IDA okays OpenNet sale to SingTel's business trust

PHOTO: IDA okays OpenNet sale to SingTel's business trust

The Infocomm Development Authority (IDA) Thursday approved the sale of OpenNet to a business trust owned by SingTel, but set more conditions to allay fears that the deal could potentially lead to anti-competitive practices.

In August, OpenNet's shareholders - SingTel, SP Telecommunications, Singapore Press Holdings and Canada's Axia NetMedia - agreed to divest all their shares to NetLink Trust for $126 million.

NetLink Trust's trustee- manager CityNet is to manage the sale and will take over OpenNet's operations when the sale is complete.

But the sale required IDA's approval. It was also opposed by Internet service providers (ISPs) that compete with SingTel for retail broadband business. They cited conflict of interest issues.

IDA's deputy chief executive and director-general of telecoms and post, Mr Leong Keng Thai, said it had carefully considered the concerns of the ISPs but was satisfied that the sale would not substantially reduce competition or harm public interest.

For instance, the number of ISPs buying services wholesale from OpenNet has not been cut. Existing rules also require OpenNet to sell at the same wholesale rates to all, with price changes subject to IDA's approval.

IDA will also set up a monitoring board consisting of government representatives to ensure SingTel does not influence any CityNet decisions on service price and terms and conditions.

Any new contractor or telecommunications licensee appointments will also have to be approved by IDA.

"The safeguards will help to enhance the independence and neutrality of the post-consolidation entity from SingTel, particularly for the extended period before SingTel divests its unit-holdings in the NetLink Trust," said Mr Leong.

IDA has granted SingTel's request to postpone the original deadline to divest its majority stake in NetLink Trust by four years, to April 2018.

Mr Leong said the deadline extension is "not unreasonable in the light of the scope of the transfer and integration of the relevant assets, business and personnel".

The acquisition will take place in two phases. The first must start before year-end. It will take one year and involve the transfer of staff from OpenNet's key subcontractor SingTel and OpenNet's fibre assets to CityNet.

In the second, OpenNet will cease to exist, with its business operations handled by CityNet.

Noting concerns over OpenNet's delays in connecting customers to the fibre network, Mr Leong said: "The creation of a post-consolidation entity that manages ducts, manholes as well as the optical fibre within it may bring about more streamlined processes that will in turn lead to greater efficiencies and service improvements downstream."

M1 said it is still evaluating the details of IDA's decision and hopes the new arrangement will result in "tangible improvements that benefit consumers".

StarHub said it looks forward to working with IDA and the industry to ensure that OpenNet provides timely, quality services "on an open-access and non-discriminatory basis".

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