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David Evans

British telecommunications giant Cable & Wireless (C&W) and Hutchison Whampoa are to sell their combined 40.2 per cent stake in Asia Satellite Telecommunications (AsiaSat) for US$372 million.

 Under an agreement announced yesterday, Societe Europeenne des Satellites (SES), the operator of Europe's Astra direct-to-home satellite system, will take a 34.13 per cent stake in the company.

 Existing shareholder China International Trust and Investment Corp (Citic) will increase its interest to a 34.82 per cent stake from 28.73 per cent.

 The agreement is scheduled for completion on January 15.

 Hutchison and C&W will receive an average price of HK$18.33 per AsiaSat share, which represents a 49 per cent premium to Wednesday's closing price of HK$12.30.

 C&W will receive US$266 million in cash, which will be used to reduce debts. Hutchison's US$106 million will be invested in core business operations.

 Hong Kong-based AsiaSat owns and operates three communications satellites providing broadcast and telecommunications services to over two-thirds of the world's population in 53 countries.

 A fourth satellite is expected to be launched next year.

 AsiaSat chief executive Peter Jackson said the restructuring represented a 'changing of the guard'.

 'It sees two of the founding parties making way for new, strategic partners,' he said.

 Mr Jackson said SES was a mature company which would bring with it new product technology and expertise which would take AsiaSat forward.

 'The result will be to enhance AsiaSat's coverage and market power and will put us in a very strong position in terms of our competitors and other global satellite providers,' he said.

 Romain Bausch, chairman of SES' management committee, said the company wanted to maximise the value of its investment for the benefit of customers, shareholders and staff.

 London-based Merrill Lynch analyst Neil Blackley said the alliance between SES and AsiaSat would mean they could source equipment and operational systems more cheaply.

 The two companies could also share technology and experience in servicing their respective markets, he said.

 'There are synergies between the two companies,' he said.

 Morgan Stanley Asia analyst Jeffrey Camp, who covers the satellite industry, said he suspected SES's strategy would be to create a bigger footprint and offer a larger seamless network to broadcasters.

 'There is no overlapping coverage between the two firms of any meaningful size. That makes this deal complimentary rather than competitive,' he said.

 Citic president Qin Xiao said his company was committed to the continued growth of AsiaSat and its decision to increase its stake reflected that commitment.

 C&W said yesterday its decision to exit AsiaSat was part of a strategy to continue divesting businesses in which it did not have management control.



C&W, Hutchison sell AsiaSat stake for US$372m