Singapore to fling telecom market wide open

Asian Economic News, Jan 24, 2000

SINGAPORE, Jan. 21 Kyodo

The Singapore government said Friday it will open the telecommunications market completely from April this year instead of in 2002 as earlier scheduled.

The industry "is changing so dramatically, and industry players and other countries are moving so quickly, Singapore would be left totally out of the game if we waited two years until 2002," Communications and Information Technology Minister Yeo Cheow Tong said at a news conference.

Yeo also said the current 49% cap on foreign ownership of public telecommunications companies in Singapore will be lifted immediately.

The government will compensate newcomer Starhub -- a joint venture between Japan's Nippon Telegraph and Telephone Corp. (NTT), British Telecom and two Singapore companies that will start operation in April this year -- for any losses it might suffer from the abrupt change in liberalization.

Singapore Telecom will also be compensated.

Both companies had made plans and investments based on a government decision in 1997 not to further liberalize the telecom market until March 2002.

The government will engage an international consultant to advise on appropriate compensation.

Starhub has expressed concern about the decision to speed up liberalization.

"We fully support competition...However, before we can even commence operations, this competitive scenario has now suddenly changed," Terry Clonz, chief executive officer of Starhub, said in a statement.

"I am certain that this will substantially change our investment plans and business focus," he said.

NTT has a 22% share in Starhub, British Telecom 18 %, Singapore Technologies Telemedia 34.5% and Singapore Power, 25.5%.

About 80% of the shares of Singapore Telecom are currently held by the Singapore government through Temasek Holdings. The rest are floated on the Singapore stock market.

The lifting of the 49% limit means that it would be possible for foreign investor to take over Singapore Telecom.

Yeo said new entrants can provide the whole panoply of telecommunications services, including local calls, long-distance calls, local leased circuits, international leased circuits, mobile telephones and paging.

The government will issue guidelines for the submission of proposals by new entrants at the end of this month.

"With this final step, we should be fairly comparable" to Hong Kong in terms of telecommunications liberalization, Yeo said.