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Asian Carriers Indulge in January Sales

It's as if someone fired a starting pistol in the Asia/Pacific telecom market at the turn of the year -- the region is awash with announcements and rumors about mergers and acquisitions (M&A) and market deregulation.

So here's a snapshot of recent activity, starting in what is currently one of the world's hottest telecom markets.

A Taste of India
The Times of India reports that mobile carrier Spice Telecom , which operates in India's Punjab region, is up for sale and in talks with Telekom Malaysia Bhd. . Malaysia's biggest carrier has been sniffing around the Indian market for an investment opportunity, having failed to pick up a stake in either Idea Cellular Ltd. or Aircel Ltd. , which was sold to Telekom's domestic rival Maxis Communications Bhd. last week. (See Maxis Snaps Up Aircel.)

India's Modi Group owns a 51 percent stake in Spice and has enlisted KPMG International to find a buyer, while Ashmore Investment Management and Deutsche Bank AG picked up the remaining 49 percent from Hong Kong's Distacom in October last year.

But the news isn't all about money flowing into India. State-owned carrier Mahanagar Telephone Nigam Ltd. (MTNL) is looking outward, eyeing a stake in a Chinese mobile operator. Government policy restricts MTNL to operating in New Delhi and Mumbai, with India's other state-run operator Bharat Sanchar Nigam Ltd. (BSNL) covering the rest of the country, so the carrier is looking for opportunities abroad to increase its revenues.

As part of that strategy, it has: formed a joint venture in Nepal, United Telecom Ltd.; acquired a license to operate in Mauritius; and is considering expansion into Africa. Its potential pickup in China is a regional carrier planning to offer services using TD-SCDMA, the Chinese version of 3G, for which licenses are expected to be issued this quarter. MTNL told reporters Tuesday it will make a decision on the purchase before the close of the financial year.

Peoples... Peoples who need peoples...
China Mobile Ltd. (NYSE: CHL) said Friday its Fit Best Ltd. subsidiary has received acceptances from 99.68 percent of the shareholders in China Resources Peoples Telephone Co. Ltd. for its takeover offer of HK$4.55 per share. The offer, initially announced in October, values the mobile operator at HK$3.38 billion ($436 million). (See China Mobile Makes Peoples Offer.) Shares in CR Peoples were suspended from trading on the Hong Kong Stock Exchange this morning, and will be delisted when the acquisition is completed in March and the company privatized.

The deal is China Mobile HK's first acquisition outside mainland China as it looks to grow outside its core territory. CEO Wang Jianzhou said in a statement the buy will "expand CMHK's footprint and enable CMHK to achieve synergies in areas such as procurement, marketing, and product development."

Ringing in Privatization
Pakistan's government is licking its wounds after a tussle with Etisalat , national carrier of the United Arab Emirates, over a controlling stake in Pakistan Telecommunication Co. Ltd. . Etisalat beat out China Mobile Communications Corp. and Singapore Telecommunications Ltd. (SingTel) (OTC: SGTJY) last year to win a 26 per cent interest in the company with a bid of $2.6 billion -- then defaulted on the payment.

In an attempt to salvage the deal, the government reluctantly "agreed to allow Etisalat to make an up front payment of $1.4 billion, minus the $260 million paid earlier at the time management control was transferred to them," according to a statement, and pay the remaining $1.2 billion in nine interest-free instalments every six months. Analysts warn the compromise sets a bad precedent for future deals as Pakistan looks to attract foreign investors, and plans to sell another 25 percent of PTCL over the next five years.

Pakistan isn't the only Asian country looking at privatizing its telecom assets. According to the AFP, the Vietnamese government is discussing plans to sell off Vietnam Posts and Telecommunications Corp. subsidiaries Vinaphone and MobiFone, the country's two largest mobile operators, to attract investment and increase competition.

Meanwhile, reports from Thailand suggest the regulator, National Telecommunications Commission (NTC), has attracted interest from a number of large international carriers, including BT Group plc (NYSE: BT; London: BTA), Vodafone Group plc (NYSE: VOD), Telefónica Europe plc (O2) , and NTT DoCoMo Inc. (NYSE: DCM), expressing interest in the market as it becomes liberalized. Carriers from Taiwan, Singapore, and Australia are also believed to be scoping out the Vietnamese market.

Word is that in late 2005, China Telecom and companies from Hong Kong and Sweden asked the NTC for details of investment guidelines and regulations. Both Vietnam and Thailand are working to introduce competition to their telecom markets as they seek to gain entry into the World Trade Organization (WTO).

Like a Virgin
Out in the Pacific, SingTel Optus Pty. Ltd. has acquired Virgin Mobile Telecoms Ltd. 's Australian business, along with a license to continue using the Virgin Mobile brand because "consumers identified with the passionate and fun approach the company has." (See Optus Buys Virgin Mobile Oz.)

Other New Year's resolutions reported by Asia's media include a plan by NTT DoCoMo to spend $300 million on a 5 percent stake in Philippine Long Distance Telephone Co. (PLDT) , while Tata Teleservices Ltd. is reportedly hoping to sell a 10 percent stake for $350 million.

— Nicole Willing, Reporter, Light Reading

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