Geert De Clercq

SINGAPORE: Singapore Telecommunications Ltd. has bought a 45 percent stake in Pacific Bangladesh Telecom Ltd., the country's third-largest cellular operator, for $118 million, as part of its drive to expand in South Asia.

The acquisition is the first in Bangladesh for SingTel, which owns nearly a third of India's top listed mobile phone company, Bharti Tele-Ventures Ltd., and is bidding for a stake in a Pakistan telecoms firm.

"The acquisition is in line with SingTel's strategy. They made investments in India about three to four years ago. And at that time, India was at a stage where Bangladesh is today," Manoj Menon, a partner with research consultancy Frost & Sullivan, said.

SingTel, Southeast Asia's largest telecoms firm, said in a statement on Thursday it has also been granted a call option to increase its equity interest in Pacific Bangladesh to 60 percent for an additional $65 million.

The call can be exercised between April 1 and June 30, 2007.

Pacific Bangladesh Telecom operates a nation-wide CDMA (code division multiple access) network and has a six percent market share.

"SingTel believes that there will be rapid telecommunications growth in Bangladesh for years to come, as has been experienced in other regional markets which SingTel has invested in," SingTel chief executive officer Lee Hsien Yang said in a statement.

Facing a mature and tiny home market, SingTel has spent S$17 billion ($10 billion) in recent years buying operators in high-growth Asian nations with fewer cellphone users, and in the bigger Australian market. It owns Optus Ltd., Australia's second-largest phone company.

It now derives about 75 percent of revenues and two-thirds of pretax earnings from operations outside Singapore, where more than nine in 10 of the 4.2 million people own a cellphone.

Last month, SingTel -- Asia's fifth-largest phone company by market value and among the top 20 globally -- said it would spend about $252 million to raise its effective stake in India's Bharti to 30.84 percent from 28.16 percent as it taps into the world's fastest growing cellphone market.

Majority government-owned SingTel is shortlisted to bid for a 26 percent controlling stake in state-owned Pakistan Telecommunication Co Ltd that could fetch $1.5 billion.

Besides the stakes in Optus, Bharti and Pacific Bangladesh, SingTel owns 21.46 percent of Thailand's Advanced Info Service Plc., 44.63 percent of the Philippines' Globe Telecom Inc. and 35 percent of Indonesia's PT Telkomsel.

TIMELY MOVE
Frost & Sullivan's Menon said Singtel's Bangladesh move was timely.

"There are some risks associated with investing in these countries -- political risks and other risks. But you have to take these risks at the right time. They took the risk in markets like India, Philippines and Thailand at the right time and it has paid off," he said.

Bangladesh, with about 140 million people, has around 5.4 million mobile phone users, representing a 3.9 percent mobile penetration rate.

Frost & Sullivan expects the mobile phone markets in India, Pakistan and Bangladesh to show explosive growth over the next 3-4 years.

The firm estimates the number of mobile users in India will grow at a compounded annual rate of 29 percent, compared to just 7-8 percent in more developed Southeast Asian markets such as Thailand and the Philippines.

SingTel shares closed 1.15 percent higher at S$2.64 on Thursday. They are up 9.66 percent in the year to date and up 16.52 in the past 12 months.

(Additional reporting by Muralikumar Anantharaman)