SingTel chief denies bluffing

By Vanda Carson
07-04-2006
From: The Australian

THE head of Singapore Telecommunications and brother of the island state's Prime Minister has denied misleading Australian Prime Minister John Howard over the future of Optus's troubled pay-TV arm.

Lee Hsien Yang, the chief executive of SingTel - parent company of Optus - yesterday rejected claims that he had acted improperly in giving regulators and Mr Howard the impression that Optus would be forced to abandon pay-TV if a deal to share pay-TV programming with rival broadcaster Foxtel was not approved.
Under cross-examination for a second day in the Federal Court, Mr Lee conceded that in a teleconference with Mr Howard and Optus chief Chris Anderson in 2002, he had failed to mention that alternatives to closure of the pay-TV service were being investigated.

Mr Lee agreed with suggestions that he had told then-Australian Competition & Consumer Commission chairman Allan Fels that Optus would also exit telephony and other services as a consequence of having to close down its pay-TV business.

Kerry Stokes's Seven Network is suing Optus, telco rival Telstra and other media companies in a $1.1 billion damages suit over the closure of Seven's pay-TV sports content provider C7.

Seven has alleged that Optus was only bluffing about closing the pay-TV business, in order to pressure the regulator to approve a content-sharing deal with Foxtel.

It alleges that the ACCC was not fully informed before approving the deal in March 2002 and that had the watchdog known the full details it would have found the deal to be anti-competitive.

Seven alleges that the content-sharing agreement ended price competition between Optus and Foxtel's pay-TV service and aided Foxtel's pursuit of a monopoly business. Seven alleges Foxtel's monopoly forced C7 out of business.

C7 ceased operating in May 2002, shortly after Optus severed all supply arrangements with the Seven subsidiary.

Mr Lee denied the plan to close the business was a pretence, arguing he was concerned about the survival of the Optus pay-TV arm because it was losing money.

He said he recalled Mr Anderson telling both Mr Howard and the ACCC that he (Mr Anderson) "would have to recommend to his shareholders and the SingTel board that we close down the business" if the content-sharing deal was knocked back.

Counsel for Seven, John Karkar QC, asked Mr Lee: "You did not tell the Prime Minister, did you, at that meeting that in fact the board of Singtel had resolved" to continue negotiations involving a merger with rival Austar?.

"No, we didn't," Mr Lee replied.

Documents tendered to the court showed Optus considered three options for its pay-TV operation in 2002, including "managing it for cash", which Mr Lee said would result in its eventual closure, a merger with Austar, or doing a deal with Foxtel.

Mr Lee agreed that he understood that Telstra and Foxtel would profit from the content-sharing agreement because it reduced competition.

He also denied that Optus's decision to reject a deal with C7 "flies in the face of business common sense".

Singapore