Analysts cautious on SingTel Indian deal

SINGAPORE: Shares of Singapore Telecommunications Ltd. blipped higher on

Monday after it said it was planning to invest US $400 million in an Indian

telecom firm, but analysts were cautious over the deal.

SingTel shares ended four cents up, or almost two per cent, at S $2.37, after

the group said it planned to take a significant minority stake in India's

privately held Bharti Group through Bharti Telecom Ltd. and Bharti Televentures

Ltd.

Analysts said details of the deal were still too uncertain to evaluate fully,

but some said it was difficult to be enthusiastic as the Indian cellular market

has seen little growth since it opened up in the mid-1990s.

"When I see that they are paying US $400 million for half a million

subscribers, I am a bit alarmed," said an analyst with a listed Singapore

brokerage, who declined to be named.

By comparison, SingTel Mobile, the group's domestic cellular unit, already

has a million subscribers in Singapore.

"It is a question of whether SingTel is getting into India at the right

time. A lot of foreign operators have pulled out in the last few years,"

said Prudential Bache Securities analyst Neil Jurgens.

He said the Indian cellular market had seen disappointing growth since the

sector was first open to foreign operators due to the high fees by regulators

among other problems.

"The penetration rate in India is very low, at 0.2 per cent or about two

million subscribers. It is very disappointing compared to say China, where we

are looking at about 50 million subscribers," said Jurgens, who has an

accumulate on SingTel.

He said things have improved in India in the last six months in terms of

lower fees for mobile operators, so SingTel could have a better chance do well

in India.

"Bharti is certainly one of the more well known operators," he

said.

A SingTel statement said the Bharti group, which is India's largest private

telecom services group, has a total of more than 500,000 subscribers.

It said the investment would be SingTel's third largest overseas investment

after its stakes in Belgium's Belgacom and Advance Info Services in Thailand.

SingTel said completion of the investment in Bharti was conditional upon

various issues, including finalization of agreements relating to the

transactions and approval of all relevant authorities and third parties.

(C) Reuters Limited 2000.