FIRB approves SingTel purchase of Optus

The Australian government's Foreign Investment Review Board has approved the planned take-over of the Cable & Wireless Optus Ltd by Singapore's government-owned telecommunications utility, SingTel.

But Treasurer Peter Costello has placed security-related conditions on the $14 billion take-over, which will give SingTel control of Optus C1/D joint civil/military communications satellite scheduled for launch late next year, as well as the existing Optus B1 satellite which carries a significant amount of military communications traffic. The conditions include compartmentalisation of satellite operations to protect sensitive Australian military information; and an assurance from SingTel that US State Department export licenses are not required for any of CWO's satellites, ground support equipment and technical data.

The $500 million Optus C1/D communications satellite incorporates a dedicated military payload paid for by Defence. This will be the principal carrier for Australian military satellite communications traffic in the Australian and south-east Asian region. Prime contractor for the satellite project is Mitsubishi Electric Co, but the satellite itself is being manufactured by Space Systems - Loral Inc in Palo Alto, California.

A spokesman for defence minister Peter Reith told ADM that Reith is confident that the security of Australia's military communications and the Australian Defence Force's continuing access to the Optus C1/D satellite won't be affected in any way by the Singtel take-over. On June 29 this year Singtel signed a contractually binding Deed of Agreement with the department to "protect Defence communications and to protect Defence investment in telecommunications infrastructure in relation to any SingTel takeover of Optus".

"These measures are a part of a range of Defence measures in both the short and long-term to protect its communications in an environment of proliferation of multinational ownership in Australian telecommunications," according to the department.

The conditions imposed by Costello "are designed to protect Australia's security interests and are imposed at the request, and with the approval, of the Department of Defence and the Australian Security Intelligence Organization (ASIO)," he said in a statement August 23. "Undertakings required by the US Department of State have been given by Singtel and Optus, and formal clearance from the Office of Defence Trade Controls, US Department of State that no export licences are required must be received before the acquisition can go ahead on these conditions," Costello added.

The take-over was expected to be concluded by the end of last month.