News 2000
Singtel Mobile and Virgin Announce Billion Dollar Pan-Asian Venture
19/05/2000
SingTel Mobile and Virgin (Asia) Management Ltd (Virgin) today announced that the two companies have signed a Memorandum of Understanding (MOU) to create a billion dollar venture to offer cellular services throughout most of Asia and Internet services in Singapore.
Under the terms of the MOU, SingTel Mobile and Virgin will negotiate and finalise definitive agreements by August 2000. SingTel Mobile and Virgin will each have a 50 per cent shareholding in a new enterprise, Virgin Mobile (Asia) Pte Ltd, to be headquartered in Singapore. For the purposes of the MOU, both parties have agreed to an initial start up valuation of US$1 billion. The first tranche of the US$100 million will be provided equally by both shareholders on completion of the definitive agreements.
It is expected that Virgin Mobile will introduce services in the first quarter of 2001. The initial target markets are Singapore, Hong Kong, South Korea. These are three of the most developed economies in Asia where demand for cellular services remains high. The combined population of these three markets exceeds 55 million and the average cellular penetration of less than 50 per cent still lags behind the 70-odd per cent found in Scandinavian countries like Finland and Norway.
Virgin Mobile will function as a regional virtual mobile network operator, buying cellular airtime on a wholesale basis, from a leading local cellular service provider in each market, such as SingTel Mobile in Singapore. It will, however, manage its own marketing, billing and customer care functions. In Singapore, the company will also offer narrow and broadband Internet services.
Lucas Chow, SingTel Mobile's CEO said: "SingTel Mobile is delighted to have Virgin as a partner in this venture. We share Virgin's commitment to value, quality and innovation and look forward to working with them to bring fun and easy-to-use cellular services to consumers in this region.
"The venture supports the SingTel Group's effort to be a leading info-communications player in Asia. It reflects our willingness to invest in and exploit exciting business opportunities in the region. Virgin Mobile has been a huge success in the United Kingdom, and we are confident that Asia will likewise embrace the Virgin brand."
Sir Richard Branson, founder and chairman of the Virgin Group of Companies added: "Following the expansion of Virgin Atlantic Airways into the Asian market, and our retailing successes in Japan, we decided at the end of last year that the time was right to expand Virgin's presence in Asia. This ground-breaking agreement with SingTel Mobile is a very important step on that road, as there are no existing regional brands for mobile telephony in Asia. Indeed, there are no consumer brands in the mobile business and it is our ambition to become the first.
"Virgin Mobile in the UK launched last November as the world's first virtual mobile network operator, and it is this model that we are going to use in the Asian market, with a strong emphasis on customer service, value and product innovation. We believe SingTel Mobile will be an excellent partner and we greatly look forward to working together."
For further information please contact:
Steven Day, Virgin Mobile, Tel: 07931 777777
Will Whitehorn, Virgin Management, Tel: 0860 223789
Chia Boon Chong, SingTel, Tel: +65 838 2022
About SingTel Mobile
SingTel Mobile is a wholly-owned subsidiary of Singapore Telecommunications (SingTel). It has more than one million customers on its GSM 900 and GSM 1800 networks. The first operator to introduce WAP in Singapore, SingTel Mobile offers a suite of leading edge wireless e-services.
SingTel is a leading info-communications company in the Asia Pacific. Its vision is to be a pan-Asian total communications carrier with global connectivity. The group is also developing various Internet and e-commerce initiatives both in Singapore and the region.
SingTel has an extensive network of 19 overseas offices in 14 countries and territories around the world, including Indonesia, Thailand, Vietnam, Hong Kong, China, Taiwan, Japan, Australia, the United Kingdom and the United States. The group has investments worth more than S$6 billion (US$ 3.5 billion). Overseas investments currently contribute about 15 per cent of the group's pre-tax profit, with a proportionate share of the group's turnover of 25 per cent.
In 1998/99, SingTel turnover and net profit were S$4.88 billion (US$ 2.92 billion) and S$1.96 billion (US$1.17 billion) respectively. Listed on the Singapore Exchange, SingTel is Singapore's largest company in terms of market capitalisation (about US$22 billion).
About Virgin (Asia) Management
Virgin is one of the world's best known brand names. Over 150 Virgin companies trade around the world in a variety of distinct business areas, including transport, travel, financial services, retailing, telecommunications, consumer goods, and the Internet. Virgin is not a single holding company, but rather a branded venture capital organisation.
Virgin (Asia) Management Ltd was recently formed to develop, invest in and supervise the growth of new businesses in the Asia Pacific region, with a focus on e-commerce, telecommunications and retail activities.
Existing activities in Asia are not affected by today's announcement. Virgin Atlantic Airways flies from London to Shanghai, Tokyo and Hong Kong. It also code-share arrangements with Malaysian Airlines and a marketing alliance with Ansett. Singapore Airlines recently acquired a 49% equity stake in Virgin Atlantic's holding company for a consideration of 600 million pounds sterling. In Japan, Virgin has a number of existing business interests including Megastores, Cinemas and other consumer products. Plans were also announced recently to establish a domestic airline and a mobile telephony joint venture in Australia, both of which will start trading this year.
