UK-based Cable & Wireless PLC plans to increase its stake in Australia's Optus Communications by buying BellSouth's shares in the company.
Under the terms of the agreement, Cable & Wireless will purchase all of BellSouth's 24.5% shareholding in Optus. The acquisition will raise Cable & Wireless's stake to 49% in the Australian telecommunications company. No date has been finalised for the completion of the acquisition, according to Cable & Wireless officials.
Optus is a telecommunications provider that offers long distance, national and cellular telephone service, as well as cable television and data network services.
Cable & Wireless will make a cash payment of A$980 million (US$740 million) to BellSouth for its 490 million shares, officials say. In addition, BellSouth will receive an undisclosed interest in Cable & Wireless's 22.3% stake in Occel, a mobile telecommunications provider in the country of Columbia. This move is subject to Occel shareholder approval, however.
In addition to purchasing BellSouth's 490 million shares in Optus, Cable & Wireless will also be given the right to buy 298.9 million share options in the company at approximately A$1.89 a share. After exercising these share options, Cable & Wireless could raise its stake in Optus to more than 50%, officials said. This would give Cable & Wireless the opportunity to extend its management control over Optus operations.
Cable & Wireless's main strategy right now is to get control of companies offering a wide range of telecommunications services by owning more than 50% of the shares, says Jennifer Weller, a spokesperson for Cable & Wireless. The company has been involved for more than five years in Optus and believes it will be profitable in the next two years, she says. Occel, which offers only mobile servcies, is not the kind of business in which Cable & Wireless wants to have a majority stake.
"We have decided to dig our roots deeper in Australia where we can offer our customers a full range of integrated services, and to plan an exit from a dilutive wireless business in Columbia where we cannot," said Cable & Wireless CEO Richard Brown, in a statement.
Cable & Wireless, based in London, can be reached at http://www.cwplc.com/.