News spends $1.6bn on SingTel
By Luke Collins
Mr Rupert Murdoch's News Corp has made a $US1 billion ($1.6 billion) investment in Singapore Telecommunications.
Talk of the SingTel deal and speculation News Corp is close to announcing an alliance with United States internet giant Yahoo! helped add $4 billion to the market value of News Corp yesterday.
The SingTel investment, announced last night, and the Yahoo! speculation follow weeks of conjecture about the direction Mr Murdoch would take following last month's mega-merger between America Online and Time Warner.
Details emerged yesterday of a series of meetings between Mr Murdoch's second-in-command, Mr Peter Chernin, and Yahoo! co-founder Mr Jerry Yang on a wide-ranging alliance between the companies.
Most observers believe Yahoo! will become a cornerstone investor in Platform Co, News Corp's $US40 billion satellite spin-off, which is likely to float later this year.
While overseas newspapers said company executives privately confirmed the discussions, a formal deal was said to still be some weeks away.
Last night, SingTel said in a statement that News Corp would take a 4 per cent stake for $US1 billion to help it fund its pending bid for Hong Kong's dominant telecommunications company, Cable and Wireless HKT Ltd.
SingTel said it and News Corp had agreed to jointly develop broadband, internet and wireless businesses in Asia.
The move will have wide-ranging implications for other News Corp operations in the region. There were suggestions last night that One.Tel - in which News Corp is a major investor - might make a placement to SingTel as part of any deal, which would shake up the local telecommunications sector.
News Corp is also planning to tip its 25 per cent Foxtel stake into Platform Co, and Foxtel's chief executive, Mr Tom Mockridge, has been in Hong Kong speaking to Star TV about the proposal.
A News Corp-SingTel deal could create another strong pay-TV operation and further pressure the Foxtel alliance with Telstra and Mr Kerry Packer's Publishing and Broadcasting Ltd.
"This is a transaction which would make sense for Murdoch," said Warburg Dillon Read's media analyst, Mr Peter Shorthouse. "SingTel must be looking for a pay-TV partner and the marketplace would be very similar to Hong Kong. It's potentially as attractive a transaction as the HKT one."
Earlier yesterday, News Corp declined to comment on either the Yahoo! or SingTel issues. Investors ignored the absence of official confirmation to send the company's ordinary shares $1.14 higher to $23.40 and its preferred stock up 81¢ to $20.45.
While the rumoured Yahoo! deal was not unexpected, observers were surprised by News Corp's emergence at SingTel and immediately noted the fine line Mr Murdoch must walk to maintain his relationships with all companies involved.
News Corp's Asian satellite broadcaster, Star TV, has a relationship with HKT via its pay-TV, internet and mobile joint venture, DTV.
SingTel, meanwhile, is bidding to buy HKT in competition with Pacific Century CyberWorks, the Hong Kong market darling headed by Mr Richard Li, the 33-year-old son of property tycoon Mr Li Ka-shing.
Mr Li was a major investor in Star TV until being bought out by News Corp and his CyberWorks remains favoured to grab control of HKT.
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