March 12, 2003

All hail SingTel Optus chief, a modest profit

Eric Ellis, Singapore

ONE swallow does not a summer make. But Singapore Inc seems determined to turn that old axiom on its head with regard to one of its favourite sons - SingTel Optus chief executive Lee Hsien Yang.
Lee - the 42-year-old youngest son of Singapore's political strongman, Lee Kuan Yew - is enjoying a purple patch of positive publicity since SingTel's Australian operation, Optus, turned a modest $22 million profit in the December 2002 quarter.
Unsurprisingly, much of that publicity has been generated by Singapore's government-controlled media, the same government that owns 67 per cent of SingTel Optus.
While the prospect of continued Optus profits has been well received by analysts, it is a moot point whether the modest December quarter figure yet justifies the $14 billion-plus purchase price SingTel paid for Optus two years ago.
The acquisition has been a major negative for SingTel shares, which have slumped by about 60 per cent since the deal.
And, while Singapore's compliant journalists might like the Optus contribution, the market is less impressed. SingTel Optus shares have flatlined since the profit announcement last month.
But that seems to be a mere detail amid the lavish praise heaped upon Lee, long regarded as his father's less favoured son behind Singapore Deputy Prime Minister and political heir-apparent Lee Hsien Loong.
Singapore's English business daily, The Business Times, gushed: "SingTel chief proves critics wrong as telco surprises with strong showing.
"After years of barbs and criticism over his foreign forays, SingTel president and chief executive Lee Hsien Yang brought home the bacon."
Not to be denied, Optus chief executive Chris Anderson also got in on the act.
"The best thing that's ever happened to Optus - and I've been there six years - is SingTel's ownership," he told The Business Times.
Mr Anderson paid tribute to Mr Lee's leadership. "We see a lot of Hsien Yang, who gives quite inspirational direction," he said. "He is a very considerable regional business leader."
Attracting less attention, and praise, are the bankers who have been called in to review financing of SingTel Optus's struggling $3.5 billion undersea data cable play, C2C - one reason why SingTel's share price is proving stubbornly unresponsive.
C2C's dramas formed part of the same information avalanche that included the Optus profit, but received rather more modest attention in the BT. News that bankers were called in over a $US650 million secured financing facility when C2C missed a revenue target rated just one paragraph.
Analysts believe C2C, 60 per cent owned by SingTel, faces higher interest costs after missing the targets. The company has said it has generated about $US800 million in sales for C2C - well below the $US2 billion SingTel and partners have invested in the 17,000km submarine cable linking East Asia with India and Europe which has faltered as bandwidth demand has failed to take off.