP
COMPANIES PRINCIPAL ACTIVITIES BUSINESS %
2001 2000 1999
Subsidiary Companies
Held by the Company
C2C Asiapac Pte Ltd Investment holding and Singapore 100 100 100
(formerly known as provision of administrative,
Global technical and advisory services.
Multimedia Pte Ltd)
# GB21 (Hong Kong) Provision of telecommunications Hong Kong 100 100 –
Limited services and products.
ICO Investment (Singapore) Investment holding company. Singapore 100 100 100
Private Limited
InnoVoice Services Dormant. Singapore 100 100 100
Private Limited
## INS (Europe) Limited Dormant. United Kingdom 100 100 100
INS Holdings Pte Ltd Investment holding Singapore 100 100 100
and provision of
telecommunications services.
@ InfoCom Holding Investment holding company. Singapore 100 100 100
Company Pte Ltd
KA Land Pte Ltd Investment holding company. Singapore 100 100 100
@ Mercurix Pte Ltd Provision of data Singapore 100 – –
communication services.
National Computer Provision of information Singapore 100 100 100
Systems Private Limited technology and consultancy
services.
Sembawang Cable Provision of storage facilities for Singapore 60 60 60
Depot Pte Ltd submarine telecommunications
cables and related equipment.
Singapore Post Private Operation and provision of Singapore 100** 100** 100**
Limited postal services.
Singapore Telecom Investment holding company. USA 100 100 100
America, Inc.
Singapore Telecom ADSB Investment holding company. Netherlands 90 90 90
(Netherlands Antilles) N.V. Antilles
## Singapore Telecom Provision of administrative, United Kingdom 100 100 100
Europe Ltd technical and advisory services.
# Singapore Telecom Investment holding Hong Kong 100 100 100
Hong Kong Limited and provision of
telecommunications services.
# Singapore Telecom Provision of telecommunications India 100 100 –
India Private Limited services and all related activities.
Singapore Telecom Holding of strategic investments Singapore 100 100 100
International Pte Ltd in companies engaged in the
field of telecommunications,
and provision of technical and
management consultancy
services in the field of
telecommunications.
# Singapore Telecom Provision of telecommunications Japan 100 100 100
Japan Co Ltd services and all related activities.
# Singapore Telecom Provision of telecommunications Korea 100 100 –
Korea Limited services and all related activities.
Singapore Telecom Provision of mobile phone Singapore 100 100 100
Mobile Pte Ltd services.
Singapore Telecom Provision of paging, public Singapore 100 100 100
Paging Pte Ltd mobile data and radio trunk
repeater services.
# Singapore Telecom Provision of customer services Taiwan 100++ 100++ 100
Taiwan Limited for telecommunications related
activities.
Singapore Telecom Provision of administrative, USA 100 100 100
USA, Inc. technical and advisory services
in the USA.
SingaSat Pte Ltd Investment holding company. Singapore 100 100 100
SingNet Pte Ltd Provision of value-added Singapore 100 100 100
services and internet-related
services.
Aeradio Pte Ltd Provision of facilities Singapore 100 100 100
management and consultancy
services and distributor of
specialised telecommunications
and data communication products.
208
AUDITED FINANCIALSTATEMENTS
COUNTRY OF PERCENTAGE OF
INCORPORATION EFFECTIVE EQUITY
NAME OF AND PLACE OF HELD BY THE GROUP
COMPANIES PRINCIPAL ACTIVITIES BUSINESS %
2001 2000 1999
Subsidiary Companies
Held by the Company
Asian Investments Investment holding company. Singapore 100 100 100
Pte Ltd
Australia Holding Investment holding company. Singapore 100 100 100
Pte Ltd
# (Europe) Limited Telecommunication business United Kingdom 100 100 100
in United Kingdom.
Global Services Dormant. Singapore 100 100 100
Private Limited
Investments Portfolio investment holding Singapore 100 100 100
Private Limited company.
# i2i Private Limited Investment holding company. Mauritius 100 – –
# Japan Co., Ltd Engaged in telecommunications Japan 100 100 –
services business and all other
related businesses.
(Jersey) Private Portfolio investment holding Jersey 100 100 100
Limited company.
Mobile Satellite Investment holding company. Singapore 100 100 100
Pte Ltd
(Netherlands Liquidated. Netherlands – 100 100
Antilles) Pte N.V.
# (Philippines), Inc. Provision of customer services Philippines 100 100 100
for telecommunications related
activities.
Ventures Venture capital investments in Cayman Islands 100 100 100
(Cayman) Pte Ltd start-up technology and
telecommunications companies.
Ventures Venture capital investments in Singapore 100 100 100
(Singapore) Pte Ltd start-up technology and
telecommunications companies.
Yellow Pages Provision of directory Singapore 100 100 100
Pte Ltd advertising and publishing.
Sat Pte Ltd Provision of satellite capacity Singapore 100 100 100
for telecommunication and
video broadcasting services.
+##STEL Information Provision of data processing People’s 100 100 100
Technology and programming services for Republic
(Shanghai) Co Ltd holding company and technical of China
services related to
telecommunications information
services.
# Sudong Sdn Bhd The management, provision Malaysia 100 100 100
and operations of a call centre
for telecommunication services.
Telecom Equipment Engaged in the sale Singapore 100 100 100
Pte Ltd and maintenance of
telecommunications equipment.
Held by Subsidiary
Companies
C2C Marine Pte Ltd Owning, operating and Singapore 59.5 – –
managing of maintenance-
cum-laying cableships.
# C2C Pte Ltd Operation and provision of Bermuda 59.5 – –
telecommunications facilities
and services utilising a network
of submarine cable systems and
associated terrestrial capacity.
C2C Singapore Pte Ltd Operation and provision of Singapore 59.5 – –
telecommunications facilities
and services utilising a network
of submarine cable systems and
associated terrestrial capacity.
Chapter-e.com Pte Ltd Engaged in e-commerce services. Singapore 51 51 –
DataPost Pte Ltd Provision of electronic printing Singapore 70 70 7
0
and despatching services.
^##First Cube Pte Ltd Provider of internet-enabled Singapore 72.9 50 –
storage units.
Global Page Pte Ltd Marketing, implementing and Singapore 100 100 100
operating radio paging systems
and investment holdings.
+## Guangzhou Zhong Approved training centre for People’s Republic 70 – –
Sheng Information Microsoft and Cisco products. of China
Technology Co Ltd
209
AUDITED FINANCIALSTATEMENTS
COUNTRY OF PERCENTAGE OF
INCORPORATION EFFECTIVE EQUITY
NAME OF AND PLACE OF HELD BY THE GROUP
COMPANIES PRINCIPAL ACTIVITIES BUSINESS %
2001 2000 1999
Subsidiary Companies
Held by Subsidiary
Companies
## Information Network Provision of data Malaysia 100 100 100
Services Sdn Bhd communication and value
added network services.
## Integrated Data Services Engaged in the business of Myanmar 90 90 90
Limited printing, publishing and
advertising.
# Integrated Information Publication of directories and Hong Kong 100 100 100
(Hong Kong) Limited sale of advertising space in
directories.
# Integrated Information (M) Engaged in the sale of Malaysia 100 100 100
Sdn Bhd advertising space in overseas
telephone and telex directories,
magazines and periodicals.
# Integrated Media Services Under voluntary liquidation. Taiwan 100 100 100
(Taiwan) Co Ltd
Info Ad Publishing Provision of consultancy and Singapore 100 100 100
Consultants Private market research in information
Limited technology, directory
advertising and publishing.
## Lanka Communication Provision of data Sri Lanka 82.9 82.9 82.9
Services (Private) Limited communication services.
## NCS Information Engaged in information People’s Republic 100 100 100
Technology (Suzhou) system software development of China
Co. Ltd services.
# NCSI (Australia) Pty Ltd Provision of information Australia 100 100 –
technology services.
NCSI Holdings Pte Ltd Investment holding company. Singapore 100 100 100
# NCSI Holdings (Malaysia) Investment holding company. Malaysia 100 100 –
Sdn Bhd
# NCSI (Malaysia) Sdn Bhd Provision of information Malaysia 100 100 –
technology services.
# NCSI (HK) Limited Provision of information Hong Kong 100 100 100
technology services.
# NCSI (India) Private Limited Provision of information India 100 100 100
technology services.
^^^ Print and Mail Printing and distribution of Singapore ^^^ ^^^ 70
Intercontinental (Asia) international mail.
Pte Ltd
# Pastel Limited Investment holding company. Mauritius 100 – –
^^ SESAMi.com Pte Ltd Engaged in e-commerce Singapore ^^ 100 –
services.
^^#SESAMi.com (Australia) Engaged in e-commerce Australia ^^ 100 –
Pty Limited services.
^^#SESAMi.com (HK) Limited Engaged in e-commerce Hong Kong ^^ 100 –
services.
+##Shanghai Zhong Sheng Provision of product reselling, People’s Republic 70 – –
Information Technology training and software of China
Co. Ltd development, consultancy
and representation.
Singapore Post Enterprise Investment holding company. Singapore 100 100 100
Private Limited
## Singapore Telecom Provision of consultancy United Kingdom 100 100 100
International Europe Ltd services in telecommunications
to related companies.
# Singapore Telecom Provision of managed facsimile Australia 100 100 100
Australia Pty Limited services.
ADSB Investment holding company. Netherlands 90 90 90
(Netherlands) B.V.
## (Cambodia) Under voluntary liquidation. Cambodia 100 100 100
Private Limited
Mobile Sales Sale of telecommunications Singapore 100 100 100
Pte Ltd equipment and provision of
related services.
# Services Australia Provision of customer services Australia 100 100 100
Pty Limited for telecommunications
related activities.
Strategic Investment holding company. Singapore 100 100 70
Investments Pte Ltd
USA, Inc. Investment holding company. USA 100 100 100
210
AUDITED FINANCIALSTATEMENTS
COUNTRY OF PERCENTAGE OF
INCORPORATION EFFECTIVE EQUITY
NAME OF AND PLACE OF HELD BY THE GROUP
COMPANIES PRINCIPAL ACTIVITIES BUSINESS %
2001 2000 1999
Subsidiary Companies
Held by Subsidiary
Companies
ST Paging Pte Ltd Sale of telecommunications Singapore 100 100 100
equipment and provision of
related services.
STI (Australia) Holding Investment holding company. Singapore 100 100 100
Pte Ltd
+# Suzhou ZhongXing Under voluntary liquidation. People’s 70 70 70
Telecommunication Republic
Engineering Development of China
Co. Ltd
TE International (S) Engaged in the business of Singapore 100 100 100
Pte Ltd investment holding, sales and
maintenance of
telecommunications equipment.
Thai Page Pte Ltd Investment holding company. Singapore 100 100 100
# Tourism Publications Provision of directory Malaysia 100 100 100
Corporation Sdn Bhd advertising and publishing.
## Viva Bahagia Sdn Bhd To acquire property for Malaysia 100 100 100
investment and to carry out
general trading.
ZapSurf Private Limited Provision of value-added Singapore 100 – –
services and internet-related
services.
Zeus Digital Asset Services To provide digital asset Singapore 100 – –
Pte Ltd services to content owners
and to be a wholesale
distributor of protected
music content.
Notes:
* Denotes amounts of less than S$50,000.
** Excluding the Special Share issued to the Minister for Finance (Incorporated) in pursuant to section 47 of the TAS Act 1992 and
Article 6 of the Articles of Association.
+ Subsidiary company’s financial year is 31 December.
++ Includes 97.77% deemed interest held by a wholly owned subsidiary.
^ During the financial year ended 31 March 2001, the Group increased its interest in First Cube Pte Ltd from 50% to 72.92%.
Accordingly, it is reclassified from a joint venture to a subsidiary company as at 31 March 2001.
^^ Pursuant to a merger with Asia2B.com Holdings Limited during the financial year ended 31 March 2001, the Group exchanged i ts
89% equity interest in SESAMi.com Pte Ltd group for an equity interest of 44.5% in SESAMi Inc., a joint venture company.
^^^ During the financial year ended 31 March 2000, interest was diluted to 50% and reclassified from a subsidiary to a joint venture
company accordingly.
@ Shareholding was transferred from a subsidiary company to the Company during the year ended 31 March 2001.
All companies are audited by PricewaterhouseCoopers, Singapore except for the following:
# Audited by associate firms of PricewaterhouseCoopers, Singapore.
## Audited by other firms.
211
AUDITED FINANCIALSTATEMENTS
COUNTRY OF PERCENTAGE OF
INCORPORATION EFFECTIVE EQUITY COST OF
NAME OF PRINCIPAL AND PLACE OF HELD BY THE GROUP INVESTMENT
COMPANIES ACTIVITIES BUSINESS % S$ MILLION
2001 2000 1999 2001 2000 1999
Joint Venture
Companies
Held by the
Company
# Acasia Communications Provision of Malaysia 18.8 18.8 18.8 0.5 0.5 0.5
Sdn Bhd services relating to
telecommunications,
computer, data and
information within
and outside Malaysia.
ACPL Marine Pte Ltd Owning, operating and Singapore 41.7 – – 0.1 – –
managing of maintenance-
cum-laying cableships.
ASEAN Cableship An operator of a cable Singapore 16.7 16.7 16.7 0.1 0.1 0.1
Pte Ltd repair vessel for repair
and maintenance
of submarine
telecommunication
cables.
# ASEAN Telecom Investment holding Malaysia 17.6 17.6 17.6 0.1 0.1 0.1
Holding Sdn Bhd company.
## Digital Network Access Provision of analogue Singapore 50 – – 22.7 – –
Communications Pte Ltd and digital public
trunk radio services.
Failsafe Corporation Provision of IT Singapore 50 50 – 17.2 5.1 –
(Singapore) Pte Ltd outsourcing and
hosting services.
Indian Ocean Cableship Ownership and Singapore 50 50 – 0.1 0.1 –
Pte Ltd chartering of ships,
barges and remotely
operated vehicles for
repair, maintenance
and protection of
submarine cable and
plant.
International Cableship Ownership and Singapore 45 45 45 0.4 0.4 0.4
Pte Ltd chartering of cableships.
Lycos Asia Limited To provide local portal Singapore 50 50 – 54.1 8.4 –
(formerly known as sites in its target markets
Lycos Asia Pte Ltd) with services such as
World Wide Web
navigation, search and
community features.
# Network i2i Limited Operation and provision Mauritius 50 – – * – –
of telecommunications
facilities and services
utilising a network of
submarine cable systems
and associated terrestrial
capacity.
## Radiance The sale, distribution, Singapore 50 50 – 13.3 13.3 –
Communications Pte Ltd installation and
maintenance of
telecommunications
equipment in Singapore.
TeleTech Park Pte Ltd Engaged in the business Singapore 40 40 40 10.0 10.0 10.0
of development,
construction, operation
and management of
TeleTech Park.
@ Virgin Mobile Holdings Investment holding Singapore 50.6 – – 9.1 – –
Pte Ltd company.
212
AUDITED FINANCIALSTATEMENTS
COUNTRY OF PERCENTAGE OF
INCORPORATION EFFECTIVE EQUITY COST OF
NAME OF PRINCIPAL AND PLACE OF HELD BY THE GROUP INVESTMENT
COMPANIES ACTIVITIES BUSINESS % S$ MILLION
2001 2000 1999 2001 2000 1999
Joint Venture
Companies
Held by Subsidiary
Companies
## APT Satellite Provision of Hong Kong 45.0 – – 6.8 – –
Telecommunications telecommunications
Limited services.
## Beijing Asia Pacific FirstTo construct a People’s Republic 35 35 35 21.2 21.2 21.2
Star Communications nation-wide radio of China
Technology Co. Ltd paging network.
Distribution Centre International mail Singapore 40 40 40 0.3 0.3 0.3
(Asia) Pte Ltd distribution.
^ First Cube Pte Ltd Provider of internet- Singapore ^ 50 – ^ 1.2 –
enabled storage units.
# Forward Media Sdn Bhd To publish Borneo Brunei 50 50 50 0.1 0.1 0.1
Bulletin Brunei Yearbook
and other publications.
## ID.Safe Pte Ltd To provide certifying, Singapore 50 50 – 1.0 1.0 –
authenticating, verifying
of electronic transactions
and other corporate
security related transactions.
InfoGrid Pte Ltd Under voluntary Singapore 50 50 50 * * *
liquidation.
# Integrated Databases Provision of directory India 49 49 49 0.8 0.8 0.8
India Ltd advertising and publishing.
Mail Boxes Exchange Provision of document Singapore 50 50 50 0.4 0.4 0.4
(MBE) Pte Ltd exchange, business and
communication services.
# PT Bukaka Operation of fixed public Indonesia 40 40 40 47.1 47.1 47.1
International switch telephone network
services in eastern Indonesia.
## PT SkyTelindo Services Provision of paging Indonesia 30 30 30 4.6 4.6 4.6
services.
Print and Mail Printing and distribution Singapore 50 50 – 0.2 0.2 –
Intercontinental of international mail.
(Asia) Pte Ltd
^^ SESAMi Inc. Engaged in investment Cayman Islands 44.5 ^^ – 36.8 ^^ –
holding, provision of
b2b e-commerce services,
e-commerce software
solutions and related
services.
# Shin Digital Investment holding Thailand 30 – – 82.9 – –
Company Limited company.
Virgin Mobile Provision of Singapore 44.7 – – * – –
(Asia) Pte Ltd telecommunications
services and products.
# Virgin Mobile Provision of Hong Kong 44.7 – – * – –
(Hong Kong) Limited telecommunication
services and products.
Virgin Mobile Provision of Singapore 44.7 – – * – –
(Singapore) Pte Ltd telecommunications
services and products.
# WorldPartners Company To create and support USA 20 20 20 9.2 12.8 16.2
commonly branded
telecommunications
services under the brand
name of Worldsource.
Joint Venture Companies held by the Group – at cost 339.1 127.7 101.8
Notes:
* Denotes amounts of less than S$50,000.
^ During the financial year ended 31 March 2001, the Group increased its interest in First Cube Pte Ltd from 50% to 72.92%.
Accordingly, it is reclassified from a joint venture to a subsidiary company as at 31 March 2001.
^^ Pursuant to a merger with Asia2B.com Holdings Limited during the financial year ended 31 March 2001, the Group exchanged its
89% equity interest in SESAMi.com Pte Ltd group for an equity interest of 44.5% in SESAMi Inc., a joint venture company.
@ The Group regards Virgin Mobile Holdings Pte Ltd as a joint venture, notwithstanding that it holds 50.6% of the company’s issued
share capital, because it exercises joint control.
All companies are audited by PricewaterhouseCoopers, Singapore except for the following:
# Audited by associate firms of PricewaterhouseCoopers, Singapore.
## Audited by other firms.
213
AUDITED FINANCIALSTATEMENTS
COUNTRY OF PERCENTAGE OF
INCORPORATION EFFECTIVE EQUITY COST OF
NAME OF PRINCIPAL AND PLACE OF HELD BY THE GROUP INVESTMENT
COMPANIES ACTIVITIES BUSINESS % S$ MILLION
2001 2000 1999 2001 2000 1999
Associated
Companies
Held by the
Company
## Abacus Travel Systems Marketing and Singapore 30 30 30 0.9 0.9 0.9
Pte Ltd distributing certain
travel-related services
through on-line airline
computerised
reservations systems.
## 1-Net Singapore Pte Ltd Provision of broadband Singapore – 30 30 – 0.5 0.5
multimedia services in
Singapore.
## Point Asia Dot Com Thai internet and Thailand 31.1 – – 38.7 – –
(Thailand) Limited e-commerce service
provider.
Associated
Companies
Held by Subsidiary
Companies
## AAPT Limited Provision of switched Australia – – 17.6 – – 55.6
and lease line value
added communications
services.
## Advanced Data Network Provision of data Thailand – – 40 – – 23.5
Communications Co., Ltd communication services.
# Advanced Info Service Provision of cellular Thailand 21 20 13 608.5 572.6 534.6
Public Co., Ltd and paging
telecommunications
services.
# ADSB Investment holding Netherlands 24.3 24.3 24.3 930.5 930.5 930.5
Telecommunications B.V. company.
## APT Satellite Investment holding Bermuda 20.4 – – 13.4 – –
Holdings Ltd company.
## APT Satellite To establish, conduct British 28.6 – – 62.6 – –
International Company and carry on satellite Virgin Islands
Limited communications,
telecommunications
and related services
including management
and operation.
## Bharti Telecom Ltd Provision of cellular, fixed India 20 – – 360.2 – –
line telecommunications
and internet services.
# Bharti Televentures Ltd Provision of cellular fixed India 28.5 – – 413.7 – –
line telecommunications
services.
# Data Network Solutions Provision of information Thailand – – 49 – – *
Company Limited services and related
networking equipment.
## Globe Telecom, Inc. Provision of cellular Philippines 23.6 39 39 339.5 304.6 264.1
** mobile telephone,
international and fixed
line telecommunications
services.
## Globe Telecom To trade, issue and hold Philippines 40.7 – – * – –
Holding, Inc. financial securities.
## InfoLink Co., Ltd Provision of value Thailand 49 49 49 * * *
added paging services.
## InfoServe Technology Provision of Cayman Islands 30.5 – – 78.9 – –
Corp. (Cayman Islands) communications, internet,
VPN and solution services.
# Integrated Marketing and servicing Brunei – – 25 – – 0.3
Communications of telecommunications
Sdn Bhd and information
technology equipment.
## Multi-media Sales and maintenance Malaysia 49 49 49 0.5 0.5 0.5
Communications of telecommunications
Sdn Bhd equipment.
214
AUDITED FINANCIALSTATEMENTS
COUNTRY OF PERCENTAGE OF
INCORPORATION EFFECTIVE EQUITY COST OF
NAME OF PRINCIPAL AND PLACE OF HELD BY THE GROUP INVESTMENT
COMPANIES ACTIVITIES BUSINESS % S$ MILLION
215
AUDITED FINANCIALSTATEMENTS
216
AUDITED FINANCIALSTATEMENTS
34 SEGMENT INFORMATION
With effect from the financial year beginning 1 April 2000, the Group adopted the revised Statement
Of Accounting Standard 23 (1999), Segment Reporting, which came into effect for accounting periods
beginning on that date. SAS 23 (revised) requires that information be reported for business segments
and geographical segments. It provides more detailed guidance than the original SAS 23 for
identifying business segments and geographical segments. It requires that an enterprise look to its
internal organisational structure and internal reporting system for the purpose of identifying those
segments. As a result, reporting for the business and geographical segments have been redefined to
conform with the new requirements.
Data for the financial year ended 31 March 1999 had not been collected in a way that allows
reclassification and it is not practicable to present the information in this format for the business and
geographical segments. Accordingly the segment report for the year ended 31 March 1999 has not
been presented.
217
AUDITED FINANCIALSTATEMENTS
218
AUDITED FINANCIALSTATEMENTS
219
AUDITED FINANCIALSTATEMENTS
35 CONTINGENT LIABILITIES
As at 31 March 2001, the Company provided a guarantee to a third party for due performance by its
subsidiary of its obligations and liabilities under a contract to provide information technology services
in the ordinary course of business.
In addition, a subsidiary company provided performance guarantees amounting to S$115.2 million
(2000: S$110.0 million, 1999: S$110.9 million) to a third party in respect of a joint venture company.
36 SUBSEQUENT EVENTS
On 23 April 2001, a subsidiary company was granted a facilities-based operator licence for the
provision of third generation (3G) mobile communications systems and services and the 3G spectrum
right by the IDA at the price of S$100 million.
220
AUDITED FINANCIALSTATEMENTS
37 ACCOUNTING POLICIES
The Group will be adopting the new or revised Statements of Accounting Standard (“SAS”) that
become applicable and effective in Singapore from the following relevant dates:
221
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222
ANNEXURE 2
IMPLEMENTATION AGREEMENT
223
IMPLEMENTATION AGREEMENT
PARTIES
A. Cable and Wireless plc together with Optus invited and a number of other parties to
make proposals to acquire all or part of Optus or its principal operating businesses.
has proposed the Transaction described in this Agreement. The structure of the
Transaction has been formulated by to meet its commercial objectives.
B. and Optus have agreed on the terms of this agreement to implement the Transaction
under which Optus Shareholders will be invited by Bidder to dispose of their Optus
Shares and Bidder will acquire Optus Shares.
OPERATIVE PROVISIONS
1. INTERPRETATION
1.1 Definitions
The definitions below relate to the terms used in the Unsecured Note Provisions and
the Buy-Back Provisions which are not defined in Section 12 of this Bidder’s Statement
in the same or substantially similar terms.
The following definitions apply in this agreement, unless the context otherwise requires.
“Additional Allocated Bond Amount” is defined in clause 3.4.
“Additional Allocated Cash” is defined in clause 3.4.
“Additional Cash” is defined in clause 3.4.
“Bank Account” means an A$ bank account to be established at the Nominated Bank in
the name of Bidder as agent for the Optus Shareholders in connection with the Buy-Back.
“Bidder” means [ Australia].
“Bonds” are described in clause 3.3.
“Business Day” means a weekday on which trading banks are open for general banking
business in Sydney and Singapore.
“Cheque” means a cheque drawn on Optus’ Account.
“Final Maturity Date” is defined in clause 3.6.
“Formula Rate” of a Bond is the interest rate (expressed as a percent per annum)
determined in accordance with Schedule 7.
“Initial Redemption Amount” means A$1.48.
“Insolvency Event” means in respect of a corporation:
(a) an order is made, or the corporation passes a resolution, for its winding up;
(b) an administrator is appointed to the corporation; or
(c) the corporation is unable to pay its debts.
“Interim Maturity Date” is defined in clause 3.6.
“Late Maturity Date” is defined in clause 3.5B.
“Lender” means:
(a) if has not nominated a subsidiary as Lender in accordance with clause 3.17, ; or
224
IMPLEMENTATION AGREEMENT
(b) otherwise, a nominated subsidiary of (which nominated subsidiary may not also be the
Bidder).
“Maximum Bond Amount” means the sum of the Bond Issue Prices (expressed in A$ by
reference to the Announcement Exchange Rate) of Tranche A Bonds and Tranche B Bonds
where:
(a) the aggregate Bond Issue Price of all Tranche A Bonds equals the aggregate Bond Issue
Price of all Tranche B Bonds; and
(b) the sum of the face values of both tranches of Bonds (expressed in A$ by reference to
the Announcement Exchange Rate) is A$2 billion.
“Nominated Bank” means an Australian bank and branch (in Australia) nominated by
and approved by Optus (such approval not to be unreasonably withheld). There may be
more than one Nominated Bank.
“Optus’ Account” means an A$ account of Optus, in the name of Optus, to be styled “Buy-
Back Account” with the Nominated Bank to be opened by Lender as agent for Optus and the
authorised signatories on which from time to time are representatives of who have been
approved by Optus (such approval not to be unreasonably withheld).
“Remaining Share” means each Optus Share not accepted into the Offer by the end of
the Offer Period.
“Takeover Bid” means an off-market takeover bid for all of the Optus Shares to be
implemented in compliance with Chapter 6 of the Corporations Law (which at the election
of Bidder may extend to Optus Shares that come to be in the bid class during the Offer
Period because of the conversion of Optus Options).
“Total Cash Pool” is defined in clause 3.4.
“Tranche A Bond” means a Bond belonging to Tranche A referred to in Schedule 7.
“Tranche B Bond” means a Bond belonging to Tranche B referred to in Schedule 7.
“Transaction” means the implementation of the Takeover Bid, the Buy-Back and the
Placement on the terms of this agreement.
1.2 Rules for interpreting this agreement
Headings are for convenience only, and do not affect interpretation. The following rules
also apply in interpreting this agreement, except where the context makes it clear that a
rule is not intended to apply.
(a) A reference to:
(i) legislation (including subordinate legislation) is to that legislation as amended, re-
enacted or replaced, and includes any subordinate legislation issued under it;
(ii) a document or agreement, or a provision of a document or agreement, is to that
document, agreement or provision as amended, supplemented, replaced or
novated;
(iii) a party to this agreement or to any other document or agreement includes a
permitted substitute or a permitted assign of that party;
(iv) a person includes any type of entity or body of persons, whether or not it is
incorporated or has a separate legal identity, and any executor, administrator or
successor in law of the person; and
(v) anything (including a right, obligation or concept) includes each part of it.
(b) A singular word includes the plural, and vice versa.
(c) A word which suggests one gender includes the other genders.
(d) If a word is defined, another part of speech has a corresponding meaning.
(e) If a party to this document is made up of more than one person, or a term is used in
this document to refer to more than one party:
(i) an obligation of those persons is joint and several;
225
IMPLEMENTATION AGREEMENT
If the day on or by which a person must do something under this agreement is not a
Business Day:
(a) if the act involves a payment that is due on demand, the person must do it on or by
the next Business Day; and
(b) in any other case, the person must do it on or by the previous Business Day.
2. [NOT EXTRACTED]
3. TRANSACTION MECHANISM
3.1 Offer by Bidder
Bidder shall make Offers to all Optus Shareholders in respect of all of their Optus Shares
on the terms set out in this agreement and in compliance with the Corporations Law
(as modified or exempted).
3.2 Consideration
(a) Pursuant to the Offer, Optus Shareholders will be invited to dispose of their Optus
Shares for one of the following forms of consideration (the “Offer Consideration”) as
the shareholder elects from the following menu:
(i) 1.66 Shares for each Optus Share;
(ii) A$2.25 cash (or the US$ Cash Alternative) and 0.8 Shares for each Optus Share; or
(iii) A$2.00 cash (or the US$ Cash Alternative) and A$0.45 worth of Bonds (determined
by reference to the Bond Issue Price) and 1 Unsecured Note for each Optus Share.
(b) If an Optus Shareholder does not make an election regarding the Offer Consideration it
wishes to receive, or if it makes conflicting elections, the shareholder will be deemed to
have elected the Offer Consideration described in clause 3.2(a)(ii).
(c) If the number of Shares to be issued to an Optus Shareholder as a result of
acceptance of an Offer by that shareholder is not a whole number, the number of
Shares issued to that shareholder will be rounded up to the nearest whole number.
3.3 Bonds
(a) The principal terms and other features of the Bonds are as described in Schedule 7.
(b) If an Optus Shareholder has elected the alternative outlined in clause 3.2(a)(iii), that
shareholder will be issued Bonds from each of the 2 tranches identified in Schedule 7
(that is, Tranche A and Tranche B) having (subject to clause 3.3(c)) an equal aggregate
Bond Issue Price so the aggregate of the Bond Issue Prices of those Bonds satisfies the
Bond component of the Offer Consideration.
(c) The Bonds may be denominated in amounts of US$1,000 or US$1 to the extent
required to accommodate individual accepting Optus Shareholders. Amounts of less
than US$1 will be rounded up to the nearest whole US$1 amount – that is, if the face
value of a Bond to be issued to an Optus Shareholder as a result of acceptance of an
Offer by that shareholder is not a multiple of US$1, the shareholder will be issued with
a Bond with a face value of US$1 in respect of that amount of less than US$1.
226
IMPLEMENTATION AGREEMENT
(d) (i) All Bonds of a Tranche will be issued at the Bond Issue Price, and accrue interest at
the same rate, as the Bonds of that Tranche which are issued on the First Settlement
Date.
(ii) Any Bond issued after the First Settlement Date will accrue interest from (and
including) the First Settlement Date.
(iii) Accrued interest will be disregarded in satisfying the Bond component of the Offer
Consideration due to any Optus Shareholder.
3.4 Additional Cash for Unsecured Notes
The maximum amount of cash and Bonds available to all Optus Shareholders is A$9.25
billion, of which the maximum face value of Bonds which are available to all Optus
Shareholders (expressed in A$ by reference to the Announcement Exchange Rate) is A$2
billion. A potentially lesser amount equal to the sum of A$7.25 billion and the Maximum
Bond Amount (“Total Cash Pool”) is used for the purposes of calculation to reflect the fact
that the Bonds will be issued at the Bond Issue Prices and not face value. At the Final
Maturity Date, Bidder will calculate:
(a) the total amount of cash paid or payable to all Optus Shareholders under clause 3.2
(excluding the Redemption Amount of the Unsecured Notes), including the amount of
any Withholding Tax paid or payable to the Australian Tax Office on behalf of Optus
Shareholders under clause 4.5(b)(i); and
(b) the aggregate Bond Issue Prices of all Bonds issued or to be issued to all Optus
Shareholders under clause 3.2,
excluding in both cases, any cash or Bonds which may be paid or issued under clause 3.5,
3.5A or 3.5B. If the aggregate of (a) and (b) is less than the Total Cash Pool, the difference
(the “Additional Cash”) will be allocated in respect of each Unsecured Note as the lesser of:
(c) the Initial Redemption Amount; and
(d) the Additional Cash divided by the total number of issued Unsecured Notes,
(the “Additional Allocated Cash”). Of such Additional Allocated Cash, each Unsecured
Note is allocated an additional amount of Bonds (“Additional Allocated Bond Amount”),
which shall be calculated as the lesser of:
(e) the Additional Allocated Cash; and
(f) the difference of the Maximum Bond Amount and the amount in paragraph (b) of this
clause, if any, divided by the total number of issued Unsecured Notes.
3.5 Redemption of Unsecured Notes on Final Maturity Date
must, on the Final Maturity Date, redeem each Unsecured Note by paying to Bidder
as agent for each holder of an Unsecured Note, for each Unsecured Note, the
Redemption Amount in cash, which must be used as follows:
(a) the difference between:
(i) the Redemption Amount; and
(ii) the Additional Allocated Cash,
must be used, in aggregate, to subscribe for Shares at an issue price of A$2.74 provided,
however, that where the aggregate amount that would otherwise be received by a
holder is not a whole multiple of A$2.74, the number of Shares issued to that holder
will be rounded up to the nearest whole number of Shares (at no additional cost to the
holder);
(b) the Additional Allocated Bond Amount must be used, in aggregate, to subscribe for
Bonds at the Bond Issue Price provided that if the face value of the Bonds so subscribed
is not a whole number then rounded down to the nearest US$1 amount; and
(c) the difference between the Additional Allocated Cash (in aggregate) and the Additional
Allocated Bond Amount (in aggregate) can be either retained in A$ or exchanged for
US$ at the Announcement Exchange Rate (at the option of the holder of the Unsecured
Note) rounded down to the nearest smallest unit of the relevant currency.
227
IMPLEMENTATION AGREEMENT
If, at the end of the Offer Period, Bidder is entitled to proceed with Compulsory
Acquisition, the Unsecured Notes will be partially redeemed as follows:
(a) on the Interim Maturity Date, must pay to Bidder as agent for each holder of Unsecured
Notes, for each Unsecured Note, an amount in cash which is the difference between:
(i) the Initial Redemption Amount; and
(ii) an amount which is calculated as the Additional Allocated Cash under clause 3.4, on
the assumptions that:
(A) the Final Maturity Date is assumed for this purpose to be the date on which the
Offer Period ends; and
(B) the Offer is accepted and the Offer Consideration described in clause 3.2(a)(i) is
elected in respect of each Remaining Share,
provided, however, that where the aggregate amount that would otherwise be received
by a holder is not a whole multiple of A$2.74, the amount paid per Unsecured Note
held by that holder will be reduced so that the aggregate amount received will be the
nearest whole multiple of A$2.74; and
(b) the holder of each Unsecured Note must use the Partial Redemption Amount, in
aggregate, to subscribe for Shares at an issue price of A$2.74.
3.5B Redemption of Certain Unsecured Notes after Final Maturity Date
If any Unsecured Notes are issued after the Final Maturity Date, must, on the day of issue
(“Late Maturity Date”), immediately redeem each such Unsecured Note by paying, to
Bidder as agent for each such holder of Unsecured Notes, for each Unsecured Note, the
Redemption Amount in cash which must be used as follows:
(a) the difference between:
(i) the Redemption Amount; and
(ii) the Additional Allocated Cash which was calculated on the Final Maturity Date,
must be used, in aggregate, to subscribe for Shares at an issue price of A$2.74 provided,
however, that where the aggregate amount that would otherwise be received by a
holder is not a whole multiple of A$2.74, the number of Shares issued to that holder
will be rounded up to the nearest whole number of Shares (at no additional cost to the
holder);
(b) the Additional Allocated Bond Amount which was calculated on the Final Maturity Date
must be used, in aggregate, to subscribe for Bonds at the Bond Issue Price provided
that if the face value of the Bonds so subscribed is not a whole number then rounded
down to the nearest US$1 amount; and
(c) the difference between the Additional Allocated Cash (in aggregate) which was
calculated on the Final Maturity Date and the Additional Allocated Bond Amount (in
aggregate) which was calculated on the Final Maturity Date can be either retained in
A$ or exchanged for US$ at the Announcement Exchange Rate (at the option of the
holder of the Unsecured Note) rounded down to the nearest smallest unit of the
relevant currency.
3.6 Other terms of Unsecured Note
(a) Each Unsecured Note initially has a face value equal to the Initial Redemption Amount.
(b) The “Final Maturity Date” of the Unsecured Notes is the date which is 7 days after the
end of the Offer Period unless paragraph (c) provides otherwise.
(c) If, at the end of the Offer Period, Bidder is entitled to proceed with Compulsory
Acquisition:
(i) the “Interim Maturity Date” is the date which is 7 days after the end of the Offer
Period; and
228
IMPLEMENTATION AGREEMENT
(ii) the “Final Maturity Date” is the date which is 7 days after the date on which the
form of consideration payable in respect of each Remaining Share is ascertained
under section 661C of the Corporations Law (other than those, if any, which are the
subject of an objection under section 661E).
(d) By accepting the Offer and subscribing for an Unsecured Note, the holder has agreed
to appoint the Bidder as their agent as described in clauses 3.5, 3.5A, 3.5B and this
clause and has agreed to apply the Redemption Amount on the Final Maturity Date
(or the Late Maturity Date, as the case may be), and any Partial Redemption Amount on
the Interim Maturity Date, in accordance with clauses 3.5, 3.5A and 3.5B. will hold
the certificate for the Unsecured Note on behalf of the Optus Shareholder until the Final
Maturity Date (or the Late Maturity Date, as the case may be), and will pay or provide as
directed by the Bidder as agent for the holder the Redemption Amount and any Partial
Redemption Amount and the Bidder will apply the Redemption Amount and any Partial
Redemption Amount on behalf of the holder in accordance with clauses 3.5, 3.5A and
3.5B.
(e) may require a lien or other security over the Unsecured Note and the Redemption
Amount or any Partial Redemption Amount, to secure the performance by the holder of
its obligation under paragraph (d).
(f) No interest is payable on an Unsecured Note.
(g) The Unsecured Notes are non-transferable and will not be listed.
[Clauses 3.7 to 3.18 are Not Extracted]
4. PROVISION OF CONSIDERATION
4.1 Pre-conditions to Offer Funding
The operation of this clause 4 in relation to , Bidder, Lender and Optus is subject to all of
the defeating conditions of the Offer being fulfilled or, subject to clause 3.10(c), the Offer
being declared by Bidder to be free of all such conditions which have not been fulfilled
and no Insolvency Event occurring in relation to Optus.
4.2 Settlement Dates
and Bidder must ensure that each Optus Shareholder who accepts the Offer, whether the
Optus Shareholder chooses the Transfer Alternative or the Buy-Back Alternative, will receive
the Offer Consideration due to be paid to that shareholder (in the latter case, net of
Withholding Tax pursuant to the mechanism described in clause 4.5), as follows:
(a) for each Optus Shareholder who accepts the Offer prior to the Unconditional Date, on
the day which is 7 days after the Unconditional Date (the “First Settlement Date”);
(b) for each Optus Shareholder who accepts the Offer after the Unconditional Date, on a
date nominated by Bidder to Optus (“Second Settlement Date”) which is no later than
the earlier of:
(i) one month after the later of acceptance of the Offer by the Optus Shareholder and
the Unconditional Date; and
(ii) 21 days after the end of the Offer Period.
Bidder may nominate more than one Second Settlement Date under this clause 4.2(b).
The Settlement Date for a particular acceptance by an Optus Shareholder must not
occur until at least 5 Business Days after the date of acceptance by that shareholder.
4.3 The Buy-Back Alternative
(a) Bidder, as agent for each Optus Shareholder, must prepare a Buy-Back Agreement for
each Optus Shareholder who elects the Buy-Back Alternative in respect of each
Settlement Date on which Optus is required to accept Buy-Back Offers, completing all
relevant details of those agreements in accordance with this agreement and in a form
suitable for execution by Optus.
229
IMPLEMENTATION AGREEMENT
(b) In relation to each Optus Shareholder who accepts the Offer and elects the Buy-Back
Alternative, and who therefore makes a Buy-Back Offer, Optus must, on the first
applicable Settlement Date following the later of the day on which an Optus
Shareholder makes a Buy-Back Offer and the Unconditional Date:
(i) enter into a Buy-Back Agreement with that Optus Shareholder in respect of all Optus
Shares in respect of which the Buy-Back Alternative has been chosen by the Optus
Shareholder (and, as contemplated by clause 3.8, Bidder will act as agent for the
Optus Shareholder) by executing the draft agreements referred to in paragraph (a);
and
(ii) pay the Buy-Back Consideration payable to each Optus Shareholder who enters into
a Buy-Back Agreement in accordance with clause 4.5; and
(iii) accept a transfer of the relevant Optus Shares.
(c) Optus must use all reasonable endeavours to register the transfer of the relevant Optus
Shares to Optus on the relevant Settlement Date or, if that is not reasonably practicable,
as soon as reasonably possible after the relevant Settlement Date. In accordance with
section 257H(3) of the Corporations Law, the Optus Shares are cancelled immediately
after registration of the transfer to Optus.
4.4 Withholding Tax
On each Settlement Date, before Optus draws a Cheque, Lender must lend to Optus an
amount equal to the sum of:
(a) amounts which are required to discharge Optus’ obligation to pay Withholding Tax (if
any) in relation to the completion of any Buy-Back Agreement which Optus enters into
as part of the Transaction; and
(b) any fees, duties, levies, taxes or charges which are or will be incurred by Optus in
connection with the existence or operation of the bank account described below as it
relates to the Transaction,
by crediting a bank account of Optus at the Nominated Bank on that date in immediately
available funds.
4.5 Buy-Back Consideration
(a) The consideration payable by Optus to each Optus Shareholder who enters into a
Buy-Back Agreement will be an amount equal to the sum of the following (the “Buy-
Back Consideration”):
(i) the cash component of the Offer Consideration due to be paid to the Optus
Shareholder (if any) calculated as:
(A) the A$ amount; or
(B) the A$ Equivalent of the US$ Cash Alternative; and
(ii) the A$ Equivalent of the aggregate US$ amount of the Bond Issue Prices (calculated
by applying the Announcement Exchange Rate) of the Bond component of the
Offer Consideration due to be issued to the Optus Shareholder (if any);
(iii) the A$ Equivalent of the Market Value of the Shares component of the Offer
Consideration due to be issued to the Optus Shareholder (if any); and
(iv) the Initial Redemption Amount of the Unsecured Notes component of the Offer
Consideration due to be issued to the Optus Shareholders (if any).
(b) Optus will pay the Buy-Back Consideration to each Optus Shareholder who enters into a
Buy-Back Agreement by:
(i) firstly, paying the amount of any Withholding Tax to the Australian Tax Office; and
(ii) secondly, delivering a Cheque in favour of the Optus Shareholder or order for an A$
face amount equal to the Buy-Back Consideration less the amount of any
Withholding Tax to the Optus Shareholder’s agent, Bidder.
230
IMPLEMENTATION AGREEMENT
(a) On each Settlement Date, before Optus draws a Cheque, Lender must lend to Optus an
amount equal to the sum of:
(i) the amounts which are required by Optus to pay in full the Cheques to be issued in
accordance with clause 4.5(b)(ii); and
(ii) any fees, duties, levies, taxes or charges which are or will be incurred by Optus in
connection with the existence or operation of Optus’ Account as it relates to the
Transaction,
by crediting Optus’ Account on that date in immediately available funds.
(b) In its role as agent, Lender agrees it will not take any action which is not contemplated
by this agreement and its role as agent is limited accordingly.
4.7 Presentation of Cheques
(a) Bidder, as agent for each Optus Shareholder in whose favour a Cheque has been drawn
pursuant to clause 4.5(b), will, immediately after that Cheque has been received
endorse that Cheque in favour of Optus or order and present that Cheque to Lender as
Optus’ agent for purchase at a purchase price equal to the face value of the Cheque.
(b) Optus appoints Lender as Optus’ agent for purchase and directs Lender as Optus’
agent, upon presentation of a Cheque to Lender as Optus’ agent for purchase pursuant
to clause 4.7(a), to purchase that Cheque by drawing on Optus’ Account for an amount
equal to the face value of the Cheque (but so that there will be one aggregate drawing
on Optus’ Account for the Cheques purchased for each Settlement Date) and crediting
the amount so drawn to the Bank Account in immediately available funds.
(c) Lender must comply with the directions contained in this clause 4.7.
4.8 Subscription for Shares, Bonds and Unsecured Notes
(a) Bidder will, as agent for each Optus Shareholder in whose favour a Cheque has been
drawn pursuant to clause 4.5(b):
(i) pay from the Subscription Funds the cash component of the Offer Consideration less
the amount of any Withholding Tax to the Optus Shareholder as follows:
(A) in the case of a shareholder who elected to receive $A, by cheque in $A; or
(B) in the case of a shareholder who elected to receive US$, by purchasing US$ on
behalf of that Optus Shareholder (at the rate referred to in the definition of A$
Equivalent on the relevant Settlement Date) and sending a cheque in US$ for
that amount;
(ii) apply the balance of the Subscription Funds on behalf of the Optus Shareholder in
subscribing for the relevant number of Shares, Bonds and Unsecured Notes (as
the case may be) due to be issued to the shareholder as contemplated by clause
3.2.
However, where an Optus Shareholder chose the Offer Consideration referred to in
clause 3.2(a)(i), Bidder (as agent for that Optus Shareholder) will only subscribe for that
number of Shares calculated by dividing the Subscription Funds by the A$ Equivalent of
the Market Value of one Share, rounded up to the nearest whole number of Shares.
(b) must issue or cause the issue of the Shares, Bonds and Unsecured Notes referred to in
paragraph (a), and must do all things necessary to enable Bidder to give full effect to
the arrangements set out in paragraph (a).
(c) must issue the Shares and Bonds subscribed from time to time pursuant to clauses 3.5,
3.5A and 3.5B by Bidder as agent for a holder of Unsecured Notes.
[Clauses 4.9 to 4.13 are Not Extracted]
231
IMPLEMENTATION AGREEMENT
5. [NOT EXTRACTED]
SCHEDULE 1
[Not Extracted]
SCHEDULE 2
[Not extracted – see Section 9.12]
SCHEDULE 3
[Not Extracted]
SCHEDULE 4
TERMS OF BUY-BACK AGREEMENT
A. Each Relevant Shareholder has accepted the Offer and has chosen the Buy-Back
Alternative in respect of the parcel of Optus Shares set out beside that shareholder’s
name in Schedule A (the “Relevant Shares”).
B. Pursuant to the terms of the Offer, each Relevant Shareholder has appointed Bidder as
its agent to enter into this agreement and to perform all other actions necessary to give
effect to this agreement.
C. By choosing the Buy-Back Alternative, each Relevant Shareholder has made a Buy-Back
Offer to Optus whereby that Relevant Shareholder has offered to sell to Optus its
Relevant Shares on the terms of this agreement.
D. Optus accepts the Buy-Back Offer from each Relevant Shareholder and agrees to Buy-
Back the Relevant Shares on the terms of this agreement.
232
IMPLEMENTATION AGREEMENT
OPERATIVE PROVISIONS
233
IMPLEMENTATION AGREEMENT
234
IMPLEMENTATION AGREEMENT
SCHEDULE 5
Worked example for 2-Stage Redemption of Unsecured Notes
235
IMPLEMENTATION AGREEMENT
236
IMPLEMENTATION AGREEMENT
237
IMPLEMENTATION AGREEMENT
SCHEDULE 6
[Not Extracted]
SCHEDULE 7
[Not Extracted – the terms of the Bonds are now reflected in Section 10]
SCHEDULE 8
[Not Extracted]
238
ANNEXURE 3
TERMS AND CONDITIONS OF
THE BONDS
239
TERMS AND CONDITIONS OF THE SINGTEL BOND S
The Bonds will be constituted by and subject to the Trust Deed, the provisions of which will
apply to both the Tranche A Bonds and the Tranche B Bonds. Except as described in the
Conditions, the Tranche A Bonds and the Tranche B Bonds will have the same interest payment
dates and will contain, inter alia, the same covenants and events of default.
The following (except for paragraphs in italics) is the text of the terms and conditions which will
be endorsed on the Bonds in definitive form issued in exchange for the relevant Global Bond. All
capitalised terms that are not defined in these Conditions will have the meanings given to them
in the Trust Deed, which is available for inspection during usual business hours at the principal
office of the Trustee (presently at P.O. Box 200, Cottons Centre, Hay’s Lane, London SE1 2QT)
and at the specified offices of the principal paying agent, the registrar and the transfer agents
for the time being.
The Tranche A Bonds and Tranche B Bonds will initially be represented by interests in a Tranche
A global bond and Tranche B global bond (each a “Global Bond”) which will be deposited on
the Issue Date (as defined below) with a common depositary for, and registered in the name of
a nominee of, Euroclear Bank S.A./N.V., as operator of the Euroclear System (“Euroclear”) and
Clearstream Banking, société anonyme (“Clearstream, Luxembourg”). Each Global Bond
contains provisions which apply to the relevant Bonds while they are in global form, some of
which modify the effect of the terms and conditions of the Bonds set out below. Schedule 1
contains a summary of certain of those provisions.
The exemption from tax described in the section “Singapore Taxation Considerations –
Bonds” shall not apply to any interest derived by a permanent establishment in Singapore.
Where interest is derived from any Bonds issued during the period from 27 February 1999 to
27 February 2003 by any person who is not resident in Singapore for taxation purposes and
who carries on any operation in Singapore through a permanent establishment in Singapore,
the tax exemption shall not apply if such person acquires such Bonds using funds from
Singapore operations. Funds from Singapore operations means, in relation to a person, the
funds and profits of that person’s operations through a permanent establishment in Singapore.
Any person whose interest derived from the Bonds is not exempt from tax shall include such
interest in a return of income made under the Income Tax Act, Chapter 134 of Singapore.
The issue of up to US$494,000,000 [•]%. Bonds due 2006 (the “Tranche A Bonds”) and of
up to US$494,000,000 [•]%. Bonds due 2008 (the “Tranche B Bonds”, and together with
the Tranche A Bonds, the “Bonds”) was authorised by a resolution of the Board of Directors
of Singapore Telecommunications Limited (the “Issuer”) passed on [•] 2001. The Bonds are
constituted by a Trust Deed (the “Trust Deed”) dated [•] 2001 (the “Issue Date”) made
between (1) the Issuer and (2) Citicorp Trustee Company Limited (the “Trustee”, which
expression shall include all persons for the time being the trustee or trustees under the
Trust Deed), as trustee for the holders of the Bonds (the “Bondholders”). These Conditions
include summaries of, and are subject to, the detailed provisions of the Trust Deed, which
includes the forms of the Bonds. Copies of the Trust Deed, and of the Agency Agreement
(as amended from time to time, the “Agency Agreement”) dated [•] 2001 relating to the
Bonds between the Issuer, the Trustee and the Agents (as defined below), are available for
inspection during usual business hours at the principal office of the Trustee (presently at
P.O. Box 200, Cottons Centre, Hay’s Lane, London SE1 2QT) and at the specified offices of
the principal paying agent, the registrar and the transfer agents for the time being. Such
persons are referred to below respectively as the “Principal Paying Agent”, the “Registrar”
and the “Transfer Agents” and together as the “Agents”. The Bondholders are entitled to
the benefit of, are bound by, and are deemed to have notice of, all the provisions of
the Trust Deed and are deemed to have notice of those applicable to them of the
Agency Agreement.
240
TERMS AND CONDITIONS OF THE SINGTEL BOND S
3 STATUS
The Bonds constitute (subject to Condition 4) direct, unconditional and unsecured
obligations of the Issuer and shall at all times rank pari passu and rateably without any
preference or priority among themselves and pari passu with all other present and future
unsecured obligations (other than subordinated obligations and priorities created by law)
of the Issuer.
241
TERMS AND CONDITIONS OF THE SINGTEL BOND S
4 NEGATIVE PLEDGE
(a) Restriction: So long as any of the Bonds remains outstanding (as defined in the Trust
Deed), the Issuer shall not create or permit to subsist any mortgage, charge, pledge,
lien or other form of encumbrance or security interest upon the whole or any part of
the undertaking, assets, property or revenues present or future of the Issuer to secure
any Relevant Debt, or any guarantee or indemnity in respect of any Relevant Debt;
unless, at the same time or prior thereto, the Issuer’s obligations under the Bonds and
the Trust Deed (i) are secured equally and rateably therewith or (ii) have the benefit of
such other security, guarantee, indemnity or other arrangement as shall be approved by
an Extraordinary Resolution (as defined in the Trust Deed) of the Bondholders.
(b) Relevant Debt: For the purposes of this Condition, “Relevant Debt” means any present
or future indebtedness of the Issuer in the form of, or represented by, bonds, notes,
debentures, loan stock or other similar securities that are for the time being, or are
capable of being, quoted, listed or ordinarily dealt in on any stock exchange,
over-the-counter or other securities market, having an original maturity of more than
365 days from its date of issue and denominated, payable or optionally payable in a
currency other than Singapore dollars.
5 INTEREST
Each Tranche A Bond bears interest from [•] at the rate of [•]% per annum, payable semi-
annually in arrear on [•] and [•], in each year, commencing on [•]. Each Tranche B Bond
bears interest from the Issue Date at the rate of [•]% per annum, payable semi- annually in
arrears on [•] and [•], in each year, commencing on [•].
Each Bond will cease to bear interest from the due date for redemption unless, after
surrender of the Definitive Bond, payment of principal is improperly withheld or refused. In
such event, it shall continue to bear interest at such rate (both before and after judgment)
until whichever is the earlier of (a) the day on which all sums due in respect of such Bond
up to that day are received by or on behalf of the relevant Bondholder, and (b) the day
seven days after the Trustee or the Principal Paying Agent has notified Bondholders of
receipt of all sums due in respect of all the Bonds up to that seventh day (except to the
extent that there is failure in the subsequent payment to the relevant Bondholders under
these Conditions). If interest is required to be calculated for a period of less than one year,
it will be calculated on the basis of a 360-day year consisting of 12 months of 30 days each
and, in the case of an incomplete month, the number of days elapsed.
242
TERMS AND CONDITIONS OF THE SINGTEL BOND S
in respect of the Bonds then due. Prior to the publication of any notice of redemption
pursuant to this Condition 6(b), the Issuer shall deliver to the Trustee a certificate signed
by a duly authorised officer of the Issuer stating that the conditions precedent to the
right of the Issuer to so redeem have occurred, and an opinion of independent legal or
tax advisers of recognised standing to the effect that the Issuer has or is likely to
become obliged to pay such additional amounts as a result of such change or
amendment, in which event it shall be conclusive and binding on the Bondholders.
(c) Notice of Redemption: All Bonds in respect of which any notice of redemption is given
under this Condition shall be redeemed on the date specified in such notice in
accordance with this Condition.
(d) Purchase: The Issuer or any of its Subsidiaries may at any time and from time to time
purchase Bonds at any price in the open market or otherwise. The Issuer or any such
Subsidiary may, at its option, retain such purchased Bonds for its own account and/or
resell or cancel or otherwise deal with them at its discretion.
(e) Cancellation: All Bonds redeemed in accordance with this Condition shall be cancelled.
Any Bonds purchased in accordance with this Condition may at the option of the Issuer
be cancelled or may be resold.
7 PAYMENTS
(a) Method of Payment: Payments in respect of each Bond will be made or procured to be
made by the Principal Paying Agent by US dollar cheque drawn on, or by transfer to a
US dollar account maintained by the payee with, a bank in New York City. Payments of
principal will be made conditional upon surrender of the relevant Definitive Bond at the
specified office of any of the Transfer Agents. Interest on Bonds will be paid to the
persons shown on the relevant Register at the close of business on the tenth business
day before the due date for the payment of interest (the “Record Date”). Payments will
be made by US dollar cheque drawn on a bank in New York City and mailed to the
holder (or to the first-named of joint holders) of such Bond at his address appearing in
the relevant Register. Upon application by the holder to the specified office of any
Transfer Agent not less than 10 business days before the due date for any payment in
respect of a Bond, such payment may be made by transfer to a US dollar account
maintained by the payee with a bank in New York City.
(b) Payments Subject to Fiscal Laws: All payments are subject in all cases to any applicable
fiscal or other laws and regulations, but without prejudice to the provisions of
Condition 8. No commissions or expenses shall be charged to the Bondholders in
respect of such payments.
(c) Payment Initiation: Where payment is to be made by transfer to a US dollar account,
payment instructions (for value on the due date, or if that is not a business day, for
value the first following day which is a business day) will be initiated, and, where
payment is to be made by cheque, the cheque will be mailed on the business day
preceding the due date for payment or, in the case of payments of principal, if later, on
the business day on which the relevant Definitive Bond is surrendered at the specified
office of any Transfer Agent. For the purposes of this Condition 7, “business day” means
a day on which commercial banks in New York City and in the case of a surrender of a
Definitive Bond, in the place where the Definitive Bond is surrendered, are open or not
authorised to close.
(d) Delay in Payment: Bondholders will not be entitled to any interest or other payment for
any delay after the due date in receiving the amount due as a result of the due date not
being a business day, if the Bondholder is late in surrendering its Definitive Bond (if
required to do so) or if a cheque mailed in accordance with this Condition 7 arrives
after the due date for payment.
(e) Payment Not Made in Full: If the amount of principal or interest which is due on the
Bonds is not paid in full, the Registrar will annotate the relevant Register with a record
of the amount of principal or interest, if any, in fact paid.
243
TERMS AND CONDITIONS OF THE SINGTEL BOND S
(f) Agents: The initial Agents and their initial specified offices are listed below. The Issuer
reserves the right at any time with the approval of the Trustee (such approval not to be
unreasonably withheld or delayed) to vary or terminate the appointment of any Agent
and appoint additional or other Agents, provided that it will maintain (i) a Principal
Paying Agent, (ii) a Registrar maintaining a Register in Singapore and London for each
of the Tranche A Bonds and the Tranche B Bonds, (iii) a Transfer Agent having a
specified office in London, and (iv) a Transfer Agent having a specified office in
Luxembourg. Notice of any change in the Agents or their specified offices will promptly
be given to the Bondholders in accordance with Condition 13.
8 TAXATION
All payments of principal and interest in respect of the Bonds shall be made free and clear
of, and without withholding or deduction for, any taxes, duties, assessments or
governmental charges of whatever nature imposed, levied, collected, withheld or assessed
by or within Singapore or any authority therein or thereof having power to tax, unless such
withholding or deduction is required by law. In that event the Issuer shall pay such
additional amounts as will result in receipt by the Bondholders of such amounts as would
have been received by them had no such withholding or deduction been required, except
that no such additional amounts shall be payable in respect of any Bond:
(a) to a holder (or to a third party on behalf of a holder) who is liable to such taxes, duties,
assessments or governmental charges in respect of such Bond by reason of his having
some connection with Singapore other than the mere holding of the Bond or the
receipt of any sums due in respect of such Bond (including, without limitation, the
holder being a resident of, or having a permanent establishment in, Singapore); or
(b) the Definitive Bond in respect of which is surrendered (where required to be
surrendered) more than 30 days after the Relevant Date, except to the extent that the
holder of it would have been entitled to such additional amounts on surrender of such
Definitive Bond for payment on the last day of such period of 30 days.
“Relevant Date” means whichever is the later of (i) the date on which such payment first
becomes due and (ii) if the full amount payable has not been received in New York City by
the Principal Paying Agent or the Trustee on or prior to such due date, the date on which,
the full amount having been so received, notice to that effect shall have been given to the
Bondholders in accordance with Condition 13. Any reference in these Conditions to
principal and/or interest shall be deemed to include any additional amounts which may be
payable under this Condition 8.
9 EVENTS OF DEFAULT
If any of the following events occurs and is continuing, the Trustee at its discretion may,
and if so requested by holders of at least 25% in nominal amount of the Bonds then
outstanding or if so directed by an Extraordinary Resolution of the Bondholders shall, give
notice to the Issuer that the Bonds are, and they shall immediately become, due and
payable at their principal amount together with accrued interest:
(a) Non-Payment: the Issuer fails to pay the principal of or any interest on any of the Bonds
when due and such failure continues for a period of more than seven days in the case
of principal or more than 14 days in the case of interest; or
(b) Breach of Other Obligations: the Issuer does not perform or comply with any one or
more of its other obligations in the Bonds or the Trust Deed which default is incapable
of remedy or, if in the opinion of the Trustee capable of remedy, is not in the opinion of
the Trustee remedied within 60 days after notice of such default shall have been given
to the Issuer by the Trustee; or
(c) Cross-Default: (i) any other present or future indebtedness of the Issuer for or in respect
of moneys borrowed or raised becomes due and payable prior to its stated maturity by
reason of any default, event of default or the like (howsoever described), or (ii) any such
indebtedness is not paid when due or, as the case may be, within any applicable grace
244
TERMS AND CONDITIONS OF THE SINGTEL BOND S
period, or (iii) the Issuer fails to pay when due any amount payable by it under any
present or future guarantee for, or indemnity in respect of, any moneys borrowed or
raised, provided that the aggregate amount of the relevant indebtedness, guarantees
and indemnities in respect of which one or more of the events mentioned above in this
paragraph (c) have occurred equals or exceeds S$40,000,000 or its equivalent (as
reasonably determined by the Trustee); or
(d) Enforcement Proceedings: a distress, attachment, execution or other legal process is
levied, enforced or sued out on or against any material part of the property, assets or
revenues of the Issuer and is not discharged or stayed within 60 days; or
(e) Security Enforced: any mortgage, charge, pledge, lien or other encumbrance, present
or future, created or assumed by the Issuer on or over all or any material part of the
property, assets or revenues of the Issuer becomes enforceable and any step is taken to
enforce it (including the taking of possession or the appointment of a receiver, judicial
manager or other similar person); or
(f) Insolvency: the Issuer is (or is deemed by law or a court to be) insolvent or bankrupt or
unable to pay its debts as they fall due, stops, suspends or threatens to stop or suspend
payment of all or a material part of (or of a particular type of) its debts, or proposes or
makes a general assignment or an arrangement or composition with or for the benefit
of the relevant creditors in respect of all or a material part of (or of a particular type of)
its debts or a moratorium is agreed or declared in respect of or affecting all or a
material part of (or of a particular type of) the debts of the Issuer; or
(g) Winding up: an order is made or an effective resolution passed for the winding-up or
dissolution of the Issuer, or the Issuer ceases or threatens to cease to carry on all or
a material part of its business or operations, except for the purpose of and followed by
a reconstruction, amalgamation, reorganisation, merger or consolidation on terms
approved by the Trustee (such approval not to be unreasonably withheld) or by an
Extraordinary Resolution of the Bondholders; or
(h) Nationalisation: any governmental authority or agency seizes, compulsorily acquires,
expropriates or nationalises all or a material part of the assets of the Issuer; or
(i) Authorisation and Consents: any action, condition or thing (including the obtaining or
effecting of any necessary consent, approval, authorisation, exemption, filing, licence,
order, recording or registration) at any time required to be taken, fulfilled or done in
order (i) to enable the Issuer lawfully to enter into, exercise its rights and perform and
comply with its obligations under the Bonds and the Trust Deed, (ii) to ensure that
those obligations are legally binding and enforceable and (iii) to make the Bonds and
the Trust Deed admissible in evidence in the courts of Singapore or England is not
taken, fulfilled or done, or any such consent or condition ceases to be in full force and
effect (unless that consent or condition is no longer required or applicable); or
(j) Illegality: it is or will become unlawful for the Issuer to perform or comply with any one
or more of its obligations under any of the Bonds or the Trust Deed; or
(k) Analogous Events: any event occurs that under the laws of any relevant jurisdiction has
an analogous effect to any of the events referred to in any of the foregoing paragraphs,
provided that in the case of paragraphs (b), (c), (d), (e), (h), (i), (j) and, to the extent that
any event has an analogous effect to these paragraphs, (k) above, the Trustee shall have
certified that in its opinion such event is materially prejudicial to the interests of the
Bondholders.
10 PRESCRIPTION
Claims in respect of principal and interest shall be prescribed unless made within a period
of 10 years in the case of principal and five years in the case of interest from the
appropriate Relevant Date.
245
TERMS AND CONDITIONS OF THE SINGTEL BOND S
11 ENFORCEMENT
At any time after the Bonds become due and payable, the Trustee may, at its discretion and
without further notice, institute such proceedings against the Issuer as it may think fit to
enforce the terms of the Trust Deed and the Bonds, but it need not take any such
proceedings unless (a) it shall have been so directed by an Extraordinary Resolution or so
requested in writing by Bondholders holding at least 25% in principal amount of the Bonds
outstanding, and (b) it shall have been indemnified to its satisfaction. No Bondholder may
institute proceedings directly against the Issuer unless the Trustee, having become bound
so to proceed, fails or neglects to do so within a reasonable time and such failure or
neglect is continuing.
13 NOTICES
Notices to Bondholders will be mailed to them at their respective addresses in the relevant
Register and shall be published in a leading daily newspaper having general circulation in
London (which is expected to be the Financial Times). Any such notice shall be deemed to
have been given on the later of the date of such publication and the fourth day after being
so mailed.
246
TERMS AND CONDITIONS OF THE SINGTEL BOND S
Subject to Condition 14(e) and certain provisions of the Trust Deed, which requires the
Trustee to have regard to the Tranche A Bonds and Tranche B Bonds as separate classes in
certain circumstances, the Tranche A Bonds and the Tranche B Bonds shall be regarded by
the Trustee as a single class for the purpose of considering the Bondholders’ interests.
(c) Modification and Waiver: The Trustee may agree, without the consent of the
Bondholders, to (i) any modification of any of the provisions of the Trust Deed which
is of a formal, minor or technical nature or is made to correct a manifest error, (ii) any
modification necessary to enable the listing of the Bonds, and (iii) any other
modification (except as mentioned in the Trust Deed), and any waiver or authorisation
of any breach or proposed breach, of any of the provisions of the Trust Deed which is in
the opinion of the Trustee not materially prejudicial to the interests of the Bondholders.
Any such modification, authorisation or waiver shall be binding on the Bondholders
and, if the Trustee so requires, such modification shall be notified to the Bondholders in
accordance with Condition 13 as soon as practicable.
(d) Substitution: The Trust Deed contains provisions permitting the Trustee to agree, subject
to such amendment of the Trust Deed and such other conditions as the Trustee may
require, but without the consent of the Bondholders, to the substitution of the Issuer’s
successor in business or any Subsidiary of the Issuer or its successor in business in place
of the Issuer or any previous substituted company, as principal debtor under the Trust
Deed and the Bonds. In the case of such a substitution, the Trustee may agree, without
the consent of the Bondholders, subject to the provisions of the Trust Deed, to a
change of the law governing the Bonds and/or the Trust Deed provided that such
change would not in the opinion of the Trustee be materially prejudicial to the interests
of the Bondholders.
(e) Entitlement of the Trustee: In connection with the exercise of its functions (including but
not limited to those referred to in this Condition 14) the Trustee shall have regard to
the interests of the Bondholders as a single class and shall not have regard to the
consequences of such exercise for individual Bondholders and the Trustee shall not be
entitled to require, nor shall any Bondholder be entitled to claim, from the Issuer or the
Trustee any indemnification or payment in respect of any tax consequences of any such
exercise upon individual Bondholders; provided that the Trustee shall not agree to
exercise such powers, trusts, authorities or discretions if, in the opinion of the Trustee,
such exercise would prejudice the holders of either the Tranche A Bonds or the
Tranche B Bonds considered in each case as a separate and single class.
15 FURTHER ISSUES
The Issuer may from time to time without the consent of the Bondholders create and issue
further securities of the same class having the same terms and conditions as the Bonds of
such class in all respects so that such further issue shall be consolidated and form a
single series with the outstanding Bonds of the same class. The original issue of Bonds
and any further issues pursuant to this Condition 15 may not in aggregate exceed
U.S.$988,000,000. References in these Conditions to the Bonds include (unless the context
requires otherwise) any other securities issued pursuant to this Condition and forming
a single series with the Bonds. Any further securities forming a single series with the
outstanding Bonds of the same class constituted under the Trust Deed or any deed
supplemental to it shall be constituted under a deed supplemental to the Trust Deed.
The Trust Deed contains provisions for convening meetings of the Bondholders.
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18 GOVERNING LAW
(a) Governing Law: The Trust Deed, the Agency Agreement and the Bonds are governed by,
and shall be construed in accordance with, English law.
(b) Jurisdiction: The courts of England are to have jurisdiction to settle any disputes which
may arise out of or in connection with the Bonds and accordingly any legal action or
proceedings arising out of or in connection with the Trust Deed and the Bonds
(“Proceedings”) may be brought in such courts. The Issuer has in the Trust Deed
irrevocably submitted to the jurisdiction of such courts.
(c) Agent for Service of Process: The Issuer has in the Trust Deed appointed an agent in
England to receive service of process in any Proceedings in England. If for any reason
the Issuer does not have such an agent in England, it will promptly appoint a substitute
process agent and notify the Bondholders of such appointment in accordance with
Condition 13. Nothing herein shall affect the right to serve process in any other manner
permitted by law.
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SCHEDULE 1
SUMMARY OF PROVISIONS RELATING TO THE BONDS WHILE IN GLOBAL FORM
The Tranche A Global Bond and Tranche B Global Bond representing the Tranche A Bonds
and Tranche B Bonds, respectively, contain provisions which apply to the Bonds while they
are in global form, some of which modify the effect of the terms and conditions of the Bonds.
Terms defined in the terms and conditions have the same meanings in the paragraphs below.
The following is a summary of certain of the provisions contained in the Tranche A Global Bond
and the Tranche B Global Bond, respectively:
Exchange
A Global Bond is exchangeable in whole but not in part (free of charge to the holder) for
the Definitive Bonds described below (i) if the Global Bond is held on behalf of a clearing
system and such clearing system is closed for business for a continuous period of 14 days
(other than by reason of holidays, statutory or otherwise) or announces an intention
permanently to cease business or does in fact do so, or (ii) if the Issuer would suffer
a material disadvantage in respect of the Bonds as a result of a change in the laws or
regulations (taxation or otherwise) of any jurisdiction referred to in Condition 8 which
would not be suffered were the Bonds in definitive form and a certificate to such effect
signed by a director of the Issuer is delivered to the Trustee, for display to Bondholders.
Thereupon (in the case of (i) above) the holder may give notice to the Principal Paying
Agent and (in the case of (ii) above) the Issuer may give notice to the Principal Paying
Agent and the Bondholders, of its intention to exchange the Global Bonds for Definitive
Bonds on or after the Exchange Date (as defined below) specified in the notice.
On or after the Exchange Date, the holder of the Global Bond may surrender the Global
Bond to, or to the order of, the Principal Paying Agent. In exchange for the Global Bond,
the Issuer shall deliver, or procure the delivery of, an equal aggregate principal amount of
duly executed and authenticated Definitive Bonds, security printed in accordance with any
applicable legal requirements and in or substantially in the form set out in Schedule 1 to
the Trust Deed. On exchange of the Global Bond, the Issuer will, if the holder so requests,
procure that it is cancelled and returned to the holder together with any relevant definitive
Bonds.
“Exchange Date” means a day falling not less than 60 days after that on which the notice
requiring exchange is given and on which banks are open for business in the city in which
the specified office of the Principal Paying Agent is located and, except in the case of
exchange pursuant to (i) above, in the cities in which the relevant clearing system is
located.
Payments
Payments of principal and interest in respect of Bonds represented by the Global Bond will
be made against presentation for endorsement and, if no further payment falls to be made
in respect of the Bonds, surrender of the Global Bond to or to the order of the Principal
Paying Agent or such other Paying Agent as shall have been notified to the Bondholders for
such purpose. A record of each payment so made will be endorsed in the appropriate
schedule to the Global Bond, which endorsement will be prima facie evidence that such
payment has been made in respect of the Bonds.
Notices
So long as the Bonds are represented by the Global Bond and the Global Bond is held
on behalf of a clearing system, notices to Bondholders may be given by delivery of the
relevant notice to that clearing system for communication by it to entitled accountholders
in substitution for publication as required by the Conditions.
Prescription
Claims against the Issuer in respect of principal and interest on the Bonds while the Bonds
are represented by the Global Bond will become void unless it is presented for payment
within a period of 10 years (in the case of principal) and five years (in the case of interest)
from the appropriate Relevant Date (as defined in Condition 8).
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Meetings
The holder of the Global Bond will be treated as being two persons for the purposes of any
quorum requirements of a meeting of Bondholders represented by that Global Bond and,
at any such meeting, as having one vote in respect of each US$1.00 of principal amount of
Bonds for which the Global Bond may be exchanged. The Trustee may allow a person with
an interest in the Bonds in respect of which a Global Bond is issued to attend and speak at
a meeting of Bondholders on appropriate proof of his identity and interest.
Purchase and Cancellation
Cancellation of any Bond required by the Conditions to be cancelled following its
redemption or purchase will be effected by reduction in the principal amount of the
Global Bond.
Trustee’s Powers
In considering the interests of Bondholders while the Global Bond is held on behalf of a
clearing system, the Trustee may have regard to any information provided to it by such
clearing system or its operator as to the identity (either individually or by category) of its
accountholders with entitlements to the Global Bond and may consider such interests as
if such accountholders were the holder of the Global Bond.
Enforcement
For the purposes of enforcement of the provisions of the Trust Deed against the Trustee,
the persons named in a certificate of the holder of the Bonds in respect of which the Global
Bond is issued shall be recognised as the beneficiaries of the trusts set out in the Trust Deed
to the extent of the principal amount of their interests in the Bonds set out in the certificate
of the holder, as if they were themselves the holders of Bonds in such principal amounts.
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TELECOMMUNICATIONS, POSTAL AND
BROADCASTING REGULATION IN SINGAPORE
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The following is a general summary of the Singapore laws and regulations relating to provision of
telecommunications, postal and broadcasting services in Singapore. It is for general information only, and
does not purport to be an exhaustive or comprehensive description of those laws and regulations.
Overview of telecommunications, postal and broadcasting services in Singapore
The provision of telecommunications services in Singapore is regulated primarily under the
Telecommunications Act (Chapter 323) (the “Telecommunications Act”). The Telecommunications Act
provides the general and legal framework for the provision and operation of telecommunications systems
and services in Singapore.
The IDA is the regulatory authority principally responsible for administering the Telecommunications Act
and regulating and promoting the information and communications industry in Singapore. The IDA is a
statutory board that was established under the Info-communications Development Authority of Singapore
Act (Chapter 137A) (the “IDA Act”). Pursuant to the IDA Act, the IDA’s functions and duties include:
• promoting the efficiency and international competitiveness of the information and communications
industry in Singapore;
• ensuring that telecommunication services are reasonably accessible to all people in Singapore and are
supplied as efficiently and economically as practicable and at performance standards that reasonably
meet the social, industrial and commercial needs of Singapore;
• promoting and maintaining fair and efficient market conduct and effective competition between
persons engaged in commercial activities connected with telecommunications technology in
Singapore;
• advising the Government of Singapore on national needs and policies in respect of all information and
communications technology matters;
• exercising licensing and regulatory functions in respect of telecommunications systems and services in
Singapore, including the establishment of standards and codes relating to equipment attached to
telecommunications and radio-communication systems, and any equipment or software used as an
adjunct to or in conjunction with such systems and the monitoring of and access to such equipment
and software;
• exercising licensing and regulatory functions in respect of the allocation and use of satellite orbits and
the radio frequency spectrum in Singapore for all purposes, including the establishment of applicable
standards and codes;
• exercising licensing and regulatory functions in respect of the installation, use and provision of
submarine cables, cable frontier stations and satellite stations, receivers and transmitters in Singapore
and all equipment used in connection therewith;
• exercising regulatory functions in respect of the determination and approval of prices, tariffs, charges
and the provision of telecommunications and related services; and
• encouraging, promoting, facilitating, investing in and otherwise assisting in the establishment,
development and expansion of the information and communications industry in Singapore.
The provision of postal services in Singapore by SingPost is regulated under the Postal Services Act
(Chapter 237A) (the “Postal Services Act”). The Postal Services Act provides for the licensing and
regulatory power of the IDA (as the Postal Authority) in respect of postal matters. The Postal Services Act
confers on the Postal Authority the exclusive privilege to convey from one place to another letters and
postcards and to perform all incidental services of receiving, collecting, sending, despatching and
delivering letters and postcards, as well as the right to grant licences in respect of all such services.
The Postal Authority may also designate any postal licensee as a public postal licensee to perform all or
any of the functions relating to the provision of postal services within the exclusive privilege of the Postal
Authority under the Postal Services Act.
In providing video-on-demand and Internet services in Singapore, is regulated by the Singapore
Broadcasting Authority (the “SBA”) under the Singapore Broadcasting Authority Act (Chapter 297) (the
“SBA Act”). The SBA’s duties include exercising licensing and regulatory functions in respect of any
broadcasting service, which means a service by a person having equipment appropriate for receiving, or
receiving and displaying (as the case may be) that service, irrespective of the means of delivery of that
service, whereby signs or signals transmitted, whether or not encrypted, comprise (a) any program
capable of being received, or received and displayed, as visual images, whether moving or still, (b) any
sound program for reception, or (c) any program, being a combination of both visual image (whether
moving or still) and sound for reception, or reception and display. In particular, no person may provide
the following broadcasting services in or from Singapore without a broadcasting licence granted by
the SBA:
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adopted will be left to the choice of the licensee, subject to spectrum and other physical constraints. FBO
licences are granted on the merits of the licence application. In considering an application for an FBO
licence, the IDA considers, among other things, the applicant’s commitment to developing and investing
in Singapore’s info-communications infrastructure, its ability to deliver its proposed service or
infrastructure commitments, and its commitment to quality of service standards, subject to spectrum and
other physical constraints which would limit the number of licences that could be awarded.
FBOs are required to comply with interconnection and access obligations as well as the minimum quality
of service standards set by the IDA. They are also required to provide the IDA with a performance bond
to secure their licence commitments and any additional terms deemed necessary by the IDA.
An FBO must obtain the prior approval of the IDA for any proposed changes to the scope of its licensed
operations and services. An FBO must obtain the IDA’s prior approval for assignment of its licence, and
for any change in the FBO’s ownership, shareholding or management. Given the significance of the
percentage of Shares to be issued to Optus Shareholders as a result of the Offer, has obtained the
IDA’s approval for the changes in its ownership that will result from the Offer.
Services-Based Operator Licences
SBOs are operators who lease telecommunications network elements (such as transmission capacity,
switching services, ducts and fibre) from FBOs to provide telecommunications services to third parties
or to resell the telecommunications services of FBOs. SBOs can either be individually licensed or
class-licensed.
SBO (Individual) Licence
In general, operators who lease international transmission capacity for the provision of their services will
be licensed individually. Services that are individually licensed include, but are not limited to, international
simple resale (ISR), resale of leased circuit services, virtual private network (VPN) services, managed data
network services, Internet access services, Internet exchange services, store and forward value-added
network services, mobile virtual network operation and live audiotex services.
SBO (Class) Licence
Services provided over the public switched telephone network or over the public Internet are class
licensed. SBO class licence terms and conditions are gazetted. Interested parties are required to register
with the IDA and pay the prescribed registration fees. Services that are class-licensed include resale of
public switched telecommunication services, callback/call re-origination services, Internet-based voice and
data services, store and retrieve value-added network services, international calling card services and
audiotex services.
SBO licences may cover more than one service category. An SBO must obtain the prior approval of the
IDA for any proposed changes to the scope of its licensed operations and services.
3G licensing
IDA announced on 11 April 2001 that three eligible bidders, MobileOne (Asia) Pte Ltd, Mobile and
StarHub Mobile Pte Ltd, were each provisionally awarded a 3G spectrum right of their choice. Each 3G
licensee was required to pay a licence fee of S$100 million to IDA by 23 April 2001. On 23 April
2001, Mobile was awarded a 3G spectrum right and an FBO licence to provide 3G mobile
communications services within Singapore.
3G licensees are required to roll out their nationwide network by 31 December 2004, but the IDA may
review that deadline, in light of market reports on likely delays in the delivery of network equipment and
handsets for cellular services and international market developments.
An incumbent FBO operating public cellular mobile telephone services networks, and who is also granted
a 3G FBO licence, must offer roaming services on their existing cellular networks to new 3G entrants.
If agreement cannot be reached in negotiations between an incumbent FBO and a new 3G entrant, the
IDA will intervene to help establish a roaming agreement. The price and non-price terms and conditions
determined by the IDA will apply (unless there are reasons justifying departure) to all other incumbent
operators who are unable to commercially negotiate such roaming agreements with new 3G licensees.
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SingNet 25 May 2000 24 May 2003 Operation and provision of public Internet
access services, virtual private network
services and international simple resale
services.
Yellow 17 April 2000 30 June 2002 Provision of live audiotex services.
Pages
Other Licences
holds a licence for the provision of video-on-demand services in Singapore. This was issued by the SBA on
15 November 1997 and will expire on 14 November 2002.
Sat Pte Ltd, a subsidiary of , holds a satellite system licence from the IDA to utilise the Singapore
registered satellite orbital slot and to establish, install and maintain the satellite system for the carriage
of signals for telecommunication and broadcasting. This licence was granted to Sat on 26 October 1998
and will be valid for the duration of the design lifetime of the satellite of 12 years.
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A dominant licensee must comply with special requirements set out in the Code. There are procedures by
which a dominant licensee can seek reclassification or an exemption on a service or facilities specific basis,
from these special requirements.
Pursuant to the provisions of the Code, the IDA has designated and Singapore CableVision Limited
(which is not related to ) as dominant licensees with effect from 29 September 2000.
Duties to End-Users under the Code
Licensees must modify their service agreements with their business or residential end-users to incorporate
certain basic requirements, including the following duties:
• to comply with minimum quality standards;
• to provide accurate and timely bills;
• to provide fair dispute resolution procedures; and
• to protect end-user service information.
In addition, dominant licensees are required to provide telecommunications services on demand, on an
unbundled basis, on prices, terms and conditions that are just, reasonable and non-discriminatory, and
pursuant to tariffs approved by the IDA. The Code sets out the procedure that the IDA will use to assess
a dominant licensee’s tariffs.
Interconnection Obligations under the Code
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to impose whatever solution it deems appropriate (even if neither licensee advocates that solution). The
IDA requires the parties to agree that any disputes regarding the implementation of an interconnection
agreement arrived at through the dispute resolution exercise conducted by the IDA will be referred to the
IDA for resolution.
Infrastructure Sharing under the Code
The Code permits a licensee to request the right to share infrastructure controlled by another licensee.
The licensees must first attempt to negotiate a voluntary sharing agreement. If they are unable to do so,
the requesting licensee may ask the IDA to make a determination as to whether the infrastructure must
be shared – either because it constitutes Critical Support Infrastructure (as defined in the Code) or
because the IDA concludes that sharing it would serve the public interest. The Code designates certain
infrastructure that licensees must share at cost-based prices – such as masts, poles and towers. Upon
receiving all information required by the IDA in relation to any infrastructure sharing dispute, the IDA will,
in accordance with the Code, issue a binding direction as to whether the licensee that controls the
infrastructure is required to share it. Where the licensees are unable to reach a sharing agreement after
the IDA has directed that a specific infrastructure has to be shared, the requesting licensee may ask the
IDA to conduct a dispute resolution exercise under the Code.
Competition Rules under the Code
The Code sets out rules that preclude licensees from engaging in unilateral anti-competitive conduct.
A dominant licensee must not abuse its market position in a manner that unreasonably restricts
competition, for example, it may not set prices at levels that are so low as to unreasonably restrict
competition, nor may it leverage its position in the market to impede competition in an adjacent,
currently competitive market.
The Code prohibits licensees from entering into agreements that unreasonably restrict competition and
sets out a framework by which the IDA will assess the permissibility of such agreements. Licensees are
prohibited from entering into certain types of agreements, such as price fixing arrangements or group
boycotts. The permissibility of a licensee entering into other agreements, such as joint research or
marketing ventures, will be assessed based on each agreement’s likely or actual impact on competition.
In addition, licensees are subject to a prohibition on engaging in unfair methods of competition such as
false advertising or unnecessarily degrading the quality of a competitor’s service.
Each FBO licence issued by the IDA requires the licensee to obtain the IDA’s approval prior to any
assignment of the licence or any change in the ownership, shareholding or management of the licensee.
The IDA will not approve a request to assign an FBO licence or a change of ownership, shareholding or
management of an FBO licensee in connection with a proposed consolidation that is likely to
unreasonably restrict competition.
Enforcement
The IDA may enforce the provisions of the Code by initiating an enforcement action either on its own
initiative or in response to a request filed by a third party. Such actions must be initiated within two years
after the date on which the alleged contravention occurred or, in certain cases, within two years after the
date of discovery of the alleged contravention. In enforcing the provisions of the Code, the IDA may issue
warnings, directions or orders to cease and desist. The IDA may also impose financial penalties and
suspend, shorten the duration of, or terminate a licensee’s licence. While reserving the right to impose
financial penalties of up to S$1 million, the IDA will consider all relevant aggravating or mitigating factors
in order to ensure that any financial penalty imposed is proportionate to the contravention.
Quality of Service Standards
The IDA regulates the performance of service operators by setting the quality of service standards by
reference to primary and secondary performance indicators. Generally, primary performance indicators
relate to standards that tend to have a wider public impact over a longer period of time and which can
cause major public inconvenience should there be failure of compliance.
Service operators must submit quarterly reports regarding their service quality to the IDA. The IDA also
conducts surveys to monitor customer satisfaction and to obtain consumer feedback on how services may
be further improved. Based on these findings, service operators are instructed by the IDA to correct their
areas of weakness. The findings are also used to fine-tune the IDA’s performance quality standards.
The IDA has established a penalty framework for non-compliance with quality of service standards (up to
a penalty of S$5,000 per primary indicator per month and S$1,000 per secondary indicator per month).
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ANNEXURE 5
MATERIAL INFORMATION RELEASES
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Since 31 March 2000 (being the date of the balance sheet in ’s most recently published annual
report), has made the following material public announcements and media releases to the SGX-ST:
• On 17 April 2000, announced to the SGX-ST that Yellow Pages, has extended a six month
convertible loan of 480 million baht to Teleinfo Media Co., Ltd (“Teleinfo Media”) of
Thailand. The loan provides Yellow Pages with the option to take a 25% stake in Teleinfo Media at
the end of the six month period.
• On 3 May 2000, announced to the SGX-ST that it has agreed to buy a 31% stake in Point Asia Dot
Com (Thailand) Limited, the parent company of Thailand’s leading Internet Service Provider, Loxley
Information Service Company Limited, for US$23 million.
• On 31 May 2000, announced to the SGX-ST that SingaSat Private Limited, ’s wholly-owned
subsidiary which holds its satellite investments, has doubled its stake in Hong Kong
based APT Satellite International Company Limited (“APT International”) from one seventh to two
sevenths (28.57%). APT International holds 51% of APT Satellite Holdings Limited.
• On 13 June 2000, announced to the SGX-ST that Ventures (Singapore) Private Limited, a wholly-
owned subsidiary of , has acquired 63,158 series A preferred shares of S$1.00 each in the capital of
Airgateway.com Private Limited, representing a 24% interest in Airgateway.com.
• On 21 June 2000, announced to the SGX-ST that APT Satellite Glory Limited (“APT Glory”), a
wholly-owned subsidiary of APT Satellite, and SingaSat Private Limited (“SingaSat”) signed a joint
venture agreement in relation to APT Satellite Telecommunications Limited (“APT Telecom”). APT
Telecom is 55% owned by APT Glory and 45% owned by SingaSat. APT Telecom was granted an
external satellite-based Fixed Telecommunication Network Services Licence in Hong Kong on 19 June
2000 by the Office of Telecommunications Authority of Hong Kong. Under the terms of the licence,
APT Telecom, which is based in Hong Kong, will be able to offer external telecommunications services
in the Hong Kong Special Administrative Region through APT Satellite’s APSTAR satellites and other
systems.
• On 18 July 2000, announced to the SGX-ST that it has formed a subsidiary, C2C AsiaPac Pte Ltd, to
embark on the construction of the C2C cable network, a state of the art pan-Asian submarine cable
system.
• On 24 July 2000, announced to the SGX-ST that other leading companies in Asia and the USA have
become shareholders of C2C, a new cable builder and operator formed by . The announcement
states that the new shareholders of C2C include Globe Telecom of the Philippines, GNG Networks,
Inc. of South Korea, iAdvantage (Network) Offshore Limited of Hong Kong, KDDI (formerly known as
KDD) of Japan, NCIC of Taiwan and Norwest Venture Partners of the USA, among others. With the
participation of the new shareholders, ’s stake in C2C was reduced to about 60%.
• On 27 July 2000, announced to the SGX-ST that it has invested US$45 million for a 30% stake in
Infoserve Technology Corporation, a leading Asian ISP with operations in Taiwan, Japan, Hong Kong
and the USA.
• On 27 July 2000, announced to the SGX-ST that SingPost, TNT Post Group NV (“TPG”) and the
British Post Office had signed a joint venture agreement to establish a global cross border mail
alliance. The alliance would be constituted by a global joint venture company (“JVC”) in which TPG
would have a 51% stake and the British Post Office and Singapore Post would each have a 24.5%
stake, as well as an Asia Pacific joint venture company to be incorporated in Singapore in which
Singapore Post would have a 50% stake and the global JVC would hold the balance of 50%. The joint
venture agreement is subject to conditions precedent, including the approval of relevant authorities.
• On 28 July 2000, announced to the SGX-ST that NCS, a wholly-owned subsidiary of , has acquired a
70% interest in Shanghai Zhong Sheng Information Technology Co Limited.
• On 7 August 2000, announced to the SGX-ST that International has entered into agreements with the
Bharti Group for the acquisition by International or its nominees of the following:
– an aggregate interest of approximately 20% in the share capital of Bharti Telecom Limited; and
– an interest of approximately 15% in the issued capital of Bharti Tele-Ventures Limited.
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• On 21 August 2000, announced to the SGX-ST that following the lifting of the foreign
shareholding restrictions in the Taiwanese telecommunications sector, has increased its
interests in NCIC from 18% to 24.3%.
• On 6 October 2000, announced to the SGX-ST that it has been informed by the Inland Revenue
Authority of Singapore that the compensation payment of $859 million to be made to by the IDA
of Singapore in respect of the accelerated liberalisation of the communications market from 1
April 2000 would not attract any income tax liability. The Inland Revenue Authority of Singapore
has advised that this interpretation would also apply to the earlier compensation payment of
S$1.5 billion made to in 1997.
• On 24 October 2000, announced to the SGX-ST that and Bharti Enterprises, are setting up a joint
venture to build and operate India’s first private sector submarine fibre-optic cable network. The
announcement states that the venture plans a total investment of US$650 million.
A consortium of Alcatel Submarine Networks of France and Fujitsu Limited of Japan has been selected
to design, manufacture, install and commission the Singapore-Chennai cable. The value of the supply
contract is nearly US$250 million. Construction has commenced and the cable is expected to start
carrying commercial traffic by end 2001.
• On 10 November 2000, announced to the SGX-ST its half year results for the six months ended 30
September 2000. The announcement stated that the compensation payments from the Singapore
Government for modification of ’s original licence and the earlier introduction of market liberalisation
are accounted for as deferred compensation in the balance sheet and recognised on a straight line
basis over seven financial years from 1 April 2000. The compensation payments have been ruled by
the Inland Revenue Authority of Singapore as not taxable. The IDA has claimed that the assumed tax
component on the compensation payment of S$1.5 billion in 1997 should be repaid by .
• On 20 November 2000, announced to the SGX-ST that it had entered into a joint venture
agreement with the Virgin Group. The announcement states that and the Virgin Group will have
an equal shareholding in a joint venture company, which will be known as Virgin Mobile Asia. The
initial funding for this joint venture was US$100 million, funded equally by and the Virgin Group.
The announcement states that will grant to Virgin Mobile Asia a secured convertible loan facility of up
to US$450 million, on commercial terms, to be used for regional expansion under a jointly agreed
business plan. Virgin Mobile Asia will have a 30 year licence to use various Virgin trade marks in the Asian
region. Singapore Telecom Mobile Private Limited will supply or procure the supply of
telecommunications services to the joint venture in Singapore.
• On 23 November 2000, announced to the SGX-ST that and STT Communications Ltd, a subsidiary of
Singapore Technologies Telemedia Pte Ltd, have entered into an agreement to merge their trunked
radio service operations. The announcement states that the new joint venture company, to be named
Digital Network Access Communications Pte Ltd (“DNA Comms”), will offer trunked radio services,
a wireless communications service using handsets that function as both a two-way radio as well as a
phone. and STT Communications will hold equal stakes in DNA Comms.
• On 24 November 2000, announced to the SGX-ST that International has subscribed P929,421,000
for 1,281,960 Philippine Deposit Receipts issued by Globe Telecom Holdings Inc. In connection with
this Philippine Deposit Receipts issue, Globe Telecom has issued additional shares, reducing
International’s direct shareholding in Globe Telecom from 39.07% to 35.63%.
• On 7 December 2000, and KDDI (formerly known as KDD) announced that the joint venture plan
between the parties entered into in November 1999 would be put on hold.
• On 31 January 2001, announced to the SGX-ST that Asia’s two e-powerhouses, Singapore- based
SESAMi.com and Hong Kong-based Asia2B.com Holdings Limited (“Asia 2B”), will merge to create the
Asia Pacific region’s foremost e-commerce service provider and operator of the leading
e-h ub in Asia. The announcement states that the newly merged entity will be known as SESAMi Inc.
The shareholder weighting will be evenly split: Asia 2B’s and SESAMi.com’s existing stakeholder
groups will hold 50% of the shares each. , which held an 89% interest in SESAMi.com prior to the
joint venture, now holds a 44.5% interest in the new joint venture company.
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• On 2 February 2001, announced that its wholly-owned subsidiary, Yellow Pages, had acquired a
25% stake in Teleinfo Media Co., Ltd.
• On 15 February 2001, announced to the SGX-ST that it had submitted a non binding indicative
expression of interest for the acquisition of shares in Optus. The acquisition is subject to the approval of
the Board of Directors and all other necessary regulatory and other approvals.
• On 19 February 2001, announced that it has launched a S$1 billion bond issue as part of its effort
to continually optimise its capital structure.
• On 7 March 2001, announced to the SGX-ST that Globe Telecom and its principal shareholders
Ayala Corporation (“Ayala”) and International have signed a series of agreements with Asiacom
Philippines, Inc (“Asiacom”) and DeTe Asia Holding GmbH (“DeTeAsia”), a
wholly-owned subsidiary of Deutsche Telekom AG, to facilitate the acquisition by Globe Telecom of
100% of Isla Communications, Co. (“Islacom”). DeTe Asia and Asiacom will become shareholders
in Globe Telecom, and International and Ayala will acquire shares in Asiacom. The announcement
states that the transaction is subject, inter alia, to the approval of the Philippine Securities and
Exchange Commission. The National Telecommunications Commission approved the acquisition by
Globe Telecom of 100% of Islacom on 2 February 2001.
• On 26 March 2001, announced to the SGX-ST that it has announced a bid for Optus. The
announcement states that Optus Shareholders will be offered 1.66 Shares, or 0.8 Shares plus
A$2.25 cash, or 0.54 Shares plus A$2.00 cash plus A$0.45 US$ denominated bonds. The
announcement states that the terms of this Offer imply an equity purchase range of A$14.9 billion
to A$16 billion. If the Offer succeeds, will seek a general listing on the ASX.
• On 12 April 2001, announced to the SGX-ST that it had mandated Citibank and Salomon Smith
Barney as the coordinator and Mandated Lead Arranger for a bridging loan facility of up to A$3
billion. The announcement states that the loan will be used to finance ’s proposed acquisition of
Optus.
• On 27 April 2001, announced to the SGX-ST that the Singapore Minister for Finance (Incorporated)
has given written notice of the surrender of all special rights attached to the Special Share and
conversion of the Special Share to an ordinary share with effect from the date the Articles of
Association are altered to delete reference to the Special Share and the Special Member (the
Singapore Minister for Finance (Incorporated)).
• On 4 May 2001, announced to the SGX-ST that it had acquired a 30% interest in SDT, which, in turn,
has a 47.55% interest in DPC. DPC operates and provides PCN cellular services in Thailand.
• On 7 May 2001, announced that it will increase its investment in the Bharti Group by up to US$200
million. ’s latest commitment will increase its total investment in the Bharti Group to US$650
million. stated that Bharti had also announced that a number of financial investors including E.M.
Warburg Pincus have separately committed investments totalling up to US$260 million.
• On 9 May 2001, announced to the SGX-ST that it has received the modifications from ASIC and the
ASX referred to in its 26 March 2001 announcement of its offer for Optus. The announcement states
that the IDA’s approval has been obtained, while the process of obtaining others is progressing well.
• On 10 May 2001, made an announcement to the SGX-ST of its audited results for the year ended
31 March 2001.
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MATERIAL OPTUS INFORMATION RELEASES
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Since 31 March 2000 (being the date of the balance sheet in the last annual report), Optus has made the
following material public announcements and media releases:
• On 3 April 2000, Optus announced that it had signed a wholesale communications capacity deal to
provide AAPT with a national backbone network. The announcement states that the deal with AAPT
is part of a series of wholesale capacity deals that the company has done over the last financial year
on each of its five networks. The new capacity will be used to extend the geographic reach of AAPT’s
existing network as well as providing telephone and data transmission for its mobile and LMDS
networks. AAPT is expected to be able to access its new network capacity in approximately
12 months.
• On 4 April 2000, Optus announced the rollout of Australia’s first operational high speed mobile data
network, using GPRS technology. Using this technology Optus will be able to deliver data to mobile
phones up to four times faster than is currently available. GPRS works by breaking information into
discrete “packets” for faster transmission. This makes it ideal for delivering data such as internet and
intranet pages, graphics and even video to mobile phones and other mobile devices.
• On 12 April 2000 Optus announced that Australia’s three GSM mobile network service providers,
Telstra, Optus and Vodafone, had finalised arrangements that will enable GSM customers to send SMS
text messages to each other using their mobile phones. SMS messages are created by using the
keypad on a mobile phone to type a text message that can then be sent to other mobile phones.
Prior to these arrangements customers could only send messages to people on the same mobile
network. The new intercarrier SMS service will be available to all three service providers’ GSM
customers with SMS compatible handsets from Wednesday 12 April 2000.
• On 12 April 2000 Optus announced that it had signed a deal with internet retailer “dstore” to deliver
online shopping through WAP (Wireless Application Protocol) to mobile phones. Customers will be
able to buy goods and services using the keypad of a mobile phone handset to enter credit card
details. At launch, consumers will be able to select items from a range of dstore’s most popular
categories including books, music CDs, videos, games, DVDs, toys and sporting goods. The dstore
content will be available on Optus Networker in early May 2000. Optus Networker is available to
Optus’ GSM mobile customers with a WAP capable mobile phone.
• On 23 May 2000, Optus announced that it had signed a six year, A$42 million contract with
Airservices Australia (“Airservices”) to provide a national integrated communications network. The
announcement states that Optus has been a long term supplier of satellite services to Airservices and
this new contract will see Optus provide a range of land-based communication capabilities. Airservices
is the commercial authority responsible for air space and air traffic flow management, navigation
services, search and rescue alerts and fire fighting at airports. Under the contract Optus will provide a
sophisticated combination of communication infrastructure including satellite, fibre optic cable and
frame relay services to link over 30 locations around Australia, including the major airports.
• On 26 May 2000, Optus announced that it had sold its Optus Health Solutions business to IBA
Technologies Limited (“IBA”). Under the terms of the deal, Optus will take an 8% stake in IBA and an
option to acquire a further 5%. In exchange, IBA will acquire Optus’ Health Solutions business. Optus
Health Solutions provides electronic claiming and billing systems for general practitioners and allied
health professionals. John Filmer, Director of Enterprise Cable & Wireless Optus, will join the
IBA board.
• On 5 June 2000, Optus and the Virgin Group announced that they have formally established an
Australian joint venture company, Virgin Mobile Australia. The establishment of the company cements
an announcement in February that Optus and Virgin had signed a Heads of Agreement to form a joint
venture.
• On 7 June 2000, Optus announced its Application Service Provider push into the Australian market on
the back of a global alliance between Cable and Wireless plc and key global industry players Compaq
and Microsoft. Optus, in partnership with Compaq and Microsoft, will deploy Microsoft Office and
Outlook as a hosted application set to the small and medium enterprise (“SME”) market.
The announcement states that Compaq will be providing a range of internet access devices such as
iPAQ Pocket – PC through to storage and server infrastructure. Optus and Compaq will develop
selected channels to market and sell the new services. Optus will continue to expand the application
portfolio to SMEs and will incorporate the Commerce One procurement application into the offering
among others.
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• On 8 June 2000, Optus announced that using Dense Wavelength Division Multiplex (“ DWDM”)
technology it will increase 40 fold the capacity of its fibre optic network. The system will provide up
to 40 wavelength channels at 10Gbps with the ability to expand to 160 channels. The announcement
states that Optus is set to award multi-million dollar contracts for DWDM technology to Nortel
Networks and Fujitsu. DWDM is a technology which increases the capacity of existing optic fibres by
using multiple lasers and transmitting multiple light signals over a single optical fibre. The DWDM
equipment is expected to be installed and in use by October 2000.
• On 14 June 2000, Optus announced a strategic alliance between its wholly owned subsidiary XYZed
and Lucent Technologies to build a national digital subscriber line network to deliver broadband
access to business customers. Lucent will build, manage and maintain the initial XYZed netwo rk
including the provisioning of equipment in Telstra exchanges and customer premises, as well as
performance monitoring and field maintenance. XYZed will use the AnyMedia@Access System,
Lucent’s integrated narrowband and broadband access platform, to provide broadband services in
key metropolitan areas. XYZed’s high speed access service will be marketed through wholesale
agreements with Optus, other service providers and businesses from September 2000.
• On 15 June 2000, Optus announced that it would move quickly to take advantage of the new global
alliance between German based software house SAP and US based business to business e-commerce
specialist, Commerce One, to deliver integrated B2B (business to business) solutions to its custome rs.
Optus is the exclusive licence holder of Commerce One’s MarketSite in Australia and New Zealand.
Optus launched Australia’s first internationally recognised B2B e-commerce platform CWO MarketSite
and Enterprise Buysite in early 2000. MarketSite is an electronic marketplace allowing business to
trade online in real time. The portal links to suppliers, contains supplier catalogues and processes
transactions.
• On 23 June 2000, Optus announced that it had closed an issue of US$500 million of senior un secured
guaranteed notes through a private placement to institutional investors in the United States on
Thursday 22 June. The notes carry a coupon of 8% in US$ and Optus has swapped the notes back to
A$. The issue was announced and priced within four days reflecting strong investor demand. The
announcement states that the issue was a huge success in terms of timing, execution and pricing.
Allocations were made to over 75 investors and the issue builds on Optus’ US investor base.
• On 13 July 2000, Optus announced that it had won a contract valued at up to A$18 million over three
and a half years to supply and manage all of the South Australian Government’s mobile telephone
services. The contract will cover an initial 18 month period followed by two one-year optional
extensions. Under the terms of the contract, Optus will be the supplier of mobile fleet management
services to over 160 South Australian Government agencies and will oversee the Government’s mobile
inventory, providing web-based billing and reporting services as well as managing the mobile services
provided by other service providers. The contract includes a commitment by Optus to accelerate
the roll-out of its GSM mobile telephone infrastructure, to add another 50 base stations to the
133 already in operation in South Australia.
• On 18 July 2000, Optus announced the launch of Ozitalk, a network of unique worldwide alliances
with the aim of putting an Optus mobile into the hands of every overseas visitor. The alliances include
major communications service providers, airlines and overseas retailers. Ozitalk caters for inbound
travellers’ communication needs by providing services from mobiles to calling cards as well as offering
travel assistance.
The announcement states that, using Ozitalk, tourists will be able to buy or rent a pre-paid mobile
phone or purchase a global calling card, quickly and easily from anywhere in the world. In addition,
Ozitalk will also provide a 24 hour help hotline including medical and legal advice, automotive
assistance, translator services and travel tips.
• On 8 August 2000 Optus announced alliances with Computer Science Corporation, IBM and Nokia
that will deliver the next generation of mobile data services for business. Optus and Nokia had also
agreed to launch a data incubator centre, which will develop data business applications specifically for
WAP, GPRS and other mobile technologies. The announcement states that the alliances will provide
solutions allowing the transition of corporate systems to the mobile environment. Earlier this year
Optus launched Australia’s first operational GPRS network.
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• On 8 August 2000, Optus announced that it had formed a partnership with the world’s largest
internet telephony service provider, ITXC Corp, to further the rollout of the Optus network onto its
Voice Over Internet Protocol (“VoIP”) network. The partnership allows Optus to increase the reach of
its worldwide network ahead of other Asia Pacific communication service providers.
The announcement states that the added benefits of the VoIP partnership are reduced internet
transport costs while service provider grade quality is assured through the combination of Optus’
stringent performance systems and ITXC’s patent-pending BestValue Routing Technology. The
announcement states that Optus’ long term international strategy is to continue the deployment of
its international IP network which, allied to the Cable & Wireless global IP network, builds a solid
foundation for lower cost transport for international voice/data services.
• On 10 August 2000, Optus confirmed that it is considering options for the future of its Consumer
& Multimedia Business which include bringing in a partner or proceeding to a launch of digital
interactive television.
• On 15 August 2000, Optus announced a special brand called Boost for the youth market which will
offer a range of pre-paid mobiles and phone cards. Boost is the result of a strategic alliance between
Optus and Boost Tel Pty Limited, a company with a team of experienced youth marketers who have
developed such brands as Stussy, Mossimo and Globe. The pre-paid mobile phones will be available in
non-traditional retail outlets including General Pants, Rebel Sport and Surf and Ski shops Austra lia
wide.
• On 2 September 2000, Optus announced that XYZed, a wholly owned subsidiary of Optus, launched
its wholesale DSL service, which will compete directly with Telstra in the $1.5 billion market for high
speed broadband access. It is the first competitor to build a dedicated national DSL network. The
company launches with a presence in 50 exchanges nationally and will continue to roll out its network
targeting more than 100 exchanges where corporate and large enterprise businesses are located.
XYZed will offer competitively priced, high speed, business quality DSL access to approximately 75%
of Australian businesses. DSL technology makes it possible to deliver high-speed data over exiting
copper phone lines.
• On 26 September 2000, Optus announced that it was in the process of seeking an equity partner for
its satellite business. Optus believes that an appropriate partner will deliver substantial benefits
including cost savings due to economies of scale and additional capacity, as well as providing access
to substantially more satellites.
• On 27 September 2000, Optus announced that it was conducting an ongoing review of structural
and strategic options for all three of its operating businesses, Data and Business Services, Mobile and
Consumer & Multimedia. The announcement states that the company believes it appropriate to
examine which structures for the three businesses will optimise Optus’ growth prospects and create
the greatest value for shareholders. The review will include options which Optus has already been
examining including an equity partnership in Consumer & Multimedia, a regional branding and
equity alliance for its Mobile business or new investment partners.
On 13 October 2000, Optus announced that it had obtained a 7.996% share of the issued capital
of IBA Technologies Limited. This was consideration for the sale of Optus Health Solutions to IBA
Technologies Limited which was announced on 26 May 2000.
• On 28 November 2000, Optus announced that it was successful in bidding for spectrum in the
27 GHz auction held by the Australian Communications Authority. Optus stated that the spectrum
would be used to deploy a Local Multipoint Distribution System (“LMDS”) customer access network
across Australia. LMDS technology delivers high speed data and voice services, can be implemented
quickly, scaled up easily and provides businesses with a greater choice of communication options.
Agility Networks, a wholly owned subsidiary of Optus, will use a wholesale model for marketing the
LMDS network services.
• On 18 December 2000, Optus announced the sale of Dingo Blue, a wholly owned subsidiary, to AGL
for A$22 million. Dingo Blue is an online service provider offering a suite of communications products
and services. The announcement states that the sale will help forge close ties between the two great
Australian companies. The sale will allow AGL to diversify and add value to clients, while Optus gains
by a closer relationship with one of Australia’s leading companies. The announcement states that the
partnership will result in the building of a significant new distribution channel for Optus and a growth
opportunity for Dingo Blue.
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• On 27 December 2000, Optus announced a wholesale communications deal to provide Pri mus
Telecom with a national backbone network. The announcement states that Primus is expected to
be able to access its new network in approximately six months. Optus stated that the deal will be
accounted for in a similar manner to that of the national backbone leasing arrangement with AAPT.
Optus will manage the network for Primus.
• On 10 January 2001, Optus announced that it would seek court resolution of an accounting issue
raised by ASIC concerning the accounting treatment of wholesale cable capacity sales in the
1999/2000 financial year. The long running dispute relates to Optus’ financial accounts for the
1999-2000 financial year in which a profit of A$28 million from a capacity sale to AAPT was not
recognised. In the same accounts, a A$82 million capacity sale was recognised. ASIC has questioned
Optus’ accounting treatment and Optus has been seeking resolution since 1999. Optus announced
that it would begin proceedings in the Supreme Court of New South Wales today.
• On 22 March 2001, Optus announced that it was successful in bidding for 3G spectrum in the
22 March 2001 2 GHz auction held by the Australian Communications Authority. The announcement
stated that Optus paid a total of A$248.87 million for 3G spectrum. This included A$241.1 million for
a national licence which covers 10 MHz in capital cities and 5 MHz in regional areas, plus Optus
bought 5 MHz of unpaired spectrum in most capital cities for A$7.77 million.
• On 2 April 2001, Optus unveiled its plans to deliver Australia’s first 3G network by announcing a
A$900 million infrastructure deal with Nokia, including a commitment for 3G applications
development.
• On 26 April 2001, Optus announced that it had received a dividend of US$80 million (A$160 million)
from its on-going investment in the Southern Cross Cable Network (“Southern Cross”). The
announcement further stated that the Optus share of Southern Cross profits is expected to be
approximately A$115 million, which will be booked in the Optus results for the year ended 31 March
2001, to be announced in May 2001. The announcement stated that the Southern Cross dividend will
contribute to Optus cash flow in the year ended 31 March 2001. Further on-going and substantial
dividend payments are expected to be received in the financial year ending March 2002 and future
years, based on Southern Cross continuing its successful marketing program.
• On 27 April 2001, SAP, SAPMarkets and Commerce One announced the signing of a strategic alliance
to offer integrated e-commerce solutions to businesses in Australia and New Zealand. The
announcement stated that under the agreement, the companies will jointly identify, market and
distribute e-commerce solutions and value-added services to selected customer accounts in targeted
industries and markets.
• On 10 May 2001, Optus announced its audited results for the year ended 31 March 2001.
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CORPORATE DIRECTORY
Singapore Telecommunications Limited
31 Exeter Road
Comcentre
Singapore 239732
SHARE REGISTRARS – SINGAPORE
M&C Services Private Limited
138 Robinson Road
#17-00 Hong Leong Centre
Singapore 068906
SHARE REGISTRY – AUSTRALIA
Computershare Investor Services Pty Limited
Level 2, 60 Carrington Street
Sydney NSW 2000, Australia
FINANCIAL ADVISER
Morgan Stanley Dean Witter Asia (Singapore) Pte
23 Church Street
#16-01 Capital Square
Singapore 049481
LEGAL ADVISER – AUSTRALIA
Blake Dawson Waldron
Level 41
Grosvenor Place
225 George Street
Sydney NSW 2000, Australia
LEGAL ADVISER – SINGAPORE
Allen & Gledhill
36 Robinson Road
#18-01 City House
Singapore 068877