To compensate for the impact of accelerating the full liberalisation of the telecommunications sector by two years, from 1 April 2002 to 1 April 2000, the Government will compensate Singapore Telecommunications Ltd (SingTel) S$859 million and StarHub Pte Ltd (StarHub) S$1.082 billion...Singapore, 11 September 2000 | For Immediate Release
To compensate for the impact of accelerating the full liberalisation of the telecommunications sector by two years, from 1 April 2002 to 1 April 2000, the Government will compensate Singapore Telecommunications Ltd (SingTel) S$859 million and StarHub Pte Ltd (StarHub) S$1.082 billion nett of tax. The two companies have accepted the compensation offers. As part of the agreement with StarHub, StarHub will rollout a nationwide network that will also serve the residential market.
This follows the earlier introduction of full market competition in the telecommunications sector on 1 April 2000, which was announced by Mr Yeo Cheow Tong, Minister for Communications and Information Technology, on 21 January 20011. Compensation is being offered in recognition of the business and investment plans that both operators had made for duopoly-based public basic telecommunication services (PBTS) market, prior to the announcement of full market liberalisation.
The amount of compensation for each operator was calculated by an international consultant, based on the projected loss of earnings resulting from the early introduction of full competition2. A discounted cash flow approach was used to determine the difference in net present values for SingTel and StarHub, under the duopoly and the accelerated liberalisation scenarios. Under both scenarios, the calculation model considers parameters such as market size, market share and prices. The compensation covers services subject to PBTS licensing, and includes local and international telephony, local and international leased circuits, and public switched data services. The compensation calculation excludes non-PBTS services, such as mobile communications and Internet access services, as these service markets are already open to competition.
The Government is committed to introducing full market competition in the telecommunications sector. Competition spurs innovation, raises efficiency, improves services and lowers prices to the benefit of the public and businesses. The advance of full market competition by two years was necessary because of rapid changes in the global telecommunications market. In granting compensation, IDA recognises its earlier commitment, to SingTel and StarHub, to maintain a duopoly till 1 April 2002.
INFOCOMM DEVELOPMENT AUTHORITY OF SINGAPORE
Notes to the Editor
1 Please refer to the media release and speech issued on 21 January 2000 in the "Newsroom" section of the IDA at www.ida.gov.sg.
2 The IDA engaged Deloitte Consulting to assist in working out the compensation amounts.
About Infocomm Development Authority of Singapore
The Infocomm Development Authority of Singapore (IDA) is a dynamic organisation with an integrated perspective to developing, promoting and regulating info-communications in Singapore. In the fast-changing and converging spheres of telecommunications, information and media technologies, IDA will be the catalyst for change and growth in Singapore's evolution into a vibrant global info-communications technology centre. For more information, visit www.imda.gov.sg.
For media clarifications, please contact:
Ms Dulcie CHAN
Manager, Corporate Communication
Infocomm Development Authority of Singapore
Tel: (65) 6211-1999
Fax: (65) 6211-2227