SingTel to use Belgacom sale proceeds for debt reduction and acquisitions

Asian telecommunications heavyweight Singapore Telecommunications (SingTel) [TELE.SI] is expected to use the proceeds from the forthcoming sale of its 12.5% stake in Belgian PTO Belgacom to fund debt reduction and finance further acquisitions in Asia. The Singaporean telco, which has seen its debt pile climb in recent years following the acquisition of stakes in mobile operators in Australia, India, Thailand, the Philippines and Indonesia, has found itself increasingly constrained in its efforts to develop its international portfolio due to its high debt load. It recently saw Standard & Poor’s reduce its credit rating to A+ from AA- over concerns that the government will offload its 67.5% stake as part of a US free trade agreement. However, with Belgacom’s planned listing in 2004 set to generate around EUR10 billion to EUR11 billion (SGD19.99 billion to SGD21.99 billion), SingTel’s Belgian assets are now estimated to be worth around SGD2.7 billion – a considerable increase on the SGD840 million it paid back in 1996. It is thought that the Asian telco could use the monies received to consolidate its position in the Asia-Pacific and kick-start efforts to take control of regional operators in which it already has minority stakes. Only recently SingTel was forced to turn down an offer from Deutsche Telekom to buy the German company’s 24.8% holding in Filipino operator Globe Telecom, which would have given it majority control in the operator.