mor105 singtel draft 5

Offer bySingTel Australia Investment Ltd.

an indirectly wholly owned subsidiary of

Singapore Telecommunications Limited(a company incorporated in the Republic of Singapore)

ARBN 096 701 567

For all your ordinary shares in

Cable & Wireless Optus LimitedACN 052 833 208

THIS IS AN IMPORTANT DOCUMENT AND REQUIRES YOUR IMMEDIATEATTENTION.

THIS DOCUMENT IS THE BIDDER’SSTATEMENT (INCLUDING THE OFFER)WHICH HAS BEEN PREPARED BY SINGTELAUSTRALIA INVESTMENT LTD.

IF YOU ARE IN ANY DOUBT AS TO HOWTO DEAL WITH THIS DOCUMENT PLEASECONSULT YOUR FINANCIAL OR OTHERPROFESSIONAL ADVISER.

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Table of Contents

BIDDER’S STATEMENT

Letter from the SingTel Chairman

1 EXECUTIVE SUMMARY 7

1.1 Background to the Offer for your Optus Shares 8

1.2 SingTel 8

1.3 SingTel’s rationale for the acquisition of Optus 8

1.4 The benefits of SingTel acquiring Optus 9

1.5 The effect on SingTel of acquiring Optus 9

1.6 Acceptance considerations for Optus Shareholders 9

1.7 Definitions and glossary 9

2 OVERVIEW OF THE OFFER 11

2.1 Overview of the Offer 12

2.2 Implied A$ value of the three Offer Consideration alternatives 16

3 SINGTEL AND ITS STRATEGY 19

3.1 History and overview 20

3.2 SingTel’s goal and strategies 22

3.3 Singapore telecommunications industry 25

3.4 SingTel’s competitive environment 26

3.5 Business and support units 28

3.6 Principal business activities 30

3.7 Infrastructure and technology 35

3.8 International strategic investments 40

3.9 Employees 43

3.10 Property 44

3.11 SingTel Board and senior management 44

3.12 Capitalisation and indebtedness 47

3.13 Summary historical financial information 47

3.14 Management discussion and analysis of financial results and position 48

3.15 Dividend history 56

3.16 SingTel Share price history 56

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4 THE ACQUISITION OF OPTUS 57

4.1 Rationale for SingTel’s acquisition of Optus 58

4.2 Profile of SingTel after acquisition of Optus 58

4.3 The benefits of acquiring Optus 59

4.4 SingTel’s intentions in relation to the Optus business 63

4.5 Prospects for SingTel 66

4.6 Unaudited Pro-forma Consolidated Financial Information 68

4.7 Notes to the Pro-forma Consolidated Financial Information 79

4.8 Significant differences between Singapore GAAP and Australian GAAP,and between SingTel’s and Optus’ accounting policies 80

4.9 Report from PricewaterhouseCoopers on the unaudited Pro-formaConsolidated Financial Information 84

5 ACCEPTANCE CONSIDERATIONS FOR OPTUS SHAREHOLDERS 87

5.1 Summary of Acceptance Considerations 88

5.2 SingTel’s commitment as Optus’ new key strategic shareholder 88

5.3 Benefits of becoming a SingTel Shareholder 88

5.4 Liquidity of SingTel Shares 89

5.5 Risks of becoming a SingTel Shareholder or holding SingTel Bonds 89

5.6 Implications of not accepting the Offer 89

5.7 Individual preferences and circumstances of Optus Shareholders 90

5.8 Taxation implications for Optus Shareholders 90

5.9 Rights of SingTel Shareholders 90

6 RISK FACTORS 91

6.1 Overview 92

6.2 Changes in economic conditions 92

6.3 Changes in political conditions 92

6.4 Changes in regulatory environment 92

6.5 Competitive environment 92

6.6 Risks associated with SingTel’s regional expansion strategy 93

6.7 Changes in technology 93

6.8 Project risks 94

6.9 Perceived risks associated with electromagnetic energy 94

6.10 Control of SingTel 94

6.11 Changes in exchange rates 95

6.12 Market for and liquidity of SingTel Shares 95

6.13 Risks associated with the SingTel Bonds 96

6.14 Different shareholder rights 97

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7 TAXATION 99

7.1 Australian tax implications for Optus Shareholders 100

7.2 Singapore taxation considerations 109

8 INFORMATION ON SINGTEL SHARES 115

8.1 Share capital of SingTel 116

8.2 Recognition of other exchanges 116

8.3 Rights attaching to and regulations affecting SingTel Shares 116

8.4 Temasek’s role as majority shareholder 123

8.5 SingTel employee incentive plans 123

8.6 Substantial shareholders of SingTel 124

8.7 Trading arrangements for SingTel Shares 124

9 THE OFFER 127

9.1 The Offer 128

9.2 Consideration 128

9.3 SingTel Shares 129

9.4 SingTel Bonds 129

9.5 Unsecured Notes 130

9.6 Alternative disposal mechanisms 131

9.7 Buy-Back Alternative 131

9.8 How to accept this Offer 132

9.9 Offer Period 134

9.10 Your agreement resulting from acceptance 134

9.11 Provision of Offer Consideration 136

9.12 Conditions 138

9.13 Offerees 140

9.14 Variation and withdrawal 141

9.15 Governing Law 141

10 SUMMARY OF SINGTEL BOND TERMS AND CONDITIONS 143

10.1 Summary 144

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11 OTHER INFORMATION 149

11.1 Identity of bidder 150

11.2 Cash consideration 150

11.3 Contracts with C&W plc and Optus 152

11.4 Directors’ interests and corporate governance 156

11.5 Benefits to certain persons 158

11.6 Compulsory Acquisition 159

11.7 Litigation of SingTel 159

11.8 Interruptions in SingTel’s business 160

11.9 Material changes in financial position of SingTel and Optus 160

11.10 Regulatory and other approvals 160

11.11 ASIC modifications and exemptions 161

11.12 ASX Information Memorandum 163

11.13 ASX waivers 163

11.14 SingTel’s relevant interests and voting power in Optus 164

11.15 Dealings in Optus Shares 164

11.16 Other benefits in relation to bid securities 165

11.17 Other information about SingTel 165

11.18 Other information about Optus 165

11.19 Consents and liability 166

11.20 Miscellaneous 166

12 DEFINITIONS AND INTERPRETATION 167

12.1 Definitions 168

12.2 Glossary 173

12.3 SingTel subsidiaries, Associated Companies, projects and services 175

12.4 Interpretation 176

ANNEXURES

1 Consolidated financial statements 177

2 Implementation Agreement 223

3 Terms and conditions of the SingTel Bonds 239

4 Telecommunications, postal and broadcasting regulation in Singapore 251

5 Material SingTel information releases 261

6 Material Optus information releases 265

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IMPORTANT INFORMATIONIndicative timetable

Date of this Bidder’s Statement 18 May 2001Offer Period commences 23 May 2001SingTel Shareholders meeting 29 May 2001Offer Period ends, unless extended 3 July 2001 at 7.00 pm (Sydney time).

This timetable is indicative only and may change.

Currencies

SingTel’s consolidated financial information and other financial information about SingTel are presented in S$.

For convenience of reference only:

• the S$ mid-rate for A$, as shown on Reuters, was S$0.9262/A$1 on 30 April 2001 (at approximately 5.40 pmSingapore time); and

• the US$ mid-rate for A$, as shown on Reuters, was US$0.5095/A$1 on 30 April 2001 (at approximately5.40 pm Singapore time).

Optus Shareholders should be aware that the exchange rate determined in connection with the OfferConsideration is US$0.4940/A$1, being the Announcement Exchange Rate. Exchange rate movements mayaffect the value and/or the price of, and income from, SingTel Shares and, where relevant, SingTel Bonds.

Information about this Bidder’s Statement

This document is the Bidder’s Statement issued by SingTel Australia. It is dated 18 May 2001 and includes an Offerdated 23 May 2001. Section 9 sets out the terms of the Offer.

A copy of this Bidder’s Statement has been lodged with the Australian Securities and Investments Commission on18 May 2001. ASIC takes no responsibility for the contents of this Bidder’s Statement.

Section 12 contains definitions and a glossary of certain words and expressions used in this Bidder’s Statement.

Sources of information

Information included in this Bidder’s Statement relating to Optus and its business has been derived solely frompublicly available sources published by Optus, including Optus’ 1999 and 2000 Annual Reports to OptusShareholders, and from material made available to SingTel during the course of the limited due diligence whichOptus allowed SingTel to conduct in connection with the negotiation of the Implementation Agreement. Optus isan Australian company listed on the ASX and subject to the continuous and periodic reporting obligationsimposed by the ASX Listing Rules and the Corporations Law.

The financial information relating to Optus in Sections 4.6 to 4.9, the summary financial information relating to Optusderived from that financial information contained elsewhere in this Bidder’s Statement and the particulars of Optus’issued share capital and Optus Options, have been furnished by Optus for inclusion in this Bidder’s Statement.SingTel, SingTel Australia and their respective directors are not aware of any errors in such information.

Subject to the foregoing and to the maximum extent permitted by law, SingTel, SingTel Australia and theirrespective directors disclaim all liability for information concerning Optus included in this Bidder’s Statement.Optus Shareholders should form their own views concerning Optus from publicly available information. Inparticular, Optus Shareholders should carefully consider the contents of the Target’s Statement issued by Optus inresponse to this Bidder’s Statement.

Information included in this Bidder’s Statement relating to Temasek and the Government of Singapore has beenderived solely from publicly available sources.

US selling restriction

The SingTel Securities have not been registered under the Securities Act 1933 of the United States of America andmay not be offered or sold in the United States or to US persons (other than distributors) unless the securities areregistered under the Securities Act, or an exemption from the registration requirements of the Securities Act isavailable.

Important notice to United Kingdom shareholders

Morgan Stanley & Co. Limited is regulated in the United Kingdom by The Securities and Futures Authority Limited.This document has been issued by SingTel Australia Investment Ltd. and its contents have been approved byMorgan Stanley & Co. Limited solely for issue in the United Kingdom for the purposes of section 57 of theFinancial Services Act 1986. Morgan Stanley & Co. Limited has not approved the contents of this document forthe purposes of distribution into any jurisdiction outside the United Kingdom.

Morgan Stanley Dean Witter Asia (Singapore) Pte and Morgan Stanley & Co. Limited are acting for SingTelAustralia Investment Ltd. and no-one else in connection with the Offer and will not be responsible to anyone otherthan SingTel Australia Investment Ltd. for providing the protections afforded to customers of Morgan Stanley DeanWitter Asia (Singapore) Pte and Morgan Stanley & Co. Limited nor for providing advice in relation to the Offer.

Morgan Stanley & Co. Limited, its associates and/or its or their directors, officers and employees may have or havehad interests or long or short positions in, and may at any time make purchases and/or sales as principal or agent,or may act or have acted as market-maker in the relevant securities or related financial instruments discussed inthis document. Furthermore, Morgan Stanley & Co. Limited and its associates may have or have had a relationshipwith or may provide or have provided corporate finance, capital markets and/or other services to the relevantcompanies. Employees of Morgan Stanley & Co. Limited and its associates may serve or have served as officers ordirectors of the relevant companies.

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18 May 2001

Dear Optus Shareholder

It is with great pleasure that SingTel, through SingTel Australia, makes this Offer to acquireyour Optus Shares. Detailed terms of the Offer and further information regarding SingTel,its intentions for Optus and the profile of SingTel after the acquisition are contained withinthis Bidder’s Statement. You should read this Bidder’s Statement and the Target’sStatement from Optus carefully before making any decision regarding your Optus Shares.

SingTel’s goal is to become the leading integrated communications service provider in theAsia Pacific region. It is already the leading integrated communications service provider inSingapore and has a significant presence in key markets around the Asia Pacific region,such as India, the Philippines and Thailand. Together with its partners, SingTel is also proudto have been granted a licence as one of the new entrants to provide basictelecommunications services in Taiwan.

SingTel is the largest company listed on the Singapore Stock Exchange with a marketcapitalisation of S$28.1 billion as at 30 April 2001. For the year ended 31 March 2001,SingTel’s total operating revenue exceeded S$4.9 billion with profit after tax beforeextraordinary items of S$2.3 billion. SingTel, on the basis of its pro-forma marketcapitalisation as at 30 April 2001 following the acquisition of Optus, will be the seventhlargest company listed on the Australian Stock Exchange and one of the five largest listedcommunications companies in the Asia Pacific region (excluding Japan).

SingTel Australia is offering you a choice of three consideration alternatives: (i) SingTelShares, (ii) a combination of SingTel Shares and cash, or (iii) a combination of SingTelShares, cash and SingTel Bonds. The SingTel Board believes this choice provides OptusShareholders with the flexibility to choose the consideration that most suits their individualcircumstances. The SingTel Board believes that the SingTel Shares offered to you representan attractive investment and will enable you to participate in a leading Asia Pacificintegrated communications service provider. SingTel is seeking to be listed on the AustralianStock Exchange, in addition to its existing listing on the Singapore Stock Exchange.

Following the acquisition of Optus, SingTel believes it will have a compelling strategicposition in the communications industry in the Asia Pacific region and that benefits willaccrue to both SingTel and Optus. If SingTel’s Offer is successful, SingTel will:• have one of the Asia Pacific region’s most extensive multiple market cellular operations,

with a total subscriber base close to 11 million subscribers across five markets;• have one of the most extensive and advanced data communications networks in the

Asia Pacific region, consisting of submarine, satellite and domestic backhaul networkscovering key markets in the region and providing global connectivity;

• have more diverse, stable revenue streams, with attractive growth prospects;• be of a greater size and scale than the stand-alone SingTel and Optus groups with

potential to continue expansion; and• remain financially strong with the flexibility to continue to fund the future growth of

its businesses.

I look forward to welcoming you as a SingTel Shareholder.

Yours faithfully

Koh Boon HweeChairman, Singapore Telecommunications Limited

Singapore Telecommunications Limited31 Exeter Road, Comcentre, Singapore 239732Republic of SingaporeTel: +65 838 3388Fax: +65 732 8428Email: [email protected]: www.singtel.com

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SECTION 1EXECUTIVE SUMMARY

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1.1 BACKGROUND TO THE OFFER FOR YOUR OPTUSSHARES

Following the announcement by C&W plc that it would focus its strategy primarily oncertain markets in Europe, Japan and the United States, Optus announced on27 September 2000 a strategic review to examine alternatives to maximiseshareholder value.

On 26 March 2001, the SingTel Board announced the terms of an offer by SingTel forOptus Shares. Pursuant to the announcement, SingTel Australia, an indirectly whollyowned subsidiary of SingTel, is now making an offer to acquire all or any of your OptusShares together with all Rights attaching to them.

An overview of the terms of SingTel Australia’s Offer is set out in Section 2. The Offerincludes a choice for Optus Shareholders of three Offer Consideration alternatives and twodisposal mechanisms (the Transfer Alternative and the Buy-Back Alternative). SingTel hasincluded these choices in order to make the Offer as attractive as possible to the diverserange of Optus Shareholders. In addition, the Buy-Back Alternative, to the extent it ischosen by Optus Shareholders, could provide SingTel with an opportunity to achieve anappropriate mix of debt and equity in Optus. This could enable the Offer funding costs tobe matched against Optus revenues, and could also provide Optus with flexibility inrelation to future distributions.

The remainder of this Section 1 provides a brief explanation about SingTel, its rationale forthe acquisition of Optus, the benefits of the acquisition and some relevant acceptanceconsiderations for Optus Shareholders.

C&W plc has agreed to accept the Offer in respect of Optus Shares held by it representing19.8% of the issued Optus Shares pursuant to the Pre-Bid Agreement. Further details ofthe Pre-Bid Agreement are set out in Section 11.15.

1.2 SINGTEL

SingTel is the leading provider in Singapore of international and local telephone services,mobile communications services, data communications services and postal services.

SingTel is also one of the leading integrated communications service providers in the AsiaPacific region. It has 19 offices in 14 countries around the world, extensive networksthroughout the Asia Pacific region and significant investments outside Singapore,particularly in Belgium, India, the Philippines, Taiwan and Thailand. SingTel has a strongtrack record of adding value to its international investments and supporting their growth.

As at 30 April 2001, SingTel’s market capitalisation was S$28.1 billion, making it the largestcompany listed on the SGX-ST.

Further information about SingTel is set out in Section 3. Financial information concerningSingTel is included in Annexure 1.

1.3 SINGTEL’S RATIONALE FOR THE ACQUISITIONOF OPTUS

SingTel believes that the acquisition of Optus would assist SingTel to achieve its goal ofbecoming the leading integrated communications service provider in the Asia Pacific region.

The Australian communications market, being one of the largest in the Asia Pacific regionwith good growth potential, is attractive to SingTel. Optus has a successful track record inthe Australian market and shares SingTel’s focus on mobile and data communications ascore businesses.

Further details of the strategic rationale for SingTel’s acquisition of Optus are set out inSection 4.1.

E X E C U T I V E S U M M A R Y

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1.4 THE BENEFITS OF SINGTEL ACQUIRING OPTUS

SingTel believes that its acquisition of Optus will result in benefits to both SingTel andOptus. Some of those benefits are described below:• SingTel’s and Optus’ competitiveness in the Asia Pacific region will be enhanced,

particularly in mobile and data communications;• the management expertise available to SingTel and to Optus will be more extensive;• Optus’ financial strength and flexibility will be enhanced;• SingTel’s ability to further its regional expansion strategy will be enhanced; and• the liquidity of SingTel Shares may increase.

Further details of these benefits are set out in Section 4.3.

1.5 THE EFFECT ON SINGTEL OF ACQUIRING OPTUS

The acquisition of Optus will transform SingTel into a significant international companywith a diverse revenue and earnings base. A profile of SingTel after the acquisition is setout in Section 4.2, and details of the financial impact of the acquisition and the prospectsfor SingTel after the acquisition are set out in Sections 4.5 to 4.9.

1.6 ACCEPTANCE CONSIDERATIONS FOR OPTUSSHAREHOLDERS

Some of the key factors for Optus Shareholders considering whether to accept the Offerare discussed in Section 5. In summary, those considerations include the following:• as Optus’ key strategic shareholder, SingTel would bring a renewed commitment to the

growth of Optus’ businesses in Australia;• the benefits of becoming a SingTel Shareholder, such as:

– the opportunity to participate in a leading Asia Pacific integrated communicationsservice provider;

– the diversification of certain geographical and operating risks; and– the entitlement to receive dividends from SingTel;

• the liquidity of SingTel Shares;• the investment risks associated with becoming a SingTel Shareholder or a SingTel

Bondholder (including the risks outlined in Section 6);• the implications of not accepting the Offer, including:

– having no opportunity to participate in SingTel;– the possible reduction in the liquidity of Optus Shares;– the possible loss of Optus’ index weighting; and– the possible Compulsory Acquisition of your Optus Shares;

• the individual preferences and circumstances of Optus Shareholders; and• the taxation implications for Optus Shareholders (a general description of some of

these implications is set out in Section 7).Optus Shareholders who are in any doubt as to how to deal with the Offer should consulttheir financial or other professional advisers.

1.7 DEFINITIONS AND GLOSSARY

Sections 12.1 and 12.2 set out definitions of a number of terms used in this Bidder’sStatement, and a glossary of communications industry specialised terms that are used inthis Bidder’s Statement.

Section 12.3 sets out definitions and abbreviations used to refer to SingTel and a numberof its subsidiaries, Associated Companies, projects and services in this Bidder’s Statement.

E X E C U T I V E S U M M A R Y

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SECTION 2OVERVIEW OF THE OFFER

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2.1 OVERVIEW OF THE OFFER

This section provides a general summary of the Offer which is being made by SingTelAustralia for your Optus Shares and is intended to assist you to understand the terms ofthe Offer and the different choices available to you if you wish to accept the Offer. It is ageneral summary only. The full terms of SingTel’s Offer, which will be the basis of thecontract between SingTel and each Optus Shareholder who accepts the Offer, are set out inSection 9. The terms set out in Section 9 prevail to the extent of any inconsistency with theterms described in this Section 2.

The Bidder SingTel Australia, which is an indirectly wholly ownedsubsidiary of SingTel.

The Offer SingTel Australia offers to acquire all or any of your OptusShares.

Structure of the Offer The Offer Consideration alternatives available under the Offerand the other choices available to an Optus Shareholder whowishes to accept the Offer are described below.

1. You may elect one of three different forms of considera-tion for your Optus Shares.

The three different Offer Consideration alternatives offeredfor your Optus Shares are:

• Share Alternative

1.66 SingTel Shares for each of your Optus Shares.

• Share and Cash Alternative

A$2.25 in cash and 0.8 SingTel Shares for each of yourOptus Shares.

• Share, Cash and Bond Alternative

A$2.00 in cash plus A$0.45 worth of SingTel Bonds(based on the Announcement Exchange Rate ofUS$0.4940/A$1) plus one Unsecured Note redeemablefor 0.54 SingTel Shares, with the possibility of additionalSingTel Bonds and cash in lieu of SingTel Shares – see“How the Share, Cash and Bond Alternative works”below.

Important Note. Whether additional SingTel Bonds andcash will be available in lieu of SingTel Shares under theShare, Cash and Bond Alternative depends on the OfferConsideration alternatives chosen by all OptusShareholders. It is possible that no such additionalSingTel Bonds and cash will be available. Further, theSingTel Bonds are not listed on any stock exchange, andhence may be difficult to sell for a fair price, or at all.

If you accept the Offer, but do not indicate a choice ofwhich of the Offer Consideration alternatives you wish toreceive, or you give conflicting indications, you will (subjectto Section 9.11(b)) be taken to have chosen the Share andCash Alternative (but not the US$ Cash Alternative).


O V E R V I E W O F T H E O F F E R


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2. You may elect to receive any applicable cash amount inA$ or US$

If you wish to accept the Offer for the Share and CashAlternative or the Share, Cash and Bond Alternative thenyou may elect to receive the applicable cash amount ineither A$ or US$. If no specific choice is made, then thecash amount will be paid in A$. If an election is made toreceive US$, then the applicable A$ amount will beconverted at an exchange rate of US$0.4940 for every A$1,being the Announcement Exchange Rate.

Important Note. You should note that the US$/A$exchange rate from time to time may be above or belowthe Announcement Exchange Rate. If the US$/A$ exchangerate is above 0.4940 at the time of payment, then OptusShareholders who would otherwise prefer to receive US$may be better off by receiving A$ under the Offer andconverting those A$ to US$ at the prevailing exchange raterather than electing to receive US$.

3. You may elect to transfer your Optus Shares to SingTelAustralia or have them bought back by Optus

You may accept the Offer by either transferring your OptusShares directly to SingTel Australia (“Transfer Alternative”)or appointing SingTel Australia as your agent to offer yourOptus Shares to Optus to be bought back (“Buy-BackAlternative”). In either case, you will receive the form ofconsideration selected by you, less Withholding Tax (underthe Buy-Back Alternative) if you are resident outsideAustralia. (Foreign Shareholders should see Sections 9.6(c)and 9.11(b).)

Important Note. The tax consequences of the TransferAlternative are likely to differ from the tax consequencesof the Buy-Back Alternative. Australian resident shareholdersof Optus who wish to accept the Offer, and mostnon-resident shareholders, are likely to receive a morebeneficial Australian tax treatment by choosing the TransferAlternative rather than the Buy-Back Alternative. A generaldescription of some of the tax consequences of the TransferAlternative and the Buy-Back Alternative is contained inSection 7.

4. You may accept the Offer for all or some of your OptusShares

You may also choose the Transfer Alternative for some ofyour Optus Shares and the Buy-Back Alternative for others.You will be taken to have accepted the Offer for all of yourOptus Shares, and to have chosen the Transfer Alternative,if you do not advise otherwise in the way required by theinstructions on the Acceptance Form.

A$ implied value The table in Section 2.2 sets out illustrative implied values of the Offer in A$ of the three Offer Consideration alternatives as at

30 April 2001.

The actual implied A$ value of each of the Offer Considerationalternatives on the date on which an accepting OptusShareholder receives the Offer Consideration is affected by anumber of variables, as explained in Section 2.2.




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How the Share, Optus Shareholders who choose the Share, Cash and Bond Cash and Bond Alternative might receive additional SingTel Bonds and cash, Alternative works in lieu of SingTel Shares, depending on the Offer Consideration

alternatives chosen by all Optus Shareholders who acceptthe Offer.

The total amount of cash and SingTel Bonds available for allOffer Consideration alternatives is capped for this purpose atA$9.25 billion. Furthermore, the total face value of SingTelBonds available under the Offer will not exceed A$2.0 billion(as the SingTel Bonds are denominated in US$, the total A$amount is determined by using the Announcement ExchangeRate of US$0.4940/A$1). The allocation of the additional cashand SingTel Bonds or SingTel Shares, is achieved via theUnsecured Notes, which have a face value of A$1.48.

To the extent that all Optus Shareholder elections leave part ofthe maximum cash and SingTel Bond pool of A$9.25 billionunutilised, the unutilised cash and SingTel Bonds will beallocated to Optus Shareholders who choose the Share, Cashand Bond Alternative in substitution for some of the SingTelShares they would otherwise receive. The allocation will bemade first in SingTel Bonds and then in cash up to A$1.48 perUnsecured Note. Any balance is taken as SingTel Shares at afixed price of A$2.74 per SingTel Share.

Further details of how the Share, Cash and Bond Alternativeworks are referred to in Section 9.5 of this Bidder’s Statement.

Offer Period The Offer is to remain open for the period commencing on23 May 2001, which is the date of the Offer, and ending at7.00 pm (Sydney time) on 3 July 2001 unless the Offer isextended or withdrawn under the Corporations Law.

Terms of the Offer The terms of the Offer are set out in Section 9 of this Bidder’sStatement.

Taxation A general description of some of the taxation implicationsfor certain Optus Shareholders of accepting the Offer andelecting either the Transfer or Buy-Back Alternative is set outin Section 7.

Offer Conditions The Offer is subject to the conditions set out in Section 9.12,including:

• Australian Foreign Investment Review Board approval.

• SingTel Australia having at any time during or at the end ofthe Offer Period received acceptances in respect of morethan 50% (by number) of all Optus Shares (“MinimumAcceptance Condition”).

• All approvals required under the Australian Financial Sector(Shareholdings) Act 1998 and the Insurance Acquisitions andTakeovers Act 1991 being obtained.

• The ASX approving the listing of SingTel Shares to be issuedpursuant to the Offer (the “Listing Condition”).

• SingTel Shareholders in general meeting passing aresolution to approve the performance by SingTel of itsobligations in connection with funding the Buy-Back andthe applicable procedures under the Singapore CompaniesAct being complied with.

• No material adverse change (as described in Section9.12(a)(vi)) occurring in relation to Optus (or any subsidiary




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of Optus) during the period from 26 March 2001 to theend of the Offer Period.

• No “prescribed occurrence” (as described in Section9.12(a)(iii)) occurring during the period from 26 March2001 to the end of the Offer Period.

SingTel Australia may declare the Offer free of any of theseconditions (other than the Minimum Acceptance Conditionand Australian Foreign Investment Review Board approval) inaccordance with the Offer.

The status as at 15 May 2001 of a number of these conditionsis outlined in Section 11.10.

Eligibility The Offer will extend to all persons registered as holdersof Optus Shares on 19 May 2001 (the “Register Date”).

The Offer will also extend to:

(a) Optus Shares that are issued during the period from theRegister Date to the end of the Offer Period as a result ofthe conversion of, or exercise of rights attached to, OptusOptions on issue on the Register Date; and

(b) Optus Shares that are issued to participants in OptusEmployee Share Plans during the period from the RegisterDate to the end of the Offer Period in accordance with anannouncement made by Optus before 25 March 2001 orunder the Q1 2001 Plan or the Q2 2001 Plan whereSingTel Australia has given its consent to the issue beforethe Instrument Date.

Entitlement to If you accept the Offer and are registered as a SingTel SingTel dividends Shareholder on the Dividend Record Date, you will be entitled

to receive SingTel’s final dividend for the year ended 31 March2001. Your SingTel Shares will rank equally with all otherSingTel Shares for future dividends.

Fractions of Any entitlement to receive a fraction of a SingTel Share or a SingTel Shares SingTel Bond (except as mentioned below) will be rounded up and SingTel Bonds to the nearest whole number.

Any entitlement to receive less than a whole number of US$1face value of a SingTel Bond on redemption of an UnsecuredNote will be rounded down to the nearest whole numberof US$1.

If SingTel reasonably believes that a shareholder’s holdingshave been manipulated to take advantage of the rounding upprovisions then any traditional entitlement may be roundeddownwards.

Listing of SingTel Shares SingTel will seek listing of all SingTel Shares, other than thoseheld by Temasek, on the ASX. Listing is subject to satisfactionor waiver of all Offer conditions and to compliance with therequirements of the ASX.

SingTel has obtained the in-principle approval of the SGX-STfor the listing and quotation of all new SingTel Shares to beissued pursuant to acceptance of the Offer. Such approvalshould not be taken as an indication of the merits ofacceptance of the Offer, nor of the merits of SingTel Shares orOptus Shares. As a result, all SingTel Shares, including thoseheld by Temasek, will be listed on the SGX-ST.




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No brokerage or You will not pay brokerage or stamp duty if you accept stamp duty the Offer.

How to accept the Offer Please see Section 9.8 and follow the instructions on theAcceptance Form.

Further information For questions regarding your Optus Shareholding or theAcceptance Form, please contact Computershare InvestorServices Pty Limited between 8.30 am and 6.00 pm(Sydney time) Monday to Friday on 1800 501 501 (for callersin Australia) or +61 3 9615 5970 (for international callers).

For information in relation to the Offer please look up SingTel’swebsite at http://optusoffer.singtel.com

2.2 IMPLIED A$ VALUE OF THE THREE OFFERCONSIDERATION ALTERNATIVES

The implied value in A$ of the Offer Consideration received by an Optus Shareholder whoaccepts the Offer in respect of each Optus Share will depend on the SingTel Share price atthe date on which the Optus Shareholder receives the Offer Consideration. The impliedA$ value of each Offer Consideration alternative is also dependent on the S$/A$ exchangerate and, in relation to the Share, Cash and Bond Alternative, the US$/A$ exchange rate onthat date.

The implied value in A$ of the Offer Consideration received by an Optus Shareholder whochooses the Share and Cash Alternative or the Share, Cash and Bond Alternative is affectedby the Optus Shareholder’s election to receive the cash component in US$ or A$.

The implied value in A$ of the Offer Consideration received by an Optus Shareholder whochooses the Share, Cash and Bond Alternative is also affected by the allocation among suchOptus Shareholders of additional SingTel Bonds and cash (if any) in lieu of SingTel Shares.The relative additional allocations of SingTel Bonds and cash to an individual acceptingOptus Shareholder is affected by the elections made by all accepting Optus Shareholders.

The table below illustrates the implied value in A$ of each Offer Consideration alternative,for a range of SingTel Share prices. The notes below the table explain the assumptionsregarding the exchange rates and the elections made by Optus Shareholders who choosethe Share, Cash and Bond Alternative.

The table does not take into account the taxation implications for Optus Shareholders oftheir choice of the Transfer Alternative or the Buy-Back Alternative, nor their choices amongthe Offer Consideration alternatives. A general summary of applicable taxationconsiderations is set out in Section 7.

Exchange rate movements may affect the value and/or the price of, and income from,SingTel Shares and, where relevant, SingTel Bonds. There is no assurance that theassumptions underlying the table regarding elections to be made by Optus Shareholderswill be accurate. The implied A$ values shown in the table are for illustrative purposes only.The implied A$ value for an Offer Consideration alternative shown in the table for a givenSingTel Share price may differ substantially from the actual A$ implied value of the OfferConsideration alternative when received by an Optus Shareholder.




17

Implied value of Offer Consideration alternatives (A$ per Optus Share)(1)

S INGTEL SHARE AND SHARE, CASHSHARE PRICE SHARE CASH AND BOND

(S$) ALTERNATIVE (2) ALTERNATIVE (2,3) ALTERNATIVE (2,3,4,5)

1.50 2.69 3.55 3.311.55 2.78 3.59 3.341.60 2.87 3.63 3.371.65 2.96 3.68 3.401.70 3.05 3.72 3.431.75 3.14 3.76 3.461.80 3.23 3.80 3.491.85 3.32 3.85 3.521.90 3.41 3.89 3.541.95 3.49 3.93 3.572.00 3.58 3.98 3.602.05 3.67 4.02 3.632.10 3.76 4.06 3.662.15 3.85 4.11 3.692.20 3.94 4.15 3.722.25 4.03 4.19 3.752.30 4.12 4.24 3.782.35 4.21 4.28 3.812.40 4.30 4.32 3.842.45 4.39 4.37 3.872.50 4.48 4.41 3.89

Notes(1) The price and value of shares and the income derived from them may fall as well as rise. Past performance is not

necessarily a guide to future performance. Exchange rate movements may affect the value to shareholders ofshares or income denominated in S$ and bonds denominated in US$.

(2) Calculated based on an exchange rate of S$0.9262/A$1, as at 30 April 2001.(3) Assumes Optus Shareholders elect to receive the cash component of the Offer Consideration in A$.(4) Assumes Optus Shareholders receive SingTel Bonds based on the Announcement Exchange Rate of

US$0.4940/A$1. The A$ value of the SingTel Bonds has been calculated based on an exchange rate ofUS$0.5095/A$1, as at 30 April 2001.

(5) Assumes Optus Shareholders do not receive additional cash and SingTel Bonds in lieu of SingTel Shares.




18




19

SECTION 3SINGTEL AND ITS STRATEGY


MOR105 SINGTEL SECT 03 17/5/01 5:18 PM Page 19

20

3.1 HISTORY AND OVERVIEW

SingTel and its subsidiary, SingPost, were incorporated on 28 March 1992 to take over theprovision of telecommunications and postal services in Singapore, which had, until then,been provided by the TAS. The TAS was a government authority providing post, telegraphand telephone services in a monopoly environment.

SingTel became a public company on 1 October 1993 and was listed on the SGX-ST on1 November 1993. Temasek is the major shareholder of SingTel, owning approximately78% of SingTel as at 30 April 2001.

SingTel is the leading integrated provider of communications services in Singapore and oneof the leading integrated communications service providers in Asia. It has received industryand customer recognition of its leading position, including Best Fixed Line Operator for1998 and 1999, Best Asian Telecoms Operator for 2000, Best GSM Carrier for 2000(Telecom Asia Annual Reader’s Choice Survey) and Asia’s Most Competitive Telecoms Hubfor 1999 and 2001 (Asia Pacific Telecommunications Index, published by the NationalUniversity of Singapore’s Centre for Telemedia Strategy).

SingTel provides a wide range of communications services, including:

• international telephone services;• mobile communications services;• public data and private network services (covering a comprehensive range of data

communications services, including leased line, satellite, switched data, broadband andInternet access services);

• national telephone services;• information technology and engineering services;• postal and delivery services;• sales of communications equipment; and• directory publication and advertising services.

SingTel has made many strategic investments outside Singapore, including in Belgium,Hong Kong, India, Indonesia, the Philippines, Taiwan and Thailand. Details of some of theseinternational investments appear in Section 3.8.

Since its initial public offering and listing in 1993, SingTel has grown its business in spite ofincreasing competition. In the last few years, growth has been driven primarily by mobilecommunications, public data and private networks, and IT and engineering services.


S I N G T E L A N D I T S S T R A T E G Y

1997 1998 1999 2000 2001

4,421

4,9424,884 4,866

4,925

S$ m

illio

n

SingTel Five Year Revenue PerformanceYear Ended 31 March


21

For the year ended 31 March 2001 SingTel’s total operating revenue was S$4.9 billion,with a profit after tax before extraordinary items of S$2.3 billion. As at 31 March 2001its total assets were S$16.2 billion. As at 30 April 2001 SingTel’s market capitalisation wasS$28.1 billion, making it the largest listed company in Singapore and one of the five largestlisted communications companies in the Asia Pacific region (excluding Japan).

SingTel’s operating revenue does not include operating revenue from its AssociatedCompanies. If SingTel’s proportionate share of operating revenue from its AssociatedCompanies outside Singapore were included in operating revenue, SingTel’s consolidatedoperating revenue for the year ended 31 March 2001 would increase to S$6.9 billion fromS$6.2 billion for the year ended 31 March 1999. The proportionate share of operatingrevenue of SingTel’s Associated Companies outside Singapore would have constituted28.5% of this consolidated operating revenue for the year ended 31 March 2001.



2,6262,738

2,818

3,037

3,290

1997 1998 1999 2000 2001

S$ m

illio

n

SingTel Five Year EBITDA PerformanceYear Ended 31 March

1997 1998 1999 2000 2001

1,603

1,8381,913

1,839

2,324

S$ m

illio

n

SingTel Five Year Profit after Tax before Extraordinary Items Performance

Year Ended 31 March


22

As the above charts illustrate, SingTel’s traditional dependence on international telephoneservices is rapidly reducing, reflecting the diversification of its revenue streams across awider range of communications services.

3.2 SINGTEL’S GOAL AND STRATEGIES

(a) SingTel’s goal

SingTel’s goal is to be the leading integrated communications service provider in theAsia Pacific region. To achieve this goal, SingTel’s principal strategies are:

• to sustain its leadership position in Singapore by offering a comprehensive range ofcommunications services that meet the changing needs of different customer groups;

• to establish and operate a world-class network and service infrastructure that cansupport a comprehensive range of quality communications services on a competitiveand timely basis; and

• to expand into other markets in the region to capture their growth potential.

(b)SingTel’s strategies

(i) Customer-focused service offeringsSingTel is focused on the needs of the communications market. It is aware that newcustomer groups are emerging as a result of rapid changes in technology, lifestyleand economic and regulatory environments. For example, new cellular subscribersare increasingly from younger social groups and there is growing demand forwholesale communications services from other service providers as communicationsmarkets liberalise and new technologies and products emerge. In recognition ofthese developments, SingTel has embarked on several initiatives, as described inSection 3.4(b).



Public Data and Private Networks 22%

National Telephone 12%

IT and Engineering Services 10%

Postal Services 7%

Other 7%

24% International Telephone

18% Mobile

SingTel Revenue Composition Year ended 31 March 2001

Public Data and Private Networks 13%

National Telephone 11%

IT and Engineering Services 7%

Postal Services 6%

Other 7%

38% International Telephone

18% Mobile

SingTel Revenue Composition Year Ended 31 March 1999


23

(ii) World-class infrastructure

• Network infrastructure

SingTel’s network investment strategy is to ensure that its networks remainmodern, efficient and capable of handling the requirements of its customers.It has made substantial investments in fixed line and mobile networks inSingapore and in expanding its connectivity to the rest of the world, withparticular focus on the Asia Pacific region.

Ownership of an integrated network infrastructure enables SingTel to control thequality and availability of its services. In its network planning, SingTel aims toprovide a diverse and resilient network that ensures the quality and availabilityof its services with minimal service disruptions.

Further details of SingTel’s network infrastructure are set out in Section 3.7.

• Service infrastructure

SingTel places strong emphasis on customer service. Improvement in customersatisfaction levels is an important part of performance targets for staff. SingTelconducts customer satisfaction surveys regularly. The results are compared withbenchmarks, areas requiring improvement are analysed and solutions aredeveloped for implementation.

Front line services, such as call centres, service provision and maintenance areprovided by a centralised Customer Service Group. This ensures that sufficientfocus is given to maintaining high customer service levels.

SingTel aims to provide its corporate and retail customers with access to a highquality service infrastructure. For this purpose, SingTel has established offices inoverseas locations that enable it to support the requirements of multinationalcorporations and other overseas customers. It has established points of presencein 19 cities in 14 countries around the globe.

SingTel operates retail and customer service outlets, including Teleshops, thehello! retail store in the heart of the Singapore shopping district, Internet caféfacilities, SingPost outlets and other service channels. These make up acomprehensive distribution network for SingTel’s services.

• Access to technology developments

SingTel seeks to be at the forefront of technology developments. It has goodrelationships with major suppliers, with whom it collaborates in testing newproducts.

SingTel also operates a venture capital fund with a view to gaining early accessto new technologies and products. Technologies developed by Commerce Oneand InterTrust, two of SingTel’s venture capital investments, have already beendeployed by SingTel or its Associated Companies.

(iii) Expansion into other marketsSingTel’s international investment activities are an important part of SingTel’s growthstrategy. These investment activities also have the effect of diversifying SingTel’sbusiness and operating risks.

SingTel’s key investment criteria are as follows.

• The investment should provide attractive growth potential. Typically, this meansthat SingTel’s investments will be:

– in markets where communications penetration rates are relatively low, such asdeveloping economies;

– in larger markets such as Australia, China, India and Korea; and/or

– in companies whose principal operations are in SingTel’s targeted growthplatforms, such as mobile communications and data communications.

• The investment should provide SingTel with a meaningful equity interest,enabling it to participate in strategic decisions and to contribute to enhancingthe value of its investment, including through sharing of skills and knowledge.




24

The table below provides some details of SingTel’s key international investments. Further detailsof these investments appear in Section 3.8.

SINGTEL’SEFFECTIVE

EQUITYINVESTMENT INTEREST COUNTRY PRINCIPAL BUSINESS

AIS 21.0% Thailand MobilePaging

Globe Telecom 23.6%(1) Philippines MobileNational telephoneInternational telephoneData communications

Bharti Group 28.5%(2) India MobileNational telephoneInternet

NCIC 24.3% Taiwan National telephoneInternational telephoneData communications

Virgin Mobile Asia 50%(3) Singapore and other Asian Mobile (MVNO)markets (excluding Japan)

APT Satellite 20.35% Hong Kong Satellite services

DPC 14.3% Thailand Mobile

BSI 40.0% Indonesia National telephone

Belgacom 12.15% Belgium MobileNational telephoneInternational telephoneData communications

(1) SingTel’s effective equity interest in the enlarged Globe Telecom, after its acquisition of Isla Communications Co., Inc.(as described in Section 3.8(b)), is estimated to be 23.6%. The actual percentage will be determined only after thelegal completion of the acquisition.

(2) SingTel’s shareholdings in the Bharti Group consist of direct equity interests in two companies in the Bharti Group,namely Bharti Telecom Limited and Bharti Tele-Ventures Limited, as described in Section 3.8(c).

(3) SingTel’s 50% effective equity interest in Virgin Mobile Asia will be achieved after the completion of its agreed capitalinjection.

There are also a number of smaller international investments that SingTel has made to capturethe growth potential of relevant markets outside Singapore.

SingTel is committed to adding value to its international investments. It does this through bothnon-financial and financial contributions, as well as by provision of assistance on specificprojects. For example:

• SingTel has seconded a number of its experienced managers and professionals to assist itsAssociated Companies to manage their businesses and to provide know-how and supportin areas such as engineering, information technology, interconnection, carrier services, salesand marketing;

• Through its representation on the boards of its Associated Companies, SingTel shares itsexperience and expertise in operating fixed line, mobile, and other types ofcommunications businesses; and

• SingTel has provided assistance in a number of Associated Companies’ network projectsincluding network frequency planning, capacity expansion to improve network quality,installation of base stations, as well as in the selection of suppliers.




25

3.3 SINGAPORE TELECOMMUNICATIONS INDUSTRY

(a) Overview

Singapore’s telecommunications industry has been fully liberalised and is highlydeveloped and technologically advanced. The telecommunications market ischaracterised by the country’s high GDP per capita, a sophisticated consumer andcorporate customer base and high penetration rates. Singapore’s strategic location aswell as the Government’s initiatives aimed at attracting foreign investment havecontributed to its stature as a regional business and communications hub and a basefor over 5,000 multinational companies operating in the Asia Pacific region.

Historically, SingTel largely defined the industry as it was the sole provider of basictelecommunications services. Over the past five years, however, the industry hasundergone substantial changes. The Singapore Government’s recognition of thechanging environment in global communications markets prompted it to lift foreignownership restrictions and to progressively open the telecommunications market tocompetition. The Government introduced full competition in the telecommunicationsmarket on 1 April 2000, accelerating its earlier liberalisation plans by seven years.

In the fixed line sector, Singapore is a highly-penetrated market covering almost allhouseholds. The number of fixed lines in Singapore has gradually increased over the lastthree years – from 1.7 million in March 1998 to 1.9 million in March 2001.

With the development of Singapore as a regional communications hub, the internationalvoice market has grown considerably, both in the diversity of services as well as thenumber of operators offering these services. The number of outgoing internationaltelephone call minutes was 1.05 billion in the year ended 31 December 2000, comparedto 859 million in the year ended 31 December 1999, representing an increase of 22%due to the impact of increased competition in the market and lower prices.

Singapore’s cellular services sector has seen strong growth over recent years. Thisgrowth rate has accelerated since the entry of MobileOne in April 1997 and StarHubMobile in April 2000. At the end of March 2001, Singapore’s total number of cellularsubscribers increased to 2.7 million, from 1.6 million a year earlier and from 431,000 inMarch 1997. This represents a 69% growth over the last year and a 59% four yearcompounded annual growth rate. The cellular penetration rate increased from 41% to68% over the 12 months ended 31 March 2001, making Singapore one of the mosthighly-penetrated markets in the region. Within the sector, pre-paid subscribers grewover the last year from 372,100 in March 2000 to 819,800 in March 2001, representinga 120% increase. In April 2001, the Singapore Government provisionally awarded 3Gmobile phone licences to the three incumbent cellular operators. SingTel has alreadyreceived its 3G licence.

Singapore is extremely well positioned with respect to data communications due to itsstrategic location and the extensive transmission capacity linking Singapore to majorglobal markets utilising multiple, high-capacity submarine cables and satellite systems.The availability of advanced, high capacity domestic and international networks enablesaccess by customers to services ranging from basic narrowband and broadband Internetaccess services to the most advanced data services such as leased lines, frame relay,ATM, IP and ISDN.

(b)Regulatory environment in Singapore

The provision of telecommunications, postal, and broadcasting services in Singapore isgoverned principally by the Telecommunications Act (Chapter 323), the Info-communications Development Authority of Singapore Act (Chapter 137A), the PostalServices Act (Chapter 237A), the Singapore Broadcasting Act (Chapter 297) and thevarious subsidiary legislation, licensing guidelines and codes of practice promulgatedunder those Acts or pursuant to directions or orders issued by regulatory bodies such asthe IDA and the SBA.

All segments of the telecommunications market are now open to competition, subjectto compliance by telecommunications service providers with applicable licensing andongoing regulatory requirements. Annexure 4 sets out a general summary of theregulatory regimes in Singapore governing the provision of telecommunications, postal,and broadcasting services by SingTel.




26

3.4 SINGTEL’S COMPETITIVE ENVIRONMENT

(a) OverviewSingTel began to prepare itself for competition before its listing in 1993. Although itwas still the monopoly provider of fixed line and mobile services in Singapore, SingTelfaced competition from resellers of telecommunications services. Competition also camefrom communications service providers from other countries, such as Hong Kong andJapan, which compete with Singapore as leading Asia Pacific communications hubs.From 1992, SingTel was required by the IDA to benchmark its pricing againstinternational telecommunications service providers operating in selected markets.

In the provision of international telephone services in Singapore, SingTel now competesagainst a large number of FBOs and SBOs. SingTel’s principal competitor in this marketis StarHub, which, as the main alternative integrated communications service providerin Singapore, has a natural advantage over other FBOs and SBOs in terms of the reachof its customer base. StarHub was licensed to commence operations in April 2000.

In Singapore’s cellular communications market, SingTel’s competitors are the other twolicensed cellular operators, MobileOne and StarHub Mobile. MobileOne commencedoperations in 1997. It announced in February 2001 that it had more than 800,000subscribers. StarHub Mobile was licensed to commence operations in April 2000.It announced in March 2001 that it had reached 300,000 subscribers. Both MobileOneand StarHub Mobile have been provisionally awarded 3G spectrum rights to operate3G services in Singapore. A fourth 3G licence may be awarded at least one year afterthe award of the first three licences. Existing mobile operators are required to provideroaming services for new 3G operators onto their 2G networks. This requirement willbecome more relevant if a fourth 3G licence is awarded, since the three existing 3Glicensees have existing 2G networks. 3G operators are also required to sell capacity intheir networks to MVNOs on terms to be commercially agreed between the parties.

SingTel’s principal competitors in the data communications market in the Asia Pacificregion include global communications service providers such as MCI-Worldcom, NTT,Concert, Equant and Reach, which already have extensive networks in the region,competitive bandwidth service providers such as Asia Global Crossing, FLAG Telecomand Level 3, which are building extensive networks in the region, as well as a numberof smaller business ISPs and e-commerce infrastructure enablers.

In the national telephone market, SingTel faces competition from FBOs and SBOs in thecorporate and residential markets. Because of its dominant position, SingTel is requiredto allow interconnection to its national fixed line network by other licensedtelecommunications service providers, in accordance with standard terms andconditions (including price) approved by the IDA.

There have been a number of developments which could result in changes to thecompetitive environment in Singapore. Singapore CableVision has been granted anFBO licence to provide telecommunications services. Singapore CableVision currentlyhas Singapore’s only HFC broadband network which passes practically all Singaporehomes, and provides cable television and cable modem services including Internetaccess services. Singapore CableVision has announced that it is in discussions withStarHub regarding a potential merger of their businesses. If this merger were toproceed, the merged entity may have an enhanced competitive position in theSingapore market due to the combination of the infrastructure and expertisecontributed by the individual businesses.

Shareholders of MobileOne have announced the potential sale of their interests inMobileOne. The sale of a significant interest in MobileOne to a committed strategicshareholder may enhance MobileOne’s competitive position in the Singapore market.




27

(b)SingTel’s competitivenessSingTel has competed vigorously to maintain its leading position in all key marketsegments. It has focused on identifying and meeting the communications needs of eachmarket segment by enhancing the range, quality and value of its products and services,while at the same time ensuring that its products and services are competitively priced.Some of SingTel’s recent initiatives are outlined below:

• SingTel has organised its businesses into a number of customer focused businessunits. This enables SingTel to focus more clearly on the communications needs ofdifferent customer segments. Further details of the activities of SingTel’s principalbusiness units are set out in Section 3.5;

• to address current and expected customer demands, SingTel has continued to investin the mobile and data communications service platforms;

• SingTel has introduced competitive services and pricing plans to address the variedneeds of its customers relating to service quality and price. These products andpricing plans include IDD Call (001), BudgetCall 013, v019, FaxPlus 012, FaxPlusConnect, World Conference and eVoiz (for Internet-savvy customers);

• SingTel has refined its market segmentation strategies to identify and meet theneeds of SingTel’s different customers. For example, in April 2000, SingTelintroduced a new brand, pod, that targets the youth segment in Singapore’s cellularmarket;

• SingTel has entered into a joint venture with the Virgin Group to resell cellularservices under a new Virgin Mobile brand that targets the market attracted to theVirgin brand; and

• SingTel has launched customer loyalty programs and innovative promotion packagesaimed at retaining existing customers and attracting new ones.

SingTel believes it has a number of competitive strengths that enable it to competeeffectively against other communications service providers in Singapore and in the AsiaPacific region, including the following:

• SingTel’s network infrastructure is of high quality and has extensive reach. SingTelhas the largest number of mobile base stations, the majority of public telephonelines and the most extensive connectivity between Singapore and other countries,utilising a variety of technologies, including copper, DSL, microwave, fibre optic,submarine cable and satellite;

• its ownership of network infrastructure enables SingTel to control the quality andavailability of its services and maintain a low cost base that allows it to competitivelyprice its services;

• economies of scale provide SingTel with significant cost advantages, for example inthe procurement of network equipment;

• as an integrated communications service provider, SingTel is able to provide itscustomers with a comprehensive range of services, including cross-border servicesto multinational corporations that can be supported by SingTel offices around theworld; and

• SingTel’s local and regional partnerships with other companies, such as AIS, GlobeTelecom, Bharti Group, and NCIC, as well as its new venture with the Virgin Group,provide further bargaining power with suppliers, expanded geographical reach andthe ability to provide seamless services to customers.




28

3.5 BUSINESS AND SUPPORT UNITS

SingTel has three principal business units, which provide a range of SingTel’s services tomeet the communications needs of particular customer groups. In addition, SingTel has anumber of other business units which have expertise in service areas with growth potentialor requiring specialised skills. The business units are supported by several functionalsupport units.

The following chart illustrates the relationship between SingTel’s business units and theservices they provide.

A brief description of SingTel’s business and support units is set out below.

(a) Principal business units

(i) Corporate Business Unit

The target segments of the Corporate Business Unit are multinational corporations,large corporations and government enterprises, and small and medium enterprises,within and outside Singapore. In Singapore, SingTel offers a full range of corporatevoice, data and IT solutions and is focused on implementing and delivering suchservices wherever its customers are. Its services include national and internationalvoice and data services (including leased lines, frame relay, ATM, IP and ISDN),managed data networks, Internet exchange, facilities management/data centres,network/system integration and outsourcing and equipment sales.

The Corporate Business Unit also supplies wholesale communications services andnetwork access to other communications service providers in Singapore.

SingTel also offers some of these services to customers outside Singapore, whereregulations permit it to do so.

(ii) Consumer Business Unit

The Consumer Business Unit focuses on residential fixed line customers and mobilecommunications customers in Singapore. Its services include national andinternational voice and facsimile services, mobile communications, paging, Internetaccess, and equipment sales. The Consumer Business Unit also sells broadbandcapacity to ISPs in Singapore.

SingTel has Singapore’s most extensive retail distribution network forcommunications services and equipment sales, comprising a large number of dealeroutlets and 15 owned retail outlets. The Consumer Business Unit is responsible formanaging SingTel’s owned retail outlets and its dealer relationships.



Principal Business Units Growth and Specialised Business Units Functional Support Units

Corporate

• International Telephone

• Mobile

• Data

• National Telephone

• IT & Engineering

• Equipment Sales


• Mobile

• National Telephone

• Equipment Sales


• Mobile

• Data

• Data

Consumer Global Multimedia IT & Engineering

• IT & Engineering

Directory & Advertising

• Directory & Advertising

• Postal & Delivery

• Network

• Customer Service

• Strategic Investments

• Others

Postal & Delivery


29

(iii) Global Business Unit

The Global Business Unit manages SingTel’s global business of offering wholesalecommunications services over satellite, submarine cable, microwave, global voicenetworks and other international networks. The Global Business Unit focuses onproviding capacity on a wholesale level to other global communications serviceproviders and other corporate buyers of international network capacity. The GlobalBusiness Unit also provides global wholesale voice delivery services to othertelecommunications carriers by leveraging on SingTel’s strategic points of presenceand extensive international infrastructure. The Global Business Unit aims to establishSingTel as a leading regional hub service provider in the Asia Pacific region.

The Global Business Unit is responsible for the development and maintenance ofSingTel’s international network infrastructure, including satellites, submarine cablesand microwave.

(b)Growth and specialised business units(i) Multimedia Business Unit

The Multimedia Business Unit manages SingTel’s narrowband and broadbandInternet businesses in Singapore, providing access and value-added services suchas hosting, co-location, managed services, security and firewalls. SingTel’s Magixbroadband interactive multimedia service is marketed through this business unit.

This business unit also oversees SingTel’s regional investments in ISPs such asPointAsia Dot Com (Thailand) Limited in Thailand and Infoserve TechnologyCorporation in Taiwan.

(ii) IT and Engineering ServicesThe IT and engineering services business is conducted primarily by NCS andAeradio.

NCS provides total IT solutions including e-business and IT consulting, businessapplications development and maintenance, systems and secured networkintegration, IT infrastructure integration, and facilities maintenance and outsourcing.NCS is also a licensed SBO for resale of various value-added telecommunicationsservices. This licence enables NCS to provide managed network and infrastructureintegration, and operations services (such as ATM, frame relay, leased lines, LAN,WAN, and broadband network implementation).

Aeradio focuses on hardware and systems integration, including those in relation toairport facilities maintenance and telecommunications transmission networks.

(iii) Postal and delivery servicesSingPost undertakes postal and delivery services such as domestic mail, internationalmail, express mail and parcel services.

(iv) Directory publishing and advertising servicesSingTel Yellow Pages produces the Singapore Phone Book and Yellow Pages in print,Internet, WAP and telephone operator-assisted form.

(c) Functional Support Units(i) Network

The Network Support Unit manages the development and maintenance of SingTel’snational fixed line and mobile communications networks.

(ii) Customer ServiceThe Customer Service Support Unit handles SingTel’s interactions with its retailcustomers on service-related matters.

(iii) Strategic InvestmentsSingTel International supports the growth objectives of SingTel’s business unitsthrough strategic investments across the region.

SingTel Ventures makes investments in early-stage technology companies.

(iv) OthersSingTel has a number of other support functions, including Corporate Affairs, CorporateMarketing and Communications, Finance, Human Resources and Information Systems.




30

3.6 PRINCIPAL BUSINESS ACTIVITIES

SingTel reports its results along the lines of the six principal business activities or servicesdescribed below.

(a) International Telephone ServicesSingTel is the leading provider of international telephone services in Singapore, with amarket share in excess of 90% during the year ended 31 March 2001. Calculatingmarket share accurately has become more difficult as a result of changes in the wayoutgoing minutes of traffic are measured by the IDA. These changes may result ininstances of double counting due to the resale by SBOs of network access.

SingTel’s international telephone services include international calling cards, IDD callsand facsimile services into and out of Singapore, other international IDD call services,corporate voice, video and audio conferencing and wholesale voice services.

The international telephone services market is highly competitive. SingTel hasmaintained its significant presence in this market through competitive pricing,development of a wide range of innovative services and enhancement of the qualityand reach of its international networks.

Section 3.7(b) sets out further details regarding SingTel’s international networks.

International telephone services have been SingTel’s largest contributor to operatingrevenue. SingTel has experienced a decline in operating revenue from its internationaltelephone services business over the last three years. However, SingTel has effectivelymanaged its costs in the delivery of international call traffic which has enabled it tomaintain a healthy margin in international telephone services.

As shown by the top graph, the average net collection rate has fallen from S$1.34 perminute in the year ended 31 March 1999 to S$0.70 per minute for the year ended31 March 2001. This decline in collection rates has been offset, in part, by a continuingincrease in outgoing international call volumes (as shown in the lower graph).



1.34

1.14

0.70

Collection Rate S$

1999

2000

2001

IDD Average Net Collection Rate Year Ended 31 March

1999 799

885

1,031

2000

2001

Minutes (in millions)

Volume of Outgoing International Call Minutes Year Ended 31 March


31

(b)Public data and private network servicesSingTel is the leading provider of public data and private network services in Singapore.SingTel also provides these services outside Singapore, where applicable regulationspermit. SingTel’s public data and private network services for its residential, corporateand carrier customers include ISDN business lines, point-to-point leased lines, andhigher-end managed network services such as frame relay, ATM, hosting and co-location services through its existing Internet data centres in Australia, Hong Kong,Japan and Singapore. SingTel aims to become the total solutions provider to itscustomers, providing guaranteed quality-of-service and end-to-end connectivity.

SingTel’s leased line business generates the major part of the operating revenue frompublic data and private network services business. With Internet-relatedcommunications requirements growing and the full liberalisation of the Singaporecommunications industry leading to greater take-up of leased lines, SingTel expects thisbusiness to become an increasingly important driver of operating revenue.

SingTel offers three major Internet-related services within its public data and privatenetwork services business. These are described below.

• SingTel IXSingTel IX operates one of the largest Internet exchanges in the Asia Pacific region(excluding Japan). It provides a high quality IP transit service through its extensivenetwork.

• SingNetSingNet has the highest number of paying subscribers among ISPs in Singapore.It offers a comprehensive suite of dial-up, leased line and broadband Internet accessand other value-added services. As at 31 March 2001, it had close to 293,000subscribers, about 50% of the subscription-based dial-up market and 54% of thecorporate Internet leased line market. Internet access with e-mail accounts isprovided free of charge to all of SingTel’s fixed line customers through themysingtel.com portal, which had more than 1.2 million registered users at31 March 2001.

SingNet was named Singapore’s Best Internet Service Provider 2000 (ComputerWorld Magazine Annual Awards).

• MagixMagix is SingTel’s broadband interactive multimedia service. It was launched in1997, making SingTel one of the early pioneers in broadband interactive services inthe world. Magix uses ADSL technology to provide users with high-speed Internetaccess as well as various multimedia services such as video streaming and education-on-demand. As at 31 March 2001, Magix had approximately 30,000 subscribers.



1999 2000 2001

621763

1,065

S$ m

illio

n

Public Data and Private Networks Three Year Revenue PerformanceYear Ended 31 March


32

The public data and private network business is experiencing the largest revenuegrowth of all of SingTel’s businesses. As the above graph shows, operating revenue hasgrown 72% from S$621 million for the year ended 31 March 1999 to S$1.1 billion forthe year ended 31 March 2001. Operating revenue from leased lines grew during thatperiod by 42.3%, but the strongest growth came from Internet-related revenues whichgrew by 46.3% and which now amount to more than S$230 million.

SingTel’s data services strategy is to maintain and control an extensive, high capacitynetwork that connects its retail and wholesale customers to key Asia Pacific markets aswell as to Europe and North America. SingTel also intends to extend the geographicalreach of its networks by expanding its existing Internet data centres over the coming18 months. SingTel believes these initiatives will position it well to take advantage ofthe growth in demand for bandwidth resulting from increasing Internet usage ande-commerce activities.

(c) Mobile communications servicesSingTel provides mobile communications services, including cellular, paging andmaritime and aeronautical communications. The majority of the operating revenue fromthese services is derived from cellular services.

SingTel is the leading mobile communications operator in Singapore withapproximately 1.5 million cellular subscribers and a market share of approximately 56%as at 31 March 2001. SingTel offers both post-paid and pre-paid services on its dualband GSM900 and GSM1800 networks. Of SingTel’s 1.5 million mobile subscribers,approximately 38% are pre-paid subscribers.

Mobile penetration in Singapore has grown rapidly since 1997, with market penetrationreaching approximately 68% as at 31 March 2001.

SingTel’s key strategies and initiatives already taken to maintain its significant presencein the mobile communications market, and to grow its mobile communicationsbusiness, include the following:

• SingTel focuses on bringing new and innovative products and services to the marketto meet the needs of its various customer groups;

• in June 1999, SingTel became one of the first in the world to offer a mobile e-trading service;

• SingTel was the first to offer dual band GSM900/GSM1800 service in Singapore;

• in October 2000, SingTel launched GPRS which supports a data rate of up to115kbps;

• SingTel launched a WAP service in February 2000;

• on 23 April 2001, SingTel was awarded 3G spectrum rights and an FBO licence afterpayment of the licence fee of S$100 million. Prior to award of the licence, SingTel,together with NTT DoCoMo and the Centre for Wireless Communications (part ofthe National University of Singapore), was the first in Singapore to complete trialson Wideband CDMA, a 3G cellular system; and

• SingTel continues to improve its mobile communications services to customers whilethey are overseas. SingTel’s customers can roam to over 135 destinations worldwide,which is greater coverage than is available from any other Singapore operator.




33

As the above graph shows, SingTel’s cellular subscriber base increased by 106% from745,000 as at 31 March 1999 to 1.54 million as at 31 March 2001, as the overallmarket experienced significant growth. Despite the entry of a third operator, SingTelcontinues to hold a commanding market share in both the pre-paid and the post-paidsegments. SingTel believes it had the highest post-paid ARPU in the Singapore marketof approximately S$83 for the year ended 31 March 2001 due to its high penetrationof the corporate customer market.

SingTel expects that competition in the mobile communications services market willcontinue to increase. However, SingTel believes that its high quality networks, goodcustomer service, innovative marketing, and its integrated communications serviceprovider model will enable it to compete successfully and to maintain its significantpresence in this market.

(d)National telephone servicesSingTel remains the dominant provider of national telephone services in Singapore,with a market share of over 99%. SingTel has an extensive national fixed line networkinfrastructure that can service almost all residential and business premises in Singapore.The national fixed line network is required to be open for competition as described inSection 3.4(a).



1999

2000

2001

745

1,058

1,537

Subscribers (’000)

SingTel Cellular Subscribers Year Ended 31 March

1999

2000

2001

692

716

1,086

1,778

1,823

1,945

1,107

787

Business Residential

1,158

Direct Exchange Lines (DEL) Year Ended 31 March

Number of Lines (’000)


34

Operating revenue has grown steadily over the past three years from S$547 million forthe year ended 31 March 1999 to S$588 million for the year ended 31 March 2001.As the above graph shows, the total number of working DELs has also grown over thepast three years. Operating revenue growth has been achieved through enhancednetwork services, including caller identification, voicemail and call waiting. Such servicesnow account for 20% of national telephone operating revenue.

(e) IT and engineering servicesSingTel’s IT and engineering services business is a market leader in its field in Singapore.Both NCS and Aeradio have an extensive blue chip customer list in this business.

The services provided through SingTel’s IT and engineering services business fall intothe following main categories:

• global competency, comprising:

– consulting, providing advice on its customers’ IT and e-business strategies; and

– package-based solutions, including supply chain management, knowledgemanagement, mobile commerce, enterprise resource management and customerrelationship management;

• industry solutions, offering complete turnkey solutions to various industries,including government, banking and finance, transportation, telecommunications,and education. Services range from consulting, applications development to systemsintegration and maintenance;

• infrastructure integration, focusing mainly on the provision of networkingintegration for enterprise customers and infrastructure service providers;

• infrastructure outsourcing providing business recovery, call centre, data centremanagement, facilities management, groupware and messaging, hosting andInternet data centre services to its clients; and

• premises distribution, with its key business in distributing communications relatedequipment such as structured cabling and wireless devices to the enterprise market.

NCS is extending its activities to other markets in the region and has established officesor ventures in Australia, China, Hong Kong, India and Malaysia. It is focusing onproviding services to corporate customers in the Asia Pacific region, leveraging on itsextensive consulting and projects experience for customers in government andcommercial sectors such as finance and banking, transportation andtelecommunications in Singapore.

Aeradio has a threefold strategy:

• to expand its customer base in the aviation, banking, environmental, healthcare,telecommunications, transport and other relevant industry sectors;

• to look for new business, making use of multi-disciplinary state-of-the-arttechnologies in providing solutions to meet its customers’ needs; and

• to build a regional presence leveraging off international investments by SingTel.

Over the past three years, the operating revenue of the IT and engineering servicesbusiness has grown 40.8% from S$341 million for the year ended 31 March 1999 toS$480 million for the year ended 31 March 2001.

(f) Postal and delivery servicesSingPost operates a network of more than 1,000 postal outlets throughout Singapore.SingPost offers a wide range of postal services, including domestic mail, internationalmail, express mail, parcel services, retail sales (including postal and agency products)and philatelic sales. In the year ended 31 March 2001, SingPost delivered 825 millionitems nationally and internationally.

SingPost faces a number of challenges in these markets, including higher costs and theincreasing use of electronic communication services.




35

SingPost has implemented a number of strategies to address these issues, includingincreasing its focus on direct mail and printed matter distribution, maintainingcompetitive pricing and adding various value-added services. For example, SingPost hasintroduced a number of e-commerce facilities, such as vPOST (a bill presentment andpayment portal), ID.Safe (a digital certification authority system for electronictransactions) and First Cube (a smart locker delivery system).

In the highly competitive express mail and parcel services market, SingPost has adominant presence in Singapore. In the outbound international market, SingPost facescompetition from international operators such as DHL, UPS and Fedex.

SingPost has sought international partnerships and alliances as part of its growthstrategy. In March 2000, SingPost, TNT Post Group NV (of The Netherlands) and theBritish Post Office signed an agreement to create the world’s largest international mailpartnership, subject to meeting regulatory conditions. The joint venture will focus oncross-border mail to better serve the needs of businesses seeking global reach.

Postal services revenue over the past three years has grown by 10.8% fromS$308 million for the year ended 31 March 1999 to S$341 million for the year ended31 March 2001.

(g)Other businessesIn addition to the businesses outlined in detail above, SingTel participates in a numberof other businesses, including:

(i) Equipment salesThis business is involved in the sale of communications equipment to corporate andretail customers through direct marketing, retail outlets and the Internet. InDecember 1999, the equipment sales division introduced hello!, a new retail conceptfor a chain of communications lifestyle stores that provide and support SingTel’s fullrange of services, including Internet café facilities.

(ii) Directory publishing and advertisingThis business produces the Singapore Phone Book and Yellow Pages in print, Internet,WAP and telephone operator-assisted form. In recent years, a reduction in advertisingexpenditure by corporate customers due to general economic conditions has resultedin declining revenue. The business unit has taken steps to address this by venturinginto related media businesses both locally and in the Asia Pacific region.

3.7 INFRASTRUCTURE AND TECHNOLOGY

As Singapore’s leading integrated communications service provider, SingTel owns the mostextensive network in Singapore with state-of-the-art technology that enables it to offer acomprehensive array of voice and data communications services. SingTel owns the majorityof the national network of local telephone lines and the principal data communicationsnetwork in Singapore. It has extensive interests in submarine cables and satellites in theAsia Pacific region. SingTel’s network investment strategy is to ensure that its networksremain modern, efficient and capable of handling the requirements of its customers.

In the last three financial years, SingTel has invested about S$3.0 billion in its networkinfrastructure and plans to make Singapore a communications hub in the Asia Pacificregion.

(a) Singapore networks(i) Fixed line networks

SingTel has an extensive fibre optic fixed line network in Singapore. All telephoneswitches are digital. The network has an ATM backbone that supports high-speedapplications. The majority of commercial and public housing buildings equippedwith MDF rooms are linked by fibre optic cables.

In Singapore, as at 31 March 2001, there were about 100 telephone switches andfour international telephone gateways serving SingTel’s customers. A nationwidebroadband ADSL network provides high-speed Internet access.




36

Using ADSL technology, SingTel’s Magix service provides video streaming speeds ofup to 2.5mbps, as well as high speed Internet access, on a point-to-point basis.Magix’s ADSL coverage area is approximately 98.4% of Singapore.

SingTel’s broadband network meets the requirements of its corporate customers tocommunicate by way of voice and video at the same time. SingTel’s ATM service,launched in June 1998, offers customers a high-speed technology that enablesmultimedia (voice, text, data, image and video) transmissions on a single platform.The same technology recently enabled SingTel to win a project to link up all schoolsin Singapore to the Ministry of Education via a nationwide ATM network to promoteinteractive multimedia-based learning.

In October 2000, SingTel announced a S$50 million five year investment inMeg@POP, a new generation IP-centric service platform in Singapore. Using thisplatform, SingTel offers business customers, ISPs and content providers a one-stop,broadband solution to enable the provision of IP-based services, such as VPN,high-speed Internet, e-business and broadband multimedia applications.

(ii) Mobile networksTo date, SingTel has invested more than S$1.1 billion in its mobile networks. As at31 March 2001, customers are supported by over 1,700 base stations nationwide,providing extensive coverage indoors and outdoors. SingTel’s digital GSM900and GSM1800 cellular networks cover all of Singapore. SingTel’s coverage duringthe quarter ended 31 March 2001 is rated at 100% for GSM900 and 99.92% forGSM1800.

SingTel intends to roll out a 3G network that will maintain SingTel’s competitiveedge, subject to the availability of handset technology and to market readiness.

(b) International networksInternational communications traffic to and from Singapore is transmitted viasubmarine fibre optic cables, satellite and microwave systems. SingTel’s internationalnetwork provides both direct and indirect connections from Singapore to more than100 countries.





37


to Australia >

to USA >

to USA >

to USA >

to USA >

to USA >

to Hawaii/USA >

Batangas

Shantou

Shanghai

Macau

Okinawa

Guam

Chikura

Jakarta

ST-188 E

INDONESIA

BRUNEI

PHILIPPINES

TAIWAN

THAILAND

VIETNAM

HONG KONG

JAPAN

SINGAPORE

MALAYSIA

CHINA

< to Europe

< to India

APC

APCN

China-US Cable

Japan-US Cable

SEA-ME-WE3

APCN 2 (3Q 2001)

C2C Phase 1 (3Q 2001)

C2C Phase 2 (4Q 2001)

i2i (1Q 2002)

Branching unit

Landing point

Satellite

KOREA

o

Current SingTel International Infrastructure


38

(i) Submarine cable systemsThrough its ownership and investments in a number of global submarine cablesystems, SingTel is favourably placed to ensure competitive bandwidth prices andsufficient capacity to meet the exponential growth expected in broadband andmultimedia communications services including ATM, IP and video transmissions.

SingTel constantly seeks investments into new submarine cable systems to achievethe lowest optimal unit cost for international bandwidth. SingTel is an investor insome of the world’s major submarine cable systems, such as SEA-ME-WE 2,SEA-ME-WE 3, APCN, Japan-US, China-US, Australia-Japan and APCN2. SingTel istaking the lead in implementing two new submarine cable projects in the pan-Asianregion and the Indian Ocean region, namely the C2C and i2i cable networks. Bothwill utilise the most up-to-date technology and the largest submarine cable capacityto be delivered to the respective regions to date.

The C2C cable network is expected to be completed in December 2001 and willconnect Singapore to other Asian countries such as China, Hong Kong, Japan,Korea, the Philippines and Taiwan. C2C will further provide onward bandwidthconnectivity to North America via capacity on new trans-Pacific cable systems.SingTel’s interest in C2C is 59.5% as at 31 March 2001, and its initial financialcommitment to C2C is estimated to be approximately US$320 million.

The first cable of the i2i cable network is expected to be ready for commercialservice by the first quarter of 2002 and will provide direct connectivity fromSingapore to India. SingTel’s interest in i2i is approximately 50% as at 31 March2001, and its initial financial commitment to the i2i cable network is estimated to beapproximately US$75 million.

Optus, TCNZ and SingTel are currently involved in feasibility studies for a submarinecable project linking Australia, Indonesia and Singapore. It is currently envisagedthat the cable may be ready for commercial service by the fourth quarter of 2002.As part of the feasibility studies, Optus, TCNZ and SingTel have commissionedmarket demand surveys and desktop surveys for the project. The three sponsorshave also issued a tender to potential suppliers. It is currently anticipated that eachsponsor will contribute equally to the equity component of the project financing.

(ii) Satellite systemsSatellite systems play a major role in providing an alternative to cable networks aswell as direct connection to countries that are otherwise not accessible bysubmarine cable. SingTel has four major satellite stations providing directtransmissions to over 80 countries.

SingTel’s satellite systems are used to meet demand from its customers forinternational services, including leased lines, VSAT, broadcasting and Internet.

Apart from being an investor in the world’s largest satellite systems such asINTELSAT and INMARSAT, SingTel also launched its own satellite in August 1998.The ST-1 satellite, co-owned with Chung Hwa Telecom of Taiwan, supportscommunications and broadcasting services with broad coverage, swift responsetimes and competitive prices. The ST-1 satellite has a footprint covering most of Asiaup to the borders of Russia.

SingTel has also recently invested about US$112 million to lease 15 transponders inthe APSTAR V satellite, to be launched in the first quarter of 2003.

(iii) Microwave systemsSingTel’s microwave systems link Singapore with Malaysia and Batam (in Indonesia).These systems complement the cable and satellite links to these countries. There arecurrently five microwave links to Malaysia and two to Batam.

(iv) SingTel IXSingTel IX is one of the largest Internet bandwidth providers in the Asia Pacificregion (excluding Japan). Its network includes more than 900mbps of bandwidth tothe United States, connections to more than 30 countries, dedicated points of




39

presence in major cities around the world, including Hong Kong, London, NewYork, San Francisco, Sydney and Tokyo, more than 20 private peering partnerswithin the Asia Pacific region, public peering in key locations such as PAIX, LINX,and JPIX and connections to more than 70 Asia Pacific ISPs. Additional points ofpresence are planned for Chicago, Los Angeles, Osaka, Seoul and other major cities.

(v) Internet data centresNCS’ Digit@l Centrix provides co-server hosting services for customers who requireInternet data centre facilities and services. The services help companies to go on-linequickly without the need for significant up-front investment. Digit@l Centrix’sInternet network has a 155 mbps link leading to SingTel IX.

Stor@ge Centric is a value-adding service under Digit@l Centrix, partnering withleading storage services provider, EMC. Stor@ge Centric provides a flexible andcost-effective suite of pay-as-you-grow managed storage services.

(vi) International ATM networkSingTel’s international ATM service was implemented in 1998. Bilateral ATM servicehas been established with 10 major telecom operators, providing SingTel customersconnectivity to Australia, China, Germany, Hong Kong, Japan and the United States.SingTel’s ConnectPlus Managed ATM service is now available in key globalcommunications hubs like Hong Kong, London, New York, San Jose, Sydney andTokyo through its own points of presence. In partnerships with others, the coverageis extended to Indonesia, Malaysia, the Philippines, Thailand and major Europeanand North American cities.

(c) E-Commerce and Internet network infrastructureSingTel’s strategy is to leverage its network infrastructure and other capabilities across itsbusinesses to provide e-commerce solutions, on-line media services and infrastructurealong the value chain. SingTel’s involvement extends from provision of terminals, accessand content to procurement and fulfilment.



SingTel’s initiatives across the e-commerce and broadband value chain

SingTelMHS

SingTel IX

Content & Application

Content, Hosting & Distribution

TechnologyEnablers

InternetAccess

RegionalBackbone

EndUsers


40

(i) Internet access service providersSingTel provides Internet access services through SingNet, SingTel IX and Magix,as described above in Section 3.6(b).

(ii) Infrastructure and enablersThrough NCS and SingTel IX, SingTel builds and provides an e-commerceinfrastructure and platform on which businesses can conduct business transactionsand can also set up e-commerce businesses and operations.

Digit@l Centrix and Consumer Connect provide a complete e-commerce infrastructurethat assists companies to move their brick-and-mortar businesses online.

To gain exposure to the business-to-business market, SingTel launched SESAMi.comin September 1999. Targeted at businesses across Asia, SESAMi.com provides theleading online e-infrastructure for business by providing trading communities thatcan be readily tapped for e-commerce. With the recent merger with Asia2B.comHoldings Limited, both SESAMi.com and Asia2B.com Holdings Limited are now heldunder one holding company, namely, SESAMi Inc., in which SingTel has a 44.5%interest. SESAMi Inc. now has offices in Beijing, Hong Kong, Mumbai and Singapore.

MERCURiX Pte Ltd, a subsidiary of SingTel, provides intellectual property rightsprotection in the digital domain, enabling content providers to price and securelydistribute digital merchandise such as music, video, text and other multimediamaterial.

(iii) Portals and contentLycos Asia is one of the largest Internet portals in Asia with 11 local websites in Asia.

(iv) Bill presentment/payment and fulfilmentSingPost provides bill presentment and payment and fulfilment services throughvPOST, ID.Safe and First Cube.

vPOST enables consumers to pay bills on-line. Fulfilment of orders, a vitalcomponent in the e-commerce value chain, is provided through SingPost’s maildelivery network and services. In addition, First Cube, an electronic locker systemprovides a safe delivery infrastructure for the “last mile” to the home.

(v) Investing in high-tech start-upsSingTel Ventures was established in 1997, and manages SingTel’s S$225 millionventure capital fund. From the inception of the fund up to 31 March 2001, SingTelVentures had invested and committed over S$162 million in about 34 entities.

It provides equity capital, strategic advice and assistance to high-tech start-ups inthe IT and communications industries, which are developing new technologies,products, applications and services related to SingTel’s business. These early-stagetechnology investments enable SingTel to gain early access to the latest technologiesand potentially introduce them to its customers. SingTel Ventures has alsoengineered various strategic relationships between its portfolio companies andSingTel’s business units. SingTel Ventures’ ultimate intention is to divest itsinvestments through initial public offerings or trade sales.

(d)SingPost infrastructureSingPost operates a network of more than 1,000 postal outlets throughout Singapore.In addition, it operates a sorting centre and 11 delivery bases for processing domesticand international mail and parcels.

3.8 INTERNATIONAL STRATEGIC INVESTMENTS

SingTel has many international investments, most of which are in the Asia Pacific region.These investments have resulted from SingTel’s constant pursuit of external marketexpansion as a part of its growth strategy.




41

SingTel, together with its Associated Companies (excluding Belgacom), has a total of7.3 million cellular and 2.9 million fixed line subscribers in the Asia Pacific region as at31 March 2001. Taking into account SingTel’s percentage interests, this represents3.2 million cellular and 2.3 million fixed line subscribers on a proportionate basis.

Further information about SingTel’s major international investments is set out below.

(a) AISAIS is the leading cellular operator in Thailand operating analogue NMT 900 and GSM900 cellular networks. As at 31 March 2001, AIS had approximately 50% market sharein Thailand and had 2.43 million cellular subscribers. It has experienced rapid subscribergrowth, with an average of 150,000 net new subscribers being added every month inthe first quarter of 2001.

AIS is listed on the Stock Exchange of Thailand. For the year ended 31 December 2000,AIS reported operating revenue of THB37 billion and net profit after tax ofTHB6.6 billion. The market capitalisation of AIS on 30 April 2001 was THB117.4 billion.

SingTel’s effective equity interest in AIS is 21.0%. AIS’ major shareholder is ShinCorporations Public Company Limited, Thailand’s leading broad-based communicationsconglomerate.

(b)Globe TelecomGlobe Telecom is an integrated provider of fixed line, cellular, international telephone,inter-exchange carrier, data communications and Internet services in the Philippines.Globe Telecom is the number two provider of cellular services in the Philippines withapproximately 3 million subscribers as at 31 March 2001. Its subscriber base has grownby approximately 17% in the first quarter of 2001.

Globe Telecom is listed on the Philippines Stock Exchange. For the year ended31 December 2000, Globe Telecom reported revenue of PP20.1 billion and net profitafter tax of PP1.5 billion. The market capitalisation of Globe Telecom on 30 April 2001was PP49.7 billion.

SingTel’s domestic partner in Globe Telecom is the Ayala Group, which is one of thePhilippines’ leading corporate groups.



SingTel’s Major Regional Investments

Thailand21% of AIS

14.3% of DPC

Taiwan24.3% of NCIC

Philippines23.6% of Globe Telecom

Hong Kong20.35% of APT Satellite

India28.5% of Bharti

SingaporeSingTel

50% of Virgin Mobile Asia

Indonesia40% of BSI


42

On 7 March 2001, SingTel announced that Globe Telecom had signed a series ofagreements to bring it closer to acquiring Isla Communications Co., Inc., also anintegrated communications service provider in the Philippines. The acquisition willenable Globe Telecom to expand its customer base and the geographic reach of itsservices in the Philippines. The acquisition is expected to be completed in mid 2001.

SingTel’s effective equity interest in the enlarged Globe Telecom, after legal completionof the acquisition of Isla Communications Co., Inc., is estimated to be 23.6%.

(c) Bharti GroupBharti Group is a leading private fixed line and mobile communications service providerin India. Bharti Group also provides Internet services in India. With the liberalisation ofthe telecommunications industry in India, Bharti Group is looking to add domestic longdistance telephone services to its existing communications portfolio in addition toextending its cellular and fixed line services footprint to new territories within India.

SingTel’s interest in Bharti Group consists of a 20% equity interest in Bharti TelecomLimited and a 15.5% equity interest in Bharti Tele-Ventures Limited, a subsidiary ofBharti Telecom Limited. SingTel’s effective equity interest in Bharti Tele-Ventures Limitedis approximately 28.5%.

On 7 May 2001, SingTel announced that it would increase its investment in BhartiGroup by up to US$200 million. It is expected that SingTel’s effective interest in theBharti Group will increase. The percentage shareholding will depend on the investmentstructure which is yet to be finalised. Bharti Group also announced that a number ofother financial investors, including E.M. Warburg Pincus, have also separatelycommitted investments in Bharti Group totalling up to US$260 million.

(d)NCICIn March 2000, NCIC was awarded a facilities-based licence to operate a fixed linenetwork in Taiwan. NCIC plans to offer data and broadband services, leased line andInternet backbone services, as well as international, domestic long distance and localvoice services. NCIC launched its commercial operations in March 2001 using the brandname sparq*.

SingTel’s effective equity interest in NCIC is 24.3%. SingTel’s strategic partner in NCIC isthe Far Eastern Group, which is one of Taiwan’s largest non-electronics industrialgroups. The Far Eastern Group also has a significant interest in Taiwan’s fast-growingcellular player, Far EasTone.

(e) Virgin Mobile AsiaIn November 2000, SingTel entered into a joint venture with the Virgin Group toprovide MVNO services in Singapore and other Asian countries (excluding Japan).The joint venture, Virgin Mobile Asia, intends to launch its services in Singapore in2001. It also intends to enter the Hong Kong and Taiwan markets in the next 18months, depending on the feasibility of the business case in each market.

SingTel will hold an effective equity interest of 50% in Virgin Mobile Asia upon thecompletion of its agreed capital injection.

(f) APT SatelliteAPT Satellite primarily provides high quality satellite transponder andtelecommunications services for the international and Asia Pacific broadcasting andtelecommunications sectors. It currently operates three in-orbit satellites, APSTAR I,APSTAR IA and APSTAR IIR, through its own satellite control centre. It has commissionedthe launch in early 2003 of a new high-powered satellite, APSTAR V, to replace APSTAR Iand to satisfy anticipated demand for transponders. SingTel has committed to lease15 transponders on the APSTAR V satellite.

APT Satellite is listed on the Hong Kong Stock Exchange. For the year ended31 December 2000, APT Satellite reported revenue of HK$341.5 million and net profitafter tax of HK$143 million. The market capitalisation of APT Satellite on 30 April 2001was HK$1,331.3 million.




43

SingTel has an effective equity interest of 20.35% in APT Satellite. Other investorsinclude China Telecommunications Broadcast Satellite Corporation, China AerospaceScience and Technology Corporation, CASIL Satellite Holdings Limited and Kwang HuaDevelopment and Investment Ltd.

(g)DPCDPC provides cellular services in Thailand, using the digital PCN system.

SingTel announced its acquisition of an interest in SDT on 4 May 2001. SDT has a47.55% equity interest in DPC. Through this acquisition, SingTel has an effective equityinterest of 14.3% in DPC. Shin Corporations Public Company Limited, SingTel’s partnerin AIS, is also its strategic partner in SDT.

(h)BSIBSI has a joint operation agreement with PT Telkom, Indonesia’s monopoly nationaltelephone services provider, to provide fixed line services in Eastern Indonesia (includingBali, Sulawesi, Irian Jaya, Ambon and West Timor) for 15 years from 1995 to 2010. BSIis responsible for managing, operating, repairing and maintaining PT Telkom’s existinglines and constructing an agreed number of new lines in the Eastern Indonesia region.

In the year ended 31 December 2000, BSI’s share of revenue from the joint operationwas Rp345 billion. BSI reported an operating income of Rp183 billion and incurred anet loss of Rp151 billion. The net loss is mainly due to foreign exchange losses.

SingTel has an effective equity interest of 40.0% in BSI.

The terms of BSI’s joint operation agreement are under review with PT Telkom. As aresult of that review, the future of SingTel’s investment in BSI is uncertain.

(i) Lycos AsiaLycos Asia was established in 1999. It provides localised versions of the Lycos.com andTripod consumer portals to Asian markets. It is one of the largest Internet portals in Asiawith 11 local web sites in Asia. In Singapore, Lycos Asia is in a leading position, and, inChina, one of the world’s top 10 Internet markets, Lycos Asia is among the top 10 portals.

SingTel holds an effective equity interest of 50% in Lycos Asia.

(j) BelgacomBelgacom is the leading and incumbent communications company in Belgiumproviding a full range of services in mobile, local, regional and international telephoneservices, leased lines, data communications and terminal equipment in Belgium.Belgacom is owned by the Belgian State and ADSB Telecommunications B.V., aconsortium comprising SBC Communications, Tele Danmark, SingTel and Belgianfinancial investors.

For the financial year ended 31 December 2000, Belgacom reported revenue ofBef207.4 billion and net profit after tax of Bef19.3 billion.

SingTel holds an effective equity interest of 12.15% in Belgacom.

(k) Other investments and joint venturesIn addition to the investments listed above, SingTel has a number of smallerinvestments in Singapore and throughout the Asia Pacific region. These investmentsinclude an interest in PointAsia Dot Com (Thailand) Limited in Thailand and InfoserveTechnology Corporation in Taiwan, both of which are ISPs.

3.9 EMPLOYEES

SingTel has approximately 13,400 employees. More than 98% of SingTel’s employees areemployed on a full time basis.

Just over half of SingTel’s employees are represented by Singapore labour unions, withapproximately 7,200 employees being members of the Union of Telecoms Employees ofSingapore and approximately 110 SingTel Yellow Pages employees being members of theSingapore Manual and Mercantile Workers’ Union. The remainder of SingTel’s employeesare covered by individual employment contracts.

SingTel has no recorded lost working time as a result of industrial disputes in the last five years.




44

3.10 PROPERTY

A large part of SingTel’s network infrastructure is located on land in relation to whichSingTel, as a public telecommunications licensee, is entitled to certain rights of access forthe purposes of erecting and maintaining plant and equipment used for the provision oftelecommunications services. SingTel also owns and occupies land on which its telephoneexchanges are located. SingTel owns approximately seven sites and occupies approximately60 sites under a lease or other basis, most of which are used for SingTel’s communicationsoperations. SingPost also owns or occupies under a lease or other basis approximately71 sites which are used to support its postal and delivery service operations. In addition tothese operational sites, SingTel owns or leases properties used for office accommodation,storage and other corporate purposes.

3.11 SINGTEL BOARD AND SENIOR MANAGEMENT

Koh Boon HweeChairmanMr Koh was Chairman of the former TAS from October 1986 and was appointed Chairmanof SingTel in April 1992. He also chairs the Nominations, Executive and CompensationCommittees. He was the Managing Director of Hewlett-Packard Singapore from 1985 to1990 and was the Executive Chairman of Wuthelam Holdings Pte Ltd from 1991 until2000. He is presently Chairman of Internet Technology Group and Chairman of OmniIndustries Ltd. Mr Koh also serves on the boards of various other listed and privatecompanies. He is Chairman of the Nanyang Technological University Council, a member ofSingapore’s Securities Industry Council and a Director of the Singapore InternationalFoundation and the Institute of Policy Studies.

Lee Hsien YangPresident and Chief Executive OfficerMr Lee joined SingTel in April 1994 and has been the President and CEO of SingTel sinceMay 1995. Prior to joining SingTel, he served (from 1975) in a variety of command andstaff appointments in the Singapore Armed Forces. He is the Chairman of the SingaporeScience Centre Board and a member of Singapore’s Land Transport Authority Board. He isalso a member of the Singapore-British Business Council, Egon Zehnder InternationalGlobal Corporate Governance Advisory Board, and the Board of Directors, INSEAD. Hegraduated with First Class Honours in Engineering from the University of Cambridge andhas an MSc in Management Science from Stanford University.

Ang Kong HuaMr Ang was appointed a non-executive Director of SingTel in May 2001. He is a memberof the Executive Committee. He is currently President of NatSteel Ltd, a listed Singapore-based manufacturing group. Before joining NatSteel in 1975, he was with Singapore’sEconomic Development Board and The Development Bank of Singapore Limited. He iscurrently Chairman of Singapore’s Securities Industry Council. Mr Ang also serves on theboards of various listed and private companies, as well as a number of government andadvisory institutions.

Paul Chan Kwai WahMr Chan has been a non-executive Director of SingTel since November 1999. He is amember of the Executive Committee. He is currently the Vice President and ManagingDirector of Compaq Computer Asia/Pacific Pte Ltd. Before joining Compaq Computer inAugust 1995, he held key general management appointments in Hewlett-PackardSingapore (Sales) Pte Ltd.

Dr Yogen K DalalDr Dalal was appointed a non-executive Director of SingTel in November 2000. He is amember of the Compensation Committee. He is currently Managing Partner of MayfieldFund and sits on the Boards of BroadVision, Tibco, Nuance and many privately heldcompanies including BeVocal, eScout, eTime Capital, Narus and Snapfish.




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MG Lim Chuan PohMajor-General Lim was appointed a non-executive Director of SingTel in April 1997 and is amember of the Executive Committee. He is currently the Chief of Defence Force with theSingapore Armed Forces. He is also a Director of Singapore Technologies Engineering Ltdand the Defence Science and Technology Agency. He was awarded the PublicAdministration Medal (Gold) (Military) in 1999.

Quek Poh HuatMr Quek has been a non-executive Director of SingTel since December 1995. He is amember of the Nominations and Executive Committees. He is currently the President ofTemasek. He was the President of Singapore Technologies Pte Ltd and Chairman ofSingapore Technologies Aerospace Ltd before joining Temasek in September 1995.

Seah Kian PengMr Seah was appointed a non-executive Director of SingTel in November 1999 and is amember of the Audit Committee. He is currently the Chief Executive Officer of NTUCMedia Co-operative Ltd and the Chief Operating Officer of NTUC Fairprice.

Jaspal SinghMr Singh was appointed a non-executive Director of SingTel in April 1999. He is a memberof the Audit Committee. He is currently a Deputy Secretary in the Singapore Ministry ofCommunications and Information Technology. Prior to this, he was a Deputy Secretary inthe Ministry of Finance.

Jackson Peter TaiMr Tai was appointed a non-executive Director of SingTel in November 2000. He is amember of the Audit Committee. He is currently the President and Chief Operating Officerof The Development Bank of Singapore Limited (”DBS Bank”). Prior to joining DBS Bank inJuly 1999, Mr Tai completed 25 years of service with J. P. Morgan & Co., where, amongother assignments, he was senior officer for the Asia Pacific region and senior officer for theWestern United States.

Keith Tay Ah KeeMr Tay was a Board member of the former TAS between October 1986 and March 1992.He has been a non-executive Director of SingTel since April 1992 and is currently theChairman of the Board’s Audit Committee and a member of the Compensation Committee.He was Chairman and Managing Partner of KPMG Peat Marwick from 1984 to 1993.He now serves on the Boards of several public companies and is the Chairman of DCSSolutions Ltd. He is a Board member of the Singapore International Chamber ofCommerce, of which he is a Past Chairman. He is also Honorary Vice President of theSingapore Institute of Directors.

Senior Management

Lim ToonChief Operating OfficerMr Lim was appointed Chief Operating Officer of SingTel in April 1999. He is responsiblefor synergising the operations of SingTel’s customer units as well as shared-resource unitslike network service, customer service and corporate marketing. He has been with SingTelsince 1970 and, since 1983, has held top management positions in various areas includingengineering, radio services, traffic operations, human resources and information systems.He holds a First Class Honours degree in Engineering from the University of Canterbury(New Zealand).

Lucas Chow Wing KeungExecutive Vice President, Consumer BusinessMr Chow was appointed Executive Vice President (Consumer Business) in July 2000. He isalso the Chief Executive Officer of SingTel Mobile. Mr Chow joined SingTel in May 1998 asGroup Director (Total Quality). Before joining SingTel, he held several senior positions inHewlett Packard where he worked for 20 years. He graduated with a Bachelor of Science(Honours) degree from the University of Aston, Birmingham (United Kingdom).




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Chua Sock KoongChief Financial OfficerMs Chua has been Chief Financial Officer of SingTel since April 1999, with overallresponsibility for all financial functions of SingTel, including treasury, tax, insurance and riskmanagement, as well as the corporate development, company secretarial, legal,international affairs and regulatory functions. She joined SingTel in 1989 as Treasurer. ACertified Public Accountant in Singapore and a Chartered Financial Analyst, she graduatedfrom the University of Singapore (now called the National University of Singapore) withFirst Class Honours in Accountancy.

William HopeExecutive Vice President, NetworkMr Hope joined SingTel as Executive Vice President (Network) in October 2000. Prior tothis, he was the Chief Technical Officer with Optus in Australia and was responsible forOptus’ local, long distance, mobile, IP and satellite networks. He graduated with First ClassHonours in Bachelor of Science from the University of Western Australia and was awardedthe HC Levey Prize (University Prize for Mathematics).

Lee Shin KoiExecutive Vice President, Customer ServiceMr Lee was appointed Executive Vice President (Customer Service) in August 2000. Hejoined SingTel in 1972 and, throughout his 29 years with SingTel, has held various positionsin postal services, finance, telephone sales, personnel, mobile and consumer business. Heholds a Bachelor of Accountancy degree from the University of Singapore (now called theNational University of Singapore).

Lim Chuan PohExecutive Vice President, Corporate BusinessMr Lim joined SingTel in October 1998 as Chief Executive (Fixed Line Services) and wasappointed Executive Vice President (Corporate Business) in April 1999. Prior to joiningSingTel, he served in different senior appointments in the Singapore Civil Service. His lastappointment before joining SingTel was as Deputy Secretary in the Ministry ofCommunications. He graduated with an Honours degree in Engineering Science fromOxford University and has a Masters degree in Public Health Engineering from the ImperialCollege of Science and Technology, University of London.

Lim ShyongExecutive Vice President, Global BusinessMr Lim was appointed Executive Vice President (Global Business) in April 1999. He joinedSingTel in 1972 and, since 1992, has held top management positions in various areasincluding international market development, international carrier services and businesscommunications. He graduated with a Bachelor of Engineering (Electrical) from theUniversity of Singapore (now called the National University of Singapore) and was awardeda Masters in Business Administration from INSEAD in 1982 under a French GovernmentScholarship.

Sin Hang BoonChief Executive Officer, Singapore Telecom InternationalMr Sin was appointed Chief Executive Officer of STI in January 1999. He joined SingTel in1960 and has held numerous positions in a variety of areas. He has been a member of thetop management team for 14 years. From 1996 to 1998, he was seconded to Belgacom ofBelgium, in which SingTel has an equity stake. He has a Bachelor of Science degree inPhysics from Nanyang University and a post-graduate diploma in Business Administrationfrom the University of Singapore. He has also attended the Advanced ManagementProgramme at Harvard.

William Tan Soo HockChief Executive Officer, Singapore PostMr Tan was appointed Chief Executive Officer of SingPost in June 1998. He joined SingTelin 1971 and has held top management positions in corporate finance and postal operationsbefore assuming his current position. He was seconded to PT Bukaka SingTel Internationalin Indonesia from 1996 until 1998. He holds an Honours degree in Electrical Engineeringfrom the University of Auckland (New Zealand).




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3.12 CAPITALISATION AND INDEBTEDNESS

The following table sets out the capitalisation and indebtedness of SingTel as at 31 March 2001.

S$ US$MILLION MILLION (1)

Shareholders’ fundsIssued and paid up share capital(2) 2,312.0 1,284.4Reserves 5,753.7 3,196.5Total shareholders’ funds 8,065.7 4,480.9Total borrowings (unsecured)Long term bonds(3) 1,000.0 555.6Total capitalisation and indebtedness 9,065.7 5,036.5Notes:(1) Exchange rate US$0.5556/S$1(2) See table below for details(3) On 15 March 2001, SingTel issued a 5-year fixed interest unsecured bond of S$1 billion due 2006, carrying interest at 3.21% per

annum.

The following table sets out the authorised and issued capital of SingTel as at 31 March 2001 and31 March 2000.

2001 2000S$ S$

MILLION MILLION

Authorised share capital33,333,333,330 ordinary shares of S$0.15 each and 1 Special Share of S$0.50 5,000.0 5,000.0Issued and paid up share capitalOrdinary shares at S$0.15 each (“Shares”) Balance as at 1 April

15,473,154,226 (2000: 15,249,938,788) Shares 2,321.0 2,287.5Issue of 787,900 (2000: 223,932,438) Shares 0.1 33.6Repurchase of 60,778,000 (2000: 717,000) Shares (9.1) (0.1)Balance as at 31 March

15,413,164,126 (2000: 15,473,154,226) Shares 2,312.0 2,321.01 Special Share at S$0.50 * *

2,312.0 2,321.0* denotes amount of less than S$50,000

3.13 SUMMARY HISTORICAL FINANCIAL INFORMATION

Audited Consolidated Financial StatementsBelow are summary audited consolidated balance sheets and income statements for each of the last threefinancial years. Further financial details regarding SingTel are set out in Annexure 1.

Summary Consolidated Income StatementsFor the financial years ended 31 March

2001 2000 1999 2001 2000 1999S$ S$ S$ % % %

MILLION MILLION MILLION CHANGE CHANGE CHANGE

Operating revenue(1) 4,925.5 4,865.8 4,883.5 1.2% –0.4% –1.2%Operating expenses(2) ( 3,036.9) ( 3,013.1) (2,910.4) 0.8% 3.5% 6.3%Operating profit 1,888.6 1,852.7 1,973.1 1.9% –6.1% –10.5%Other income 93.2 35.2 31.8 164.8% 10.7% –38.4%Compensation from IDA 337.0 – – NM NM NMShare of results of associated andjoint venture companies 348.9 367.5 291.7 –5.1% 26.0% 988.4%Earnings before interest and tax 2,667.7 2,255.4 2,296.6 18.3% –1.8% 0.6%Net finance income 384.5 265.4 305.7 44.9% –13.2% 13.0%Profit before tax 3,052.2 2,520.8 2,602.3 21.1% –3.1% 1.9%Taxation (715.1) (661.5) (670.3) 8.1% –1.3% –6.7%Profit after tax 2,337.1 1,859.3 1,932.0 25.7% –3.8% 5.3%Minority interests (12.9) (20.4) (19.2) –36.8% 6.3% NMProfit before extraordinary items 2,324.2 1,838.9 1,912.8 26.4% –3.9% 4.1%Extraordinary items (317.9) 701.0 87.0 NM 705.7% NMProfit attributable to shareholders 2,006.3 2,539.9 1,999.8 –21.0% 27.0% 12.1%EPS before extraordinary items (cents) 15.06 12.00 12.54 25.5% –4.3% 4.1%EPS after extraordinary items (cents) 13.00 16.58 13.11 –21.6% 26.5% 12.1%EBITDA (S$ million)(3) 3,290.2 3,037.1 2,817.9 8.3% 7.8% 2.9%NM – Not Meaningful




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Notes:(1) Operating Revenue

2001 2000 1999 2001 2000 1999S$ S$ S$ % % %


International Telephone 1,203.1 1,644.7 1,843.7 –26.8% –10.8% –10.4%Public Data and Private Network 1,065.0 763.0 620.6 39.6% 22.9% 10.5%Mobile Communications 885.5 851.3 880.0 4.0% –3.3% 9.2%National Telephone 588.0 572.7 546.6 2.7% 4.8% 1.4%IT and Engineering Services 480.1 383.5 340.9 25.2% 12.5% 70.7%Postal Services 341.0 322.6 307.9 5.7% 4.8% –1.3%Sale of Equipment 166.7 149.9 138.2 11.2% 8.5% –40.6%Directory Advertising 107.2 97.1 125.8 10.4% –22.8% –3.4%Others 88.9 81.0 79.8 9.8% 1.5% –22.6%Operating revenue 4,925.5 4,865.8 4,883.5 1.2% –0.4% –1.2%

(2) Operating Expenses

2001 2000 1999 2001 2000 1999S$ S$ S$ % % %


Traffic Expenses 665.4 700.8 813.1 –5.1% –13.8% –1.0%Staff Costs 666.6 595.3 622.3 12.0% –4.3% 13.3%Depreciation 624.1 782.8 521.7 –20.3% 50.0% 14.6%Selling and Administrative 591.5 525.8 556.7 12.5% –5.6% 20.7%Cost of Goods Sold 461.8 352.6 358.5 31.0% –1.6% –10.8%Repair and Maintenance 83.9 87.5 66.6 –4.1% 31.4% 11.4%Recoveries (56.4) (31.7) (28.5) 77.9% 11.2% 171.4%Operating expenses 3,036.9 3,013.1 2,910.4 0.8% 3.5% 6.3%

(3) EBITDA represents earnings before interest expense, investment and interest income, taxation,depreciation and amortisation, but after attribution of compensation from IDA and after the shareof results of associated and joint venture companies.

Summary Consolidated Balance SheetsAs at 31 March

2001 2000 1999S$ MILLION S$ MILLION S$ MILLION

Current Assets 7,962.4 6,896.0 7,350.1Non-Current Assets 8,190.2 7,020.8 5,586.4Total Assets 16,152.6 13,916.8 12,936.5Current Liabilities 3,807.1 3,030.6 2,911.4Non-Current Liabilities 3,829.5 2,281.4 2,412.7Total Liabilities 7,636.6 5,312.0 5,324.1Net assets 8,516.0 8,604.8 7,612.4Share Capital and Reserves 8,065.7 8,569.7 7,573.1Minority Interests 450.3 35.1 39.3

8,516.0 8,604.8 7,612.4

3.14 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIALRESULTS AND POSITION

The management discussion and analysis that follows should be read in conjunction with theconsolidated financial statements set out above.

(a) For the Financial Year ended 31 March 1999SingTel achieved positive earnings and EBITDA growth for the year ended 31 March 1999 despite thedifficult economic environment in the region, and despite substantial price cuts (mostly ininternational telephone services and cellular services) that were made to ensure that SingTel remainedcompetitive. Profit growth was primarily driven by the success of SingTel’s internationalisation efforts,which resulted in improved contributions from overseas investments, especially Belgacom and GlobeTelecom, and the divestment of certain loss making investments.

EBITDA increased 2.9% to S$2.82 billion.

Operating revenueSingTel’s operating revenue was S$4.88 billion, down 1.2%.




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International telephoneInternational telephone services remained the largest contributor to SingTel’s operatingrevenues, accounting for 38% of the total.

Total outgoing minutes grew by 6.0% to 799 million minutes during the year. Thisgrowth was slower than the previous year’s growth due to the slowdown in Singaporeand the regional economies.

Operating revenue declined by 10.4% to S$1.84 billion, primarily as a result of pricereductions by SingTel to ensure that its international telephone services remainedcompetitively priced compared to international benchmarks, with a decline of 13.8% inaverage gross collection rate.

Public data and private networkThe largest operating revenue growth, on a comparable basis, came from public dataand private network services, which grew 10.5% to S$621 million.

International and local leased lines were the main contributors to this growth. Greaterdemand for leased lines came from companies using applications which required higherbandwidth, as well as other operators providing cellular and Internet services.

About S$60 million in annual savings were passed on to local leased line customers interms of rate reductions, discounts, network modernisation and special schemes forISPs and their customers. Prices for ISDN services were also reduced by up to 44%.These initiatives were designed to further strengthen SingTel’s competitive position asa regional hub and to stimulate demand.

SingTel’s Internet businesses, SingNet and Magix, increased their subscriber bases toover 200,000 and 10,000 subscribers respectively during the year.

Mobile communicationsOperating revenue from mobile communications services, including cellular, paging andmaritime services, grew 9.2% to S$880 million, accounting for 18% of SingTel’s totaloperating revenue.

SingTel’s cellular subscriber base saw strong growth of 15% during the year to 745,000subscribers. SingTel’s cellular ARPU remained at about S$100, as SingTel continued toattract good quality customers to its networks. Average usage per user was estimated at350 minutes per month. Growth in operating revenues from SingTel’s cellular servicesmore than offset declining revenues from paging services, reflecting the continuedmigration of the subscriber base from paging to cellular services. Marketing promotionsand the introduction of a customer loyalty program generated sales and encouragedcustomer retention.

National telephoneOperating revenue from national telephone services grew 1.4% to S$547 million,comprising 11% of SingTel’s total operating revenue.

The total number of working Direct Exchange Lines increased by 5.5% to 1.78 millionlines. A successful second-line-for-the-home campaign and increased Internet penetrationstimulated demand for residential lines. As at 31 March 1999, approximately 19% ofhomes had more than one line, up from 15% in the previous year.

Operating revenue from enhanced network services increased by 14%, and comprised15% of national telephone operating revenue.

IT and engineering servicesOperating revenue from IT and engineering services was S$341 million, accounting for7% of SingTel’s total operating revenue. This represented a 70.7% increase over theprior year. This growth resulted from the acquisition of NCS in October 1997 whichmade its first full year contribution to SingTel. NCS’s contribution to operating revenueswas S$225 million.

Postal servicesOperating revenue from postal services contributed 6% of SingTel’s total operatingrevenue. Revenue declined by 1.3% to S$308 million, due mainly to a 2.2% decline inmail traffic volume.




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Operating expensesTotal operating expenses were approximately S$2.91 billion, an increase of 6.3% fromthe previous year. On a comparable basis (that is, excluding NCS), the overall increasein operating expenses was 3.5%.

Traffic expenses, which comprised 28% of SingTel’s operating expenses, declined by1.0% to S$813 million. Outpayments to other carriers, which accounted for more than80% of traffic expenses, declined by 6.1% even though outgoing internationaltelephone traffic increased by 6.0%. These declines resulted from aggressive accountingrates negotiation which saw settlement rates drop by more than 20%. Space segmentand leased circuit rental charges were higher to meet increased demand for dataservices.

Staff costs increased by 13.3% to S$622 million, and accounted for 21% of totaloperating expenses. Excluding NCS, staff costs would have increased by only 3.5%.

Selling and administrative expenses amounted to S$557 million, an increase of 20.7%from the previous year. This was mainly due to an increase of S$52 million in theprovision for doubtful receivables.

Accelerated depreciation of S$90 million on account of technological obsolescenceand for Y2K compliance resulted in an increase in depreciation charges of 14.6% toS$522 million.

Cost of goods sold is associated with revenues from information technology andengineering services, sale of equipment and directory advertising. Cost of goods solddecreased by 10.8% primarily attributed to lower equipment sales.

ProfitAs a result of the changes in revenues and expenses outlined above, SingTel’s operatingprofit decreased by 10.5% to S$1.97 billion.

Contributions from Associated Companies grew significantly over the year due to highercontributions from Belgacom and Globe Telecom. For the year ended 31 March 1999,overseas investments contributed S$292 million, or 11.2%, to SingTel’s profit beforetax. Contributions from overseas investments increased by S$265 million from theprevious year.

During the year, SingTel made its second largest investment to date by taking aneffective 13% stake in AIS, the largest cellular operator in Thailand.

During the year, SingTel adopted a conservative investment stance by increasing itscash and fixed income investments and reducing its exposure to equities, resulting in anincrease of 13.0% in net finance income. Interest income increased by 36.8% due to anincrease in interest rates and the higher level of fixed income investments. Investmentincome declined as a result of this portfolio restructuring.

Profit after tax before extraordinary items grew by 4.1% to S$1.91 billion. Earnings pershare before extraordinary items increased by 4.1% to 12.54 cents.

There was a net extraordinary gain of S$87 million which was the result of gainsrealised from the sale of various long term portfolio investments, offset by provision fordiminution in value for certain investments. The profit after extraordinary itemsamounted to S$2.0 billion, an increase of 12.1% from the previous year.

Financial positionAs at 31 March 1999, SingTel’s total assets stood at S$12.94 billion, an increase of11.2% from the previous year. This increase was largely a result of an increase of 14.5%in the cash and short term investments held by SingTel to S$6.4 billion on account ofstrong cash flow generated from operations as well as a 13.6% increase in property,plant and equipment, net of depreciation to S$4.6 billion. Capital expenditure for theyear totalled S$1.1 billion, an increase of 15.1% from the previous year.

Shareholders’ funds increased 16.1% to S$7.57 billion and net tangible assets per sharewas 49.66 cents, compared to 42.76 cents a year ago.




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(b)For the financial year ended 31 March 2000The financial year ended 31 March 2000 was a period which saw an improvement inregional economies after the contraction experienced in the previous year. Overall,SingTel showed positive EBITDA and earnings growth for the year despite the continuedimplementation of price cuts to remain competitive. Profit growth reflected thecontinued success of SingTel’s internationalisation efforts through improvedcontributions from its core international investments and gains realised from thedivestment of non-core international investments.

EBITDA increased by 7.8% from S$2.82 billion to S$3.04 billion.

Operating revenueSingTel’s operating revenue was S$4.87 billion, down by 0.4%.

International telephoneWith the economic recovery, growth in total outgoing international traffic recoveredand total outgoing minutes increased by 10.8%. Incoming minutes, however, declinedby 4.8%. Alternative services, such as Budget Call 013, V019 and eVoiz, wereintroduced to enhance SingTel’s product offerings. These services contributed morethan 20% to outgoing traffic.

Various tariff reductions maintained SingTel’s competitiveness, but resulted in theaverage net collection rate declining by 14.9% to S$1.14 per minute. Internationaltelephone revenue declined by 10.8% to S$1.64 billion. Margin erosion was, however,mitigated by a decline in traffic expenses as a result of falling settlement rates.

Public data and private networkPublic data and private network services continued to produce the largest operatingrevenue growth. Operating revenue for public data and private network servicesincreased 22.9% to S$763 million.

Revenues from local and international leased lines grew by 9.6% driven by stronggrowth in the demand for bandwidth arising from increased Internet and datacommunications needs.

Growth from Internet related activities was particularly strong. Revenues from SingNet,SingTel IX and Magix grew by more than 100%. Total Internet-related revenuesamounted to more than S$150 million.

Despite intense competition, including from free Internet services, SingNet continued toshow strong performance with more than 275,000 customers at the end of the financialyear. mysingtel.com, SingTel’s own free Internet service, was introduced and madeavailable to SingTel’s 1.1 million residential customers.

Revenues from SingTel IX continued to strengthen as a result of increased demand fromISPs in the region.

SingTel’s broadband service, Magix, saw a 150% increase in its subscriber base whichrose to approximately 30,000 subscribers.

Mobile communicationsAlthough competition continued to increase during the year, SingTel had a successfulyear, recording strong growth by attracting new users as well as retaining existingcustomers. SingTel’s average monthly net connections increased three-fold to morethan 26,000, resulting in the total number of subscribers increasing from 745,000 to1.1 million during the year. Innovative marketing campaigns and a successful loyaltyprogram contributed to ensuring customer retention, reflected in a relatively lowchurn rate.

Despite SingTel’s success in attracting and retaining subscribers, mobilecommunications revenue declined by 3.3% to S$851 million. This decline was mainlydue to a 9.8% decline in operating revenue from paging services in line with theincreasing shift to cellular services from paging services.

Average usage traffic remained steady at 380 minutes per user per month compared to350 minutes per user per month in the previous year. Monthly post-paid ARPU was




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maintained at more than S$90. The successful launch of new pre-paid services, and aten-fold increase in SingTel’s pre-paid subscriber base, led to a reduction in overall ARPUfrom approximately S$100 to approximately S$80, as pre-paid ARPU is lower than post-paid ARPU.

National telephoneOperating revenue from national telephone services grew by 4.8% to S$573 million.The total number of working Direct Exchange Lines grew 2.5% to 1.8 million lines.With the economic recovery, there was a 3.5% increase in the number of business lines,resulting in a total of 716,000 business lines. The year also saw an increase in thenumber of residential lines, on the back of growing demand for a second line in thehome. As at 31 March 2000, 21% of residential customers had more than one line.Operating revenue from enhanced network services increased 33% to S$116 million.Enhanced network services made up approximately 20% of operating revenue fromnational telephone services.

IT and engineering servicesIT and engineering services saw revenue growth of 12.5% to S$384 million. The bulk ofthe revenue growth came from SingTel’s subsidiary, NCS, whose revenues increasedsubstantially by S$61 million, or 25%. NCS’s growth was achieved as a result of variousfactors including continued growth of the existing business, expansion into newmarkets and the continued growth in demand.

Postal servicesOperating revenue from postal services was S$323 million, representing a 4.8% annualincrease in line with improved economic conditions in Singapore. Postal servicescontributed 7% to SingTel’s total operating revenue. Mail volume increased 3.4% to791 million items.

Operating expensesOverall operating expenses increased 3.5% to S$3.01 billion. However, if accelerateddepreciation costs were not accounted for this financial year and the preceding financialyear, operating expenses, on a comparable basis, would have decreased by 1.9%.

The largest cost component of operating expenses, traffic expenses, declined 13.8% toS$701 million. The cost of carrying traffic continued to be contained through aggressivesettlement rate negotiations, resulting in international outpayment rates falling by30.4%. As a result, overall outpayments, which contributed more than 80% of totaltraffic expense, fell by 18.9%.

Staff costs, which accounted for 20% of operating expenses, fell 4.3% to S$595 million.Most of these savings resulted from the mandated rate reduction in employer’s CPFcontributions, as part of the Government’s initiatives in January 1999.

SingTel took a one-off accelerated depreciation charge of S$245 million to reflect theresults of an asset impairment review undertaken during the year, leading to an increaseof 50% in depreciation expense.

Selling and administrative costs declined by 5.6% to S$526 million largely on accountof more cost effective advertising and promotional programs.

Cost of goods sold declined 1.6%, which reflected better margins from IT andengineering services.

ProfitAs a result of the slight decline in revenues and the impact of accelerated depreciationoutlined above, operating profits decreased S$120 million or 6.1%. However, SingTel’sshare of pre-tax profits of Associated Companies increased by S$76 million or 26.0%.This growth was consistent with SingTel’s continued internationalisation efforts andresulted in greater diversity in earnings streams.

Significantly improved contributions from overseas investments, cost control initiativesand productivity gains enabled SingTel to record growth in EBITDA, which rose toS$3.04 billion.




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Interest income decreased by 19.8% due to a fall in interest rates, leading to a declineof 13.2% in net financial income.

Profit after tax before extraordinary items decreased 3.9% to S$1.84 billion. Earningsper share before extraordinary items decreased 4.3% to 12.00 cents.

During the year, SingTel realised gains from the sale of various long-term investmentssuch as NetCom ASA and AAPT Limited of S$706 million. Together with provisions forcertain investments, extraordinary items amounted to S$701 million, resulting in aprofit after tax and extraordinary items of S$2.54 billion, a 27.0% increase from theprevious year. Earnings per share after extraordinary items grew by 26.5% to16.58 cents.

Financial positionAs at 31 March 2000, SingTel’s total assets were S$13.92 billion, up S$980 million or7.6%. The increase in total assets was driven primarily by additional investments inventures. However, SingTel’s property, plant and equipment after depreciationdecreased 2.5% to S$4.44 billion. Capital expenditure for the year decreased by 34.7%to S$714 million. Cash and short term investments decreased 7.4% to S$5.9 billion asabout S$2.0 billion in total was distributed as special and final dividends during theyear.

SingTel’s Shareholders’ funds were S$8.57 billion, up S$997 million or 13.2% from31 March 1999 and net tangible assets per share at 55.38 cents was 5.7 cents or11.5% higher than a year ago.

(c) For the financial year ended 31 March 2001The financial year ended 31 March 2001 was a period which saw continuedimprovement in the region’s economies. Operating revenues rose due to very stronggrowth in public data and private network services and IT and engineering services,which offset declining revenue from international telephone services. Overall, SingTelshowed positive EBITDA and earnings growth for the year (before extraordinary items)notwithstanding the impact of competition arising from the full liberalisation ofSingapore’s communications market on 1 April 2000. SingTel’s international investmentscontinued to contribute significantly to profitability, although due to foreign exchangetranslation losses incurred by Globe Telecom, contributions were slightly lower than inthe previous year.

EBITDA increased 8.3% from S$3.04 billion to S$3.29 billion.

Operating revenueSingTel’s operating revenue was S$4.93 billion, an increase of 1.2%.

International telephoneThe improved economic conditions and liberalisation of Singapore’stelecommunications market led to a sharp increase in international call volumes. SingTelrecorded a strong 16.5% growth in total outgoing international traffic, driven bycellular IDD calls and wholesale business. Incoming minutes, however, decreased 2.8%.

SingTel continued to implement tariff reductions, which were successful in maintainingits competitiveness and ensuring minimal loss of market share to competitors in the faceof full competition. These tariff reductions resulted in the average net collection ratedeclining by 38.3% to S$0.701. SingTel’s estimated market share of outgoing calls overthe year was in excess of 90%.

As a result of tariff reductions, international telephone revenue declined by 26.8% toS$1.2 billion. Margin erosion continued to be mitigated by declines in traffic expensesas described below.

Public data and private networkPublic data and private network services continued to grow at a rapid pace, registeringthe highest growth rate amongst SingTel’s businesses. Operating revenues grew by arecord 39.6% to almost S$1.1 billion.




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Revenues from leased lines grew by 30% and continued to be driven by strong growthin demand for international bandwidth. Demand was particularly strong from newcompetitors requiring leased line capacity to provide telecommunications services inSingapore and in the region.

SingTel’s Internet related activities continued their robust growth. Revenues fromSingNet, SingTel IX and Magix grew by S$74 million or 46.3%. Total Internet-relatedrevenues amounted to just over S$230 million, and comprise about 19% of total publicdata and private network services operating revenues.

SingNet’s revenue grew strongly at 44.5% as it shifted its focus from dial up customersto high value corporate customers. The revenue for SingTel IX also recorded goodgrowth as demand for regional traffic continued to increase. Monthly ARPU for Magix’s30,000 subscribers increased to slightly over S$100 from S$90 last year.

Mobile communicationsMobile communications revenue grew by 4.0% to S$886 million. This growth wasmainly due to strong growth of 10.8% in operating revenues from cellular services.Operating revenue from paging services, on the other hand, declined by 24.5% asdemand for paging services continued to be replaced by demand for cellular services.

SingTel benefited from increased demand for its cellular services resulting fromadvertising and promotional activities. In spite of the entry of Singapore’s third cellularoperator on 1 April 2000, SingTel’s cellular subscriber base grew by a record half amillion subscribers over the year to 1.5 million subscribers, reflecting a 45% increase.

The large increase in the number of subscribers caused a decline in monthly post-paidARPU to around S$83. Overall ARPU declined to approximately S$60 as a result of ahigher proportion of pre-paid subscribers in SingTel’s overall subscriber base.

National telephoneOperating revenue from national telephone services grew by 2.7% to S$588 million.The total number of working Direct Exchange Lines grew 3.6% to 1.94 million lines.Operating revenue from enhanced network services increased 8.4% to S$126 million,and comprised approximately 20% of operating revenue from national telephoneservices.

IT and engineering servicesIT and engineering services saw strong operating revenue growth of 25.2% to S$480million. The growth was driven by strong demand for systems integration, technicalconsulting and information services.

Postal servicesOperating revenue from postal services was S$341 million, a 5.7% increase. Postalservices contributed 7% to SingTel’s total operating revenue. Growth in operatingrevenues was driven by a 4.4% increase in mail volume and an increase in the nationalpostal rates.

Operating expensesOverall operating expenses increased marginally by 0.8%.

The average number of staff increased by 5.8% during the year. This, and overall wageincreases, combined with the increase of employers’ CPF contributions from 10% to12% in April 2000 and to 16% from January 2001, led to an increase in staff costs of12.0% to S$667 million. Staff costs accounted for 22% of operating expenses andbecame the largest cost component of operating expenses. The increase in staffnumbers was largely due to an increased focus on customer service and to increasedactivity in SingTel’s public data and private network and IT and engineering businessesand SingTel’s focus on these growth areas.

The second largest cost component of operating expenses (previously the largest costcomponent), traffic expenses, decreased 5.1% to S$665 million. The cost of carryingtraffic continued to decline as a result of aggressive settlement rate negotiations,resulting in the average outpayment rate falling by 23.0%.




55

Lower accelerated depreciation led to a fall of 20.3% in depreciation charges toS$624 million.

Cost of sales rose 31.0% to S$462 million, higher than the increase in revenue fromsales of equipment and IT and engineering services as margins came under pressurewith keen competition.

Selling and administrative costs increased by 12.5% to S$592 million largely on accountof more sales promotions, higher commission expenses and increased spending onproperty related expenses.

ProfitAs a result of the slight overall increases in both revenues and costs outlined above,operating profit increased by S$36 million or 1.9%.

SingTel also recognised S$337 million in compensation from the IDA. Total compensationof S$2.36 billion was paid by the IDA in two separate payments (each relating to aseparate licence modification) of S$1.5 billion in 1997 and S$859 million in the currentfinancial year. The compensation was paid to SingTel for the early liberalisation of theSingapore telecommunications market. In accordance with Singapore GAAP, SingTel’spolicy is to recognise this compensation in equal instalments over seven years from1 April 2000 to reflect the period by which SingTel’s monopoly was shortened.

SingTel’s share of pre-tax profits of Associated Companies fell by 5.1% to S$349 million.This decline was caused by foreign exchange translation losses by Globe Telecom andnegative contributions from certain new start-ups and ventures. Despite this decline,international investments remained a significant contributor to SingTel’s earnings,contributing 11% of profit before tax.

Improved operating profit, together with the recognition of the IDA compensation andsignificant contributions from overseas investments resulted in increases in EBITDA of8.3% to S$3.29 billion and EBIT of 18.3% to S$2.67 billion.

Net financial income rose 44.9% to S$385 million primarily as a result of increases ininvestment income. Investment income rose as a result of gains realised on ventureinvestments of S$125 million. Profit after tax before extraordinary items grew 26.4%to S$2.32 billion. Earnings per share before extraordinary items increased 25.5% to15.06 cents.

Extraordinary items resulting in losses of S$318 million were recognised during the year.These extraordinary items were primarily net provisions of S$370 million for diminutionin value of certain long term investments, partially offset by other gains of S$52 million.

Profit after tax and extraordinary items was approximately S$2.01 billion, a 21%decrease from the previous year, due to the extraordinary items recognised during theyear. Earnings per share after extraordinary items fell from 16.58 cents to 13.00 cents.

Financial positionAs at 31 March 2001, SingTel’s total assets were S$16.2 billion, up S$2.2 billion or16.1%. The increase in total assets was accounted by higher cash and new investmentsin Associated Companies. The increase in SingTel’s assets included an increase of 23.5%in SingTel’s property, plant and equipment net of depreciation to S$5.5 billion. Capitalexpenditure during the year totalled S$1.7 billion, a significant increase from last year,with the addition of C2C, a 59.5% subsidiary which invested in new cable networks.C2C’s capital expenditure for the year was slightly over S$900 million. Cash and shortterm investments increased 12.2% to S$6.6 billion due to the S$1 billion bond issue ofin March 2001.

SingTel’s Shareholders’ funds were S$8.07 billion, down S$504 million or 5.9% from31 March 2000. Although strong cash flows were generated from operations, therewere dividends totalling S$1.5 billion, relating to special dividends of S$861 millionpaid in January 2001 and proposed final dividends of approximately S$640 million.A net goodwill charge of just over $800 million from the acquisition of certaininternational investments also caused a decline in shareholders funds. Net tangibleassets per share at 52.33 cents was 3.05 cents or 5.5% lower than a year ago.




56

3.15 DIVIDEND HISTORY

(a) Dividends paid and declared in the year ended 31 March 2000A special dividend of 12 cents per share less tax of 26% (gross total: S$1.86 billion) waspaid in January 2000. This was paid as part of SingTel’s capital restructuring exerciseand in conjunction with its 120th anniversary celebration.

A final dividend of 5.5 cents per share less tax of 25.5% (gross total: S$850 million) waspaid in October 2000.

(b)Dividends paid and declared in the year ended 31 March 2001A special dividend of 7.5 cents per share less tax of 25.5% (gross total: S$1,157 million)was paid in January 2001. This was distributed out of the cash received from the IDA ascompensation for accelerating the full liberalisation of the telecommunications sector.

The SingTel Board has announced its recommendation that SingTel pay a final dividendof 5.5 cents per share less tax of 24.5% for the year ended 31 March 2001. The finaldividend recommended by the SingTel Board requires shareholder approval at anannual general meeting, which is expected to be held in August 2001. The DividendRecord Date for the entitlement of SingTel Shareholders to this final dividend isexpected to be a date in September 2001.

3.16 SINGTEL SHARE PRICE HISTORY

The following chart indicates the performance of SingTel Shares over the 12 months ended30 April 2001 compared with the MSCI Singapore Index, and the MSCI World DiversifiedTelecom Services Index. The price and value of shares may fall as well as rise. Pastperformance is not necessarily a guide to future performance. Exchange rate movementsmay affect the value to shareholders of income denominated in S$.



0.0

0.5

1.0

1.5

S$

2.0

2.5

3.0

3.5

SingTel

1 May 2000 1 Aug 2000 1 Nov 2000 1 Feb 2001

MSCI Singapore (Free) Index Rebased MSCI World Diversified Telecom Services Index Rebased

SingTel Share Price Performance - 1 May 2000 to 30 April 2001


57

SECTION 4THE ACQUISITION OF OPTUS



58

4.1 RATIONALE FOR SINGTEL’S ACQUISITION OF OPTUS

SingTel believes that the acquisition of Optus meets the investment criteria set out in Section 3.2 and willgreatly assist SingTel in its strategy to invest in growth opportunities outside Singapore. The investment inOptus will be the largest SingTel has ever made.

SingTel’s acquisition of Optus would provide SingTel with immediate exposure to one of the Asia Pacificregion’s largest and most attractive communications markets in the form of a highly successful integratedcommunications service provider, with significant market share across its key business lines.

(a) The Australian communications market is attractiveAustralia is one of the largest communications markets in the Asia Pacific region and one of four majorcommunications hubs in the region, together with Singapore, Hong Kong and Japan.Telecommunications expenditure in Australia comprises 5.5% of GDP and the Australiancommunications market ranks as one of Asia’s largest markets outside Japan. Australia has a businessenvironment where political risk is low and GDP per capita is high. It is also a target market withinSingTel’s regional expansion strategy.

SingTel anticipates continued growth in Australia’s mobile and data communications markets, in whichOptus has a significant presence. At 57% as at 31 March 2001, Australia’s cellular penetration rate isbelow cellular penetration rates in many of the region’s other developed markets and therefore hashigher growth potential. Paul Budde Communication Pty Ltd, in its “2000/2001 TelecommunicationsIndustry – Australia” report has forecast a 13% growth rate in Australia’s mobile communicationsservices market for the year ending 31 December 2001 and a 22% growth rate in Australia’s dataservices market for the year ending 31 December 2001.

(b)There is a compelling strategic fit with Optus’ business model and product focusOptus is an established integrated communications service provider with a successful track record ofgrowth. It has grown to become the strongest competitor to the incumbent operator, Telstra. Optusfocuses on growth platforms that are aligned with those of SingTel, specifically in mobile and datacommunications.

• Competitive cellular businessOptus has successfully captured a 33% market share as at 31 March 2001 in Australia’scompetitive cellular market, with 3.7 million cellular subscribers. Optus’ cellular network covers94% of Australia’s population.

• Extensive networksOptus has established an extensive, high-capacity next-generation infrastructure, to capture thegrowth of the data communications market and provide connectivity to key international marketsthrough ownership interests in 26 submarine cables and three satellites (in service).

• Strong brandOptus, like SingTel, has developed a strong brand name in its own market that supports aninnovative product range and has an extensive and diverse customer base.

The acquisition of Optus is therefore consistent with SingTel’s criteria for investments in the region.

The acquisition of Optus will provide SingTel with scale and diversification, advancing SingTel’sposition as a leading integrated communications service provider, with an enhanced ability tomake further strategic acquisitions in the region.

4.2 PROFILE OF SINGTEL AFTER ACQUISITION OF OPTUS

Following the acquisition of Optus, the enlarged SingTel would have had, on a pro-forma basis, totalassets of S$29.2 billion as at 31 March 2001, and operating revenue of S$9.4 billion and EBITDA ofS$4.2 billion (assuming SingTel acquired 100% of Optus) for the year ended 31 March 2001. Based onits market capitalisation, SingTel is already the largest company listed on the SGX-ST and, based on itspro-forma market capitalisation as at 30 April 2001, is expected to be the seventh largest company listedon the ASX. Its operations would cover many key markets, including Australia, Belgium, India, Indonesia,the Philippines, Singapore, Taiwan and Thailand.

After the acquisition, SingTel would have greater exposure to the high growth mobile and datacommunications businesses in another important developed market. SingTel’s revenue streams would bederived primarily from integrated communications businesses in Singapore and Australia, with access to


T H E A C Q U I S I T I O N O F O P T U S


59

considerable revenue from other international investments. The diverse business activities andgeographies of these revenue streams would reduce SingTel’s dependence on specific sectors or markets.

The above chart sets out certain pro-forma post-acquisition operating statistics for SingTel for the yearended 31 March 2001. For further details of the pro-forma financial impact on SingTel of the acquisition,see Sections 4.6 to 4.9.

4.3 THE BENEFITS OF ACQUIRING OPTUS

The acquisition is expected to result in a number of significant benefits for SingTel and Optus. The extentof these benefits and the speed at which they can be realised will depend on the level of ownershipSingTel ultimately achieves as a result of the Offer. If SingTel achieves 100% ownership, SingTel would beable to implement plans to realise these benefits faster and to a greater extent. Some of these benefits aredescribed below.

(a) Enhancement of regional competitivenessThe acquisition of Optus would help SingTel achieve its goal of becoming the leading integratedcommunications service provider in the Asia Pacific region, with the ability to offer services of a natureand scale that would be difficult for its competitors to replicate.

Specific benefits for SingTel’s individual businesses are described below in paragraphs (b) and (c).

(b)Enhancement of the mobile businessesSingTel is steadily building a competitive regional cellular footprint through its partnerships and jointventures in the region. After the acquisition, SingTel would be one of the few operators with a majorpresence in five key markets in the region, namely Australia, India, the Philippines, Singapore andThailand.



Revenue

CellularSubscribers

Fixed-Line Subscribers

51.1% 9.8%

39.5%

S$11.4bn

6.9million

3.8million

53.2%24.6%22.2%

39.1%

16.5%44.0%

Pro-forma Operating Statistics Year Ended 31 March 2001

Singapore Overseas Optus

(1) Includes proportionate share of operating revenue from SingTel’s international investments.(2) Includes proportionate share of subscribers from SingTel’s international investments (excluding Belgacom).

(1)

(2)

(2)


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Through the addition of Optus’ 3.7 million cellular subscribers as at 31 March 2001, SingTel and itsAssociated Companies would have a total of 10.9 million cellular subscribers in the region. SingTeland AIS are market leaders in their respective countries. Globe Telecom is the number two cellularoperator in the Philippines. Bharti Group is among the top five cellular service providers in India, andone of the leading cellular service providers in the geographical areas in which it operates in India.Optus has the number two market position in Australia, with a 33% market share. Adjusting theabove aggregate subscriber base for SingTel’s percentage ownership in its Associated Companies (andassuming SingTel acquires 100% of Optus), SingTel’s proportionate cellular subscriber base would be6.9 million subscribers as at 31 March 2001. Such scale is expected to bring potential costadvantages, including lower equipment costs from greater bargaining power with equipmentsuppliers.

SingTel, its Associated Companies and its regional partners continually work towards joint initiativesthat would enhance the value of their respective businesses. Optus would also benefit from theseregional initiatives, such as enhanced roaming and mobile enterprise solutions for corporates andmulti-cultural and multi-lingual content development.

SingTel also believes that product development savings may be achieved through initiatives for thejoint development of mobile communications services across the various cellular operations in thedifferent markets.

Given that SingTel and Optus already have joint ventures with the Virgin Group, there may also beopportunities to enhance the value of these existing relationships, with the potential to expandoperations into certain other markets in Asia.



Thailand21% of AIS

14.3% of DPC

Philippines23.6% of Globe Telecom

India28.5% of Bharti

SingaporeSingTel

50% of Virgin Mobile Asia

AustraliaOptus

Combined SingTel and Optus Cellular Presence



61


BrisbaneSouthernCross

PacrimWest

Tasman 2Sydney

Canberra

Launceston

Hobart

Melbourne

Adelaide

Perth

Source: SingTel network infrastructure - SingTel, Optus network infrastructure - Optus Information Memorandum.

Port Hedland

JASURAUS

Cairns

Townsville

B3156 E

B1160 E

A3164 E

AUSTRALIAto New Zealand,Fiji, Hawaii & USA >

to New Zealand >

o o o

Domestic network (under construction)Domestic networkSatellite

to USA >

to USA >

to USA >

to USA >

to USA >

to Hawaii/USA >

Batangas

Shantou

Shanghai

Macau

Okinawa

Guam

Chikura

Jakarta

ST-188 E

INDONESIA

BRUNEI

PHILIPPINES

TAIWAN

THAILAND

VIETNAM

HONG KONG

JAPAN

SINGAPORE

MALAYSIA

CHINA

< to Europe

< to India

APCAPCNChina-US CableJapan-US CableSEA-ME-WE3APCN 2 (3Q 2001)C2C Phase 1 (3Q 2001)C2C Phase 2 (4Q 2001)i2i (1Q 2002)Branching unitLanding point

KOREA

o

Combined SingTel and Optus Infrastructure


62

(c) Enhancement of the data communications businessesEach of SingTel and Optus already has an extensive and high quality data network in the Asia Pacificregion. SingTel has interests in 53 submarine cables and one satellite, with a principal focus onSoutheast Asia and connectivity to North America and Europe. Optus has interests in 26 submarinecables and three satellites (in service), with a principal focus on connectivity from Australia to Asia andto North America. By combining these complementary networks, SingTel and Optus will share aninfrastructure that would increase the reach and capacity for both companies.

Following the acquisition, SingTel, together with its Associated Companies:

• will have the most extensive submarine cable network in the Asia Pacific region (including newsubmarine cable networks such as C2C, i2i and an interest in Southern Cross) and one of the mostextensive submarine cable networks in the world, with landing points in most major Asian cities;

• will have one of the most extensive satellite networks in the Asia Pacific region;

• will have nationwide fibre optic networks in Singapore and Australia with the ability to access thelocal networks of its Associated Companies in other markets; and

• will be one of the largest Internet bandwidth providers in the Asia Pacific region (excluding Japan).

The acquisition would bring together international connectivity (both within Asia and to Europe andNorth America) and domestic backhaul in certain key Asia Pacific markets. In particular:

• the complementary networks of Optus, SingTel and SingTel’s Associated Companies could provideincreased growth opportunities, as SingTel and Optus would be able to offer their existing andnew value-added services over a greater area providing an enhanced value proposition to theircustomers;

• as SingTel’s and Optus’ existing networks are complementary, there is potential to reducebandwidth costs by sourcing more capacity from internal networks, and by channelling trafficmore efficiently within the enlarged network; and

• the scale of SingTel’s and Optus’ combined data network businesses could create potential toachieve procurement savings through increased bargaining power with network and contentsuppliers.

(d)Enhancement of management expertise and skillOptus has an experienced management team which has demonstrated its ability to create a highlysuccessful integrated communications service provider in a competitive market. SingTel believes thatthe experience of the Optus management team in developing new products, brand management andtechnical innovation will increase and complement the SingTel management team’s success inSingapore and elsewhere in the Asia Pacific region. The combined talent pool will enhance SingTel’sability to deploy experienced management between Optus, SingTel and regional operations, therebyimproving their ability to compete in their respective markets.

(e) Potential enhancement of Optus’ financial strength and flexibilityFollowing the acquisition, it is expected that Optus’ credit position could be enhanced as a result ofSingTel’s financial position. The decisions of Standard & Poor’s and Moody’s Investor Services to placeOptus on credit watch for possible upgrade since the announcement of SingTel’s proposed acquisitionof Optus indicates that Optus’ ability to access capital markets to meet its funding needs couldpotentially be strengthened.

(f) Enhancement of SingTel’s ability to further its regional expansion strategySingTel believes that its size and scale resulting from the acquisition of Optus, including the expansionof the coverage of its cellular and data networks in the Asia Pacific region, the mix of managementexperience as both an incumbent and a competitive communications service provider, and thefinancial strength and flexibility achieved through the acquisition, would enhance SingTel’s ability tomake further acquisitions in the region and potentially to enter into alliances with othercommunications companies.

(g)Potential improvement in liquidity of SingTel SharesFollowing the issue of SingTel Shares to Optus Shareholders who accept SingTel’s Offer, SingTel willhave a greater number of shares on issue. This has the effect of diluting the stake in SingTel held byTemasek and increasing the free public float of SingTel Shares.




63

As illustrated in the above chart, it is expected that the liquidity of SingTel’s Shares subsequent to theacquisition will be improved. It is also expected that such liquidity will also be enhanced by the listingof SingTel Shares on the ASX.

4.4 SINGTEL’S INTENTIONS IN RELATION TO THE OPTUS BUSINESS

This Section 4.4 sets out SingTel Australia’s intentions in relation to:

• the continuation of the business of Optus;• any major changes to be made to the business of Optus, including any redeployment of the fixed

assets of Optus; and• the future employment of the present employees of Optus.

The statements of intention set out in this Section 4.4 are based on the facts and information concerningOptus and the circumstances affecting Optus’ business activities that are known to SingTel Australia at thedate of this Bidder’s Statement. They have been formed with the benefit of a review of certain limitedinformation about Optus’ business activities made available by Optus during SingTel’s due diligence reviewof Optus prior to the announcement of the Offer. (This information is either in the public domain, or isdisclosed in this Bidder’s Statement or in the Target’s Statement, or is not material to the making of adecision by an Optus Shareholder whether or not to accept the Offer.) However, as SingTel Australia doesnot currently have access to all material information, facts and circumstances which are necessary to assessthe operational, commercial, taxation and financial implications of its current intentions, final decisions onthese matters have not been made. After completion of the acquisition of Optus, SingTel Australia willconduct a review of the activities, assets and employees of Optus in light of the information which thenbecomes available to it. Final decisions will only be reached after that review and in the light of all materialfacts and circumstances. The contents of this Section 4.4 should be read against this background.

The intentions of SingTel Australia set out in this Section 4.4 are also those of SingTel.

(a) SingTel Australia’s intentions if it acquires 100% ownership of OptusIf SingTel Australia receives acceptances of its Offer in respect of 90% or more of Optus Shares, it willbe entitled to compulsorily acquire outstanding Optus Shares. SingTel has agreed with Optus in theImplementation Agreement that it will proceed with Compulsory Acquisition immediately upon itbecoming entitled to do so. This will include Compulsory Acquisition of all Optus Shares that may beissued to Optus employees under the existing EOP and SPP, as described below in Section 4.4(a)(viii)up to six weeks after notice of Compulsory Acquisition has been given.



C&W plc

Temasek

Free Float22%

27%

78%

68%

5%

Pro-forma Current

0%

(1) Assumes 100% acceptance level with C&W plc electing the Share, Cash and Bond Alternative and the remaining shareholders electing the Share and Cash Alternative.

SingTel Shareholdings(1)


64

SingTel Australia’s intentions if it acquires 100% ownership of Optus are set out below.

(i) Formation of Integration CommitteeIn order to facilitate the integration of the Optus business into the SingTel business and to identifyand realise, where feasible, the benefits of the acquisition, including those set out in Section 4.3,SingTel will form an Integration Committee made up of senior SingTel and Optus executives. TheIntegration Committee will also conduct a review of Optus and refine plans for each of Optus’business units and, at the appropriate time, make recommendations to the SingTel Boardregarding the implementation of those plans. Having regard to the terms of the Separation Deed(described in Section 11.3), one of the tasks of the Integration Committee will be to review certaincontracts between C&W plc and Optus (also described in Section 11.3).

(ii) Optus’ businesses• Overall business

Optus has a strong position in the Australian market on account of its integrated strategy,brand name, networks and strong management team. SingTel’s intention is that Optus’ day-to-day operations will be managed, for the foreseeable future, as a stand-alone business. Optus’core brands will continue to be used in Australia. SingTel intends to expand and developOptus’ operations in Australia with a view to benefiting from growth opportunities in theAustralian market and improving shareholder returns. In addition, Optus would participate in,and benefit from, SingTel’s regional development activities.

• MobileSingTel recognises the excellent track record of Optus’ mobile business unit in terms of its marketshare and strong brand name. It is generally supportive of Optus’ current strategy to increasesubscriber numbers, to be a leader in emerging mobile data applications and to improveprocesses to reduce costs. SingTel intends to add value to Optus’ mobile business unit, utilising itsown experience and services and those of its Associated Companies in the Asia Pacific region.SingTel plans to develop 3G business opportunities in Australia and intends to ensure that therewill be sufficient investment in the rollout of Optus’ 3G network.

• Data and Business ServicesSingTel intends to retain Optus’ data and business services network infrastructure, including itsnational fibre optic backbone and central business district fibre optic rings, within Optus.

SingTel supports Optus’ strategy for its data and business services operations, which includes:

– increasing its share of the business communications market by providing creative and flexiblecustomer solutions;

– expanding its customer access networks in a cost-effective manner (as evidenced by Optus’DSL rollout initiatives); and

– continuing to develop services and solutions, including hosting applications and e-commercesolutions.

SingTel believes that this strategy, whereby Optus will be both a service provider and anetwork operator, will be effective in enabling Optus to benefit from anticipated high growthrates in the communications industry in Australia.

SingTel will also examine the advantages of combining certain of Optus’ and SingTel’sinternational networks and services, including satellite and submarine cable assets, subject tothe relevant regulatory approvals. SingTel believes that the combined strengths of SingTel andOptus would enable both companies to provide an enhanced range of data communicationsservices to multinational corporations and other corporate customers with communicationshubs in Singapore or Australia. SingTel also believes its position and branding as one ofAsia Pacific’s leading communications service providers and the development of its existinginternational offices and operations will enhance Optus’ own competitive positionoutside Australia.

• Consumer and MultimediaSingTel believes that there are distinct cost advantages in sharing Optus’ consumer andmultimedia infrastructure. For example, SingTel believes that Optus’ plans to expand itsnational fibre optic backbone network and submarine cable networks could result in benefits tothe consumer and multimedia business in the form of increased reliability and lowerbandwidth costs.




65

SingTel will review strategic options for the consumer and multimedia business, including thepossibility of entering into strategic partnerships with other media companies and contentproviders. The outcome of this review will be guided by SingTel’s desire to maximiseshareholder value.

(iii) ASX listing and inclusion in S&P/ASX 200 IndexSingTel Australia intends to seek the removal of Optus from the Official List of the ASX, which willresult in the removal of Optus from the S&P/ASX 200 Index.

SingTel will apply for a listing of its shares (other than those held by Temasek) on the ASX.

In these circumstances, SingTel understands that it would be considered for inclusion in theS&P/ASX 200 Index. However, whether to include SingTel in this Index (and at what weighting)are decisions for the Australian Index Committee of S&P/ASX.

(iv) Optus board of directorsSingTel Australia intends to seek the resignation of the directors of Optus and to appoint nomineesof SingTel Australia in their place. Some of the existing directors of Optus may be reappointed,subject to their agreement to be reappointed.

(v) Australian Advisory Board and SingTel BoardSingTel intends to establish an Australian advisory board to ensure that issues relating to Optus areproperly addressed and that Optus continues to offer innovative, progressive and competitivecommunications services to the Australian public.

In addition, SingTel intends to invite Australian representation onto the SingTel Board to reflect theimportance of Australia to its overall business.

(vi) Financial reportingSingTel intends to separately disclose Optus’ financial statements for the year ending 31 March2002 under Australian GAAP, prepared on a consistent basis. SingTel will also consolidate theresults of Optus’ operations into its consolidated financial statements. As SingTel’s consolidatedfinancial statements are prepared under Singapore GAAP, adjustments will be made to Optus’financial statements to conform with Singapore GAAP and the accounting policies adoptedby SingTel.

(vii)Management and employeesGiven the talent, strong track record and experience of the Optus management team, SingTelwishes to retain core members of Optus’ management team to manage Optus’ Australianoperations on a day-to-day basis. SingTel will also explore the possibility of seconding some of itscurrent employees to, or recruiting from the market for, management positions in Optus.

SingTel intends to maintain continuity and minimise disruption. It will seek to retain existing Optusemployees, having regard to the positions of Optus’ employees and the staffing requirements ofthe business going forward. SingTel believes that both SingTel and Optus employees will benefitfrom participation in SingTel’s enlarged operations with enhanced opportunities across a widerrange of markets and services and may introduce group-wide secondment programs.

(viii)Optus Options outstanding under existing employee option incentive schemesSingTel will maintain the existing EOP and SPP for the benefit of those employees who continue tohold Optus Options under these plans, but no further Optus Options will be issued under theseplans after the end of the Offer Period. No further Optus Shares will be issued under the EOP orSPP after that time, but alternative arrangements will be made for unexercised options under theEOP and SPP as described below.

As soon as possible after issuing notices of Compulsory Acquisition, SingTel will cause the rules ofthe EOP and SPP to be amended. Under the amended rules, any performance hurdle may relateto SingTel instead of Optus, and Optus may discharge its obligations on the exercise of the OptusOptions by arranging for the issue of SingTel Shares in the ratio of 1.66 SingTel Shares per OptusOption instead of issuing Optus Shares. SingTel will waive receipt of 41¢ of the A$4.11 exerciseprice of the EOP options so that the price at which the SingTel shares are issued on exercise of theoptions includes a premium over market price of those shares as at 30 April 2001 that is consistentwith the premium of the full exercise price over the market price of Optus shares at that date butno additional benefit is given to option holders which is not available to ordinary shareholders.




66

Holders of Optus Options will not have any claim on SingTel, but SingTel will undertake to Optusto issue SingTel Shares to plan participants to enable Optus to satisfy the exercise of any of theiroption rights in that way.

SingTel also intends to replace existing Optus employee option and share plans with SingTeloption and share plans, in order to better incentivise the employees to enhance the shareholdervalue of the enlarged SingTel instead of Optus only.

(ix) Australian corporate officeSingTel intends to maintain Optus’ corporate office in Australia to support Optus’ Australianoperations. Where appropriate, duplicated corporate office activities and costs between Singaporeand Australia will be rationalised, taking into account the office and infrastructure assets requiredto support Optus’ Australian operations.

(b)Changes to SingTel Australia’s intentions if it acquires less than 100% ownership of OptusSingTel Australia’s intentions as described in Section 4.4(a) are dependent on SingTel Australiaobtaining 90% or more ownership of Optus so as to enable SingTel Australia to compulsorily acquireall remaining Optus Shares. Even if that is not obtained, subject to the terms of the Offer (whichincludes the Minimum Acceptance Condition, which will not be waived), SingTel Australia will be themajority shareholder in Optus.

As the majority shareholder, SingTel Australia will still seek to implement its intentions referred to inSection 4.4(a) as far as possible. However, its ability to implement these intentions will be subject toapplicable legal and regulatory requirements which may delay or affect the extent of theirimplementation.

The changes in SingTel Australia’s intentions if it does not acquire 100% ownership of Optus are asfollows.

(i) ASX ListingSingTel’s intention is for Optus to retain its inclusion in the Official List of the ASX, subject toOptus retaining a sufficient spread of shareholders acceptable to the ASX.

(ii) Optus board of directorsSingTel Australia intends to seek the resignation of the C&W plc nominees from the Optus board,and the appointment of SingTel Australia’s nominees to the Optus board. The number of SingTelAustralia nominees will be determined in due course, having regard to the interests of minorityshareholders and principles of good corporate governance. Some of the existing directors of Optusmay become SingTel Australia’s nominees, subject to their agreement to those nominations.

(iii) SingTel BoardSingTel intends to invite Australian representation on its Board to reflect the importance ofAustralia to SingTel’s overall business.

(iv) Financial reportingSingTel will consolidate the results of Optus’ operations into its consolidated financial statements.As SingTel’s consolidated financial statements are prepared under Singapore GAAP, adjustmentswill be made to Optus’ financial statements to conform with Singapore GAAP and accountingpolicies adopted by SingTel.

(v) Management and employeesSingTel Australia and SingTel will seek to give effect to their intentions described in Section4.4(a)(vii), subject to the agreement of the Optus board.

(vi) Optus Options outstanding under existing employee incentive schemesSingTel intends to maintain the existing EOP and SPP for the benefit of those employees whocontinue to hold Optus Options under these plans, but no further Optus Options will be issuedunder those plans. SingTel would not seek to replace existing Optus employee option and shareplans with SingTel plans.

4.5 PROSPECTS FOR SINGTEL

(a) OverviewDespite increased competition for market share and rate reductions, SingTel will continue to expandaggressively and leverage on its extensive network assets and full service offerings to be competitive.




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It will continue to diversify into growth areas such as data communications services, Internetbroadband and mobile communications services to offset declining revenues from internationaltelephone services. SingTel will also continue to proactively manage its cost structure and expectscontinued earnings growth from its Singapore operations.

Details of SingTel’s performance for the year ended 31 March 2001 and discussion of operating trendsduring that year (and the two preceding years) appear in Sections 3.13 and 3.14 and Annexure 1.

SingTel will continue to extend its footprint and make investments that are expected to enhance itslong term shareholder value and growth. Some of these investments are greenfield investments thatwill incur start-up costs while others may be at the growth stage which requires significant fundingand are still loss-making. As such, SingTel expects a decline in the earnings contribution from itsAssociated Companies in the near term. Investment and interest income are expected to decline withthe deployment of funds into investments and acquisitions, and interest expense will increase withhigher borrowings. Overall, excluding Optus, SingTel expects lower earnings in the near term, arisingmainly from its investment activities which are targeted to capture longer term gains.

The effect of the proposed acquisition of Optus on SingTel is largely dependent upon the final level ofownership in Optus that SingTel achieves upon the completion of the Offer. SingTel believes that itslonger term prospects and businesses will be enhanced with the acquisition of Optus. The acquisitionwill result in greater diversity of earnings for SingTel and increase the contribution from internationalinvestments to SingTel’s overall financial results.

The SingTel Board believes that it does not have sufficient information to provide meaningful andreliable forecast financial information with respect to SingTel after the acquisition of Optus in thisBidder’s Statement. Notwithstanding this, SingTel is able to make a number of general observationson the outlook for its principal business activities, including as set out in Sections 3.6, 3.8, 4.1, 4.2and 4.3 and as set out below.

(i) International telephoneSingTel believes that its initiatives of introducing competitive prices and innovative products andservices, as well as the quality of those products and services, will enable it to continue to managethe rate of decline in tariffs and to increase usage and protect market share as competition intensifies.

SingTel expects that the acquisition of Optus is not likely to impact significantly on this business asmost of its revenue is generated from international call traffic originating from Singapore.

(ii) Mobile communicationsDue to the existing high penetration rate, SingTel expects growth in the Singapore cellular marketto moderate over the next 12 months, while competition continues to intensify. SingTel believesthat its competitive strengths and brand initiatives will enable it to compete effectively andmaintain its market leadership in Singapore.

SingTel believes that the acquisition of Optus will benefit the mobile communications business in anumber of areas, which are expected to improve the overall strength of this business. Details ofthese expected benefits are discussed above in this Section 4.

(iii) Public data and private networksSingTel expects that, on a stand-alone basis, this business will continue to be a key driver of revenueand earnings growth, despite the likely reduced rate of growth in demand for bandwidth and datacommunications due to the expected global economic slowdown. SingTel believes it is wellpositioned to capture demand for these services through the development of its state-of-the-artnational and international networks and its relationships with other service providers in the region.

SingTel expects that the acquisition of Optus will benefit the public data and private networksbusiness in a number of areas, by increasing the scale of its networks, extending its geographicalreach and enhancing the services it can offer to its customers. Details of these expected benefitsare discussed above in this Section 4.

(b)Further acquisitionsConsistent with its regional expansion strategy, SingTel continuously evaluates opportunities in theAsia Pacific region. SingTel has submitted non-binding expressions of interest or memoranda ofunderstanding, conducted due diligence, or entered into negotiations in relation to certainopportunities.




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SingTel is currently negotiating to purchase minority interests in a number of telecommunicationsservice providers in the Asia Pacific region outside Singapore. There is no assurance that any of thesepotential acquisitions will proceed. If SingTel becomes aware of any new material circumstance duringthe Offer Period, it will make appropriate announcements and will send a supplementary bidder’sstatement (if required by the Corporations Law).

(c) DividendsIn the past, it has been SingTel’s policy to maintain a steady dividend consistent with profit growth.SingTel expects to maintain this policy, subject to further acquisitions, changes in its capitalexpenditure plans, and its general desire to maintain an appropriate capital structure.

The income that may be derived from shares may fall as well as rise. Past performance is notnecessarily a guide to future performance. Exchange rate movements may affect the value toshareholders of income denominated in S$.

4.6 UNAUDITED PRO-FORMA CONSOLIDATED FINANCIALINFORMATION

(a) IntroductionThe unaudited Pro-forma Consolidated Financial Information provided in this Section 4.6 indicatesthe financial impact on SingTel of the acquisition of Optus by SingTel Australia under various possiblescenarios.

It is not possible to predict the exact level of acceptance of the Offer by Optus Shareholders, or thedistribution of acceptances among the three Offer Consideration alternatives and the otheralternatives available to Optus Shareholders. This Section sets out the financial impact of theacquisition of Optus by SingTel Australia under the following two base case scenarios, which havebeen chosen to illustrate a range of possible acceptance levels.

• Scenario 1 assumes Optus Shareholders holding 52.5% of the total Optus Shares outstandingaccept the Offer.

• Scenario 2 assumes Optus Shareholders holding 100% of the total Optus Shares outstandingaccept the Offer.

In addition, a limited sensitivity analysis, reflected in Scenario 2a and Scenario 2b, has been prepared.That analysis sets out the impact on certain post-acquisition pro-forma statistics of SingTel had certainassumptions made in Scenario 2 been modified.

Both Scenarios 1 and 2 assume C&W plc (through CWAP) accepts the Offer in respect of its entire52.5% shareholding in Optus, and elects to receive the Share, Cash and Bond Alternative. AlthoughCWAP has agreed, if it accepts the Offer, to elect to receive the Share, Cash and Bond Alternative, theseassumptions might not reflect the actual situation at the close of the Offer, nor do they necessarily reflectany intention of C&W plc (through CWAP) to accept the Offer for more than the equivalent of 19.8% ofthe total Optus Shares outstanding, which it has committed to do under the Pre-Bid Agreement.

The Pro-forma Consolidated Financial Information has been prepared from, and should be read inconjunction with, the historical financial statements of SingTel and Optus included in Annexure 1 tothis Bidder’s Statement and in the Target’s Statement respectively.

The Pro-forma Consolidated Financial Information is provided for illustrative purposes only. It does notpurport to represent what the actual results of operations or financial position of SingTel would havebeen had the acquisition of Optus occurred on the dates assumed, nor is it necessarily indicative ofSingTel’s future consolidated operating results, financial position or cash flows.

The Pro-forma Consolidated Financial Information has been reviewed by PricewaterhouseCoopers. Thetext of PricewaterhouseCoopers’ Independent Accountant’s Report on the Pro-forma ConsolidatedFinancial Information appears in Section 4.9.

(b)Basis of preparationThe Pro-forma Consolidated Financial Information has been prepared to illustrate the pro-formaconsolidated operating results, financial position and cash flows of SingTel as if SingTel Australia hadacquired Optus Shares with effect from:

• 31 March 2000 for the purposes of presenting the Pro-forma Consolidated Income Statement andthe Pro-forma Consolidated Cash Flow Statement; and




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• 31 March 2001 for the purposes of presenting the Pro-forma Consolidated Balance Sheet.

(c) Significant accounting policiesThe financial information of SingTel under Singapore GAAP has been prepared based on thesignificant accounting policies as disclosed in the historical financial statements of SingTel included inAnnexure 1 to this Bidder’s Statement.

The Pro-forma Consolidated Financial Information has been prepared in accordance with SingTel’saccounting policies under Singapore GAAP, which differ in certain respects from Optus’ accountingpolicies which are prepared in accordance with Australian GAAP. A description of the principaldifferences is set out in Section 4.8. An initial assessment has been made of the impact on Optus’financial statements of the application of SingTel’s accounting policies and Singapore GAAP. Acomplete assessment has not been made as SingTel will not have available to it sufficient informationon the exact nature of Optus’ implementation of its accounting policies for this purpose until aftercompletion of the acquisition. The reclassifications and adjustments made to the Optus FinancialInformation will not necessarily be adopted in preparing Optus’ Financial Statements in the future.As an Australian entity, Optus may continue to prepare its accounts in accordance with its existingaccounting policies under Australian GAAP.

For the purposes of presenting the Pro-forma Consolidated Financial Information, the Optus FinancialInformation has been reclassified to conform with SingTel’s presentation under Singapore GAAP, andpro-forma adjustments have been made to the Optus Financial Information to account for thesignificant differences identified between Optus’ and SingTel’s respective accounting policies. Theseadjustments are described in Section 4.7 below. These reclassifications and adjustments are notnecessarily in accordance with future Optus presentations.

(d)ConsolidationSingTel will account for its acquisition of Optus as an acquisition under Singapore GAAP. Under thismethod of accounting, the excess of the fair value of the Offer Consideration over the interestacquired by SingTel in the fair value of the identifiable assets and liabilities of Optus as at the date ofacquisition represents goodwill on consolidation. Goodwill on consolidation is recognised as anintangible asset and amortised on a straight line basis over 20 years.

The date of acquisition for accounting purposes is the date the Offer becomes unconditional.

SingTel will record the identifiable assets and liabilities of Optus at their fair values as at the date ofacquisition. However, until conclusion of the Offer, SingTel will not have sufficient information toenable it to ascertain the fair values of these identifiable assets and liabilities, especially the identifiableassets for which there is no active market. Accordingly, for the purposes of preparing the Pro-formaConsolidated Financial Information, the excess of the Offer Consideration over SingTel’s interest in thebook values of Optus’ net assets has been provisionally assigned to goodwill on consolidation untilSingTel has full access to the Optus Financial Information.

For the purposes of SingTel’s accounting for its acquisition of Optus under Singapore GAAP, the fairvalue of the Offer Consideration will comprise:

• the fair value of the SingTel Shares issued, based on their quoted price as at the date ofacquisition;

• the fair value of the Offer Consideration paid in the form of cash and SingTel Bonds, translated atthe prevailing S$/US$ and S$/A$ exchange rates on the date of acquisition, after taking intoaccount any foreign exchange hedging contracts entered into prior to that date; and

• the expenses directly attributable to the acquisition.

The fair value of the Offer Consideration set out above cannot be determined until after the date ofacquisition. For the purposes of preparing the Pro-forma Consolidated Financial Information, the costof acquisition is assumed to be as follows:

• the fair value of the SingTel Shares to be issued is based on the SingTel Share price of S$1.82 as atclose of trading on the SGX-ST on 30 April 2001;

• the fair value of the Offer Consideration paid in the form of cash and SingTel Bonds is translatedat the S$/US$ and S$/A$ exchange rates on 30 April 2001 of S$1.8180/US$1 and S$0.9262/A$1respectively, and after taking into account any foreign exchange hedging contracts up to thatdate; and




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• an estimation has been made of the transaction expenses to be incurred as part of the acquisition.

The Optus Financial Information expressed in A$ has been translated into S$ for the purposes of preparing thePro-forma Consolidation Financial Information using the following exchange rates:

• income statement and cash flow statement have been translated at the average rate for the year ended31 March 2001: S$0.9676/A$1; and

• balance sheet items have been translated at the 31 March 2001 year-end rate: S$0.8822/A$1.

(e) Scenario 1(i) Key assumptions

The following assumptions have been used to compile the Pro-forma Consolidated Financial Information forScenario 1.

• Alternative chosen by accepting Optus ShareholdersIt is assumed under Scenario 1 that C&W plc accepts the Offer in respect of its entire 52.5% shareholding inOptus and chooses the Share, Cash and Bond Alternative. It is further assumed under Scenario 1 that noother Optus Shareholders accept the Offer.

• Cost of acquisitionIt is assumed under Scenario 1 that, consistent with the Pre-Bid Agreement, C&W plc will receive cash in US$at the fixed exchange rate of US$0.4940/A$1, in lieu of SingTel Shares.

The following table summarises the total cost of acquisition under Scenario 1. The actual mechanism throughwhich the Optus Shareholders receive additional cash and SingTel Bonds in lieu of SingTel Shares is set out inSection 9.5 of this Bidder’s Statement.

CONSIDERATION IMPLIEDPAID AFTER VALUE OF

BASE CASE(1) SUBSTITUTION(2) SUBSTITUTION(3) CONSIDERATION(4)

A$ A$ A$ US$ S$MILLION MILLION MILLION MILLION MILLION

SingTel Shares 2,103.0 (2,103.0) – – –Cash 3,962.8 1,824.0 – 2,858.7 5,186.3SingTel Bonds 891.6 1,108.4 – 988.0 1,796.2Total 6,957.4 829.4 – 3,846.7 6,982.5Estimated transaction costs 89.1Cost of acquisition 6,957.4 829.4 – 3,846.7 7,071.6(1) Base case: The cost of acquisition reflects C&W plc’s choice of the Share, Cash and Bond Alternative.(2) Substitution: Shows the effect on the cost of acquisition upon substitution of SingTel Shares for additional cash and SingTel Bonds.(3) Consideration paid after substitution: Shows the consideration payable in US$ via cash and SingTel Bonds, translated at the fixed

exchange rate of US$0.4940/A$1.(4) Implied value: Shows the total cost of acquisition in S$, translated at the S$/US$ exchange rate on 30 April 2001 of S$1.8180/US$1

adjusted for the effect of foreign exchange hedging contracts up to that date.

The above implied values of the cash and SingTel Bonds components of the Offer Consideration in S$ mayvary depending upon movements in exchange rates in the period up to the date of acquisition.

The above computation is based on 3,774.0 million Optus Shares issued as at 31 March 2001. It does notinclude any Optus Shares that have been or may be issued from 1 April 2001 to the end of the Offer Period,details of which are set out in Section 11.2(a) of this Bidder’s Statement.

• Financing the acquisition and acquisition funding costsThe acquisition of Optus Shares will be financed by newly issued SingTel Shares, SingTel’s cash reserves andadditional long term debt, as well as newly issued SingTel Bonds. The assumed funding under Scenario 1,used for the Pro-forma Consolidated Financial Information, is as follows:

IMPLIED VALUECOST OF ACQUISITION FUNDED BY: S$ MILLION

SingTel Shares –SingTel’s cash reserves 4,464.6SingTel’s new long term debt 810.8SingTel Bonds 1,796.2

7,071.6

For pro-forma purposes, cost of acquisition is assumed to be funded by SingTel’s cash reserves comprisingS$3,637.3 million from cash and cash equivalents and S$827.3 million from short term investments.

For the purposes of the pro-forma consolidation, funding costs are assumed to be S$323.3 million, includingS$176.8 million reduction in interest and investment income due to cash reserves being utilised.

• SynergiesNo synergistic benefits have been factored into the Pro-forma Consolidated Financial Information.




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Scenario 1Pro-forma Consolidated Income Statement (unaudited)For the year ended 31 March 2001

The following unaudited Pro-forma Consolidated Income Statement has been prepared to illustrate the pro-formaconsolidated operating results of SingTel, as if SingTel Australia had acquired 52.5% of Optus Shares outstanding on31 March 2000. The accompanying notes in Section 4.7 form an integral part of this statement.

SINGTEL RECLASS- PRO-FORMA SINGTEL(SING GAAP) OPTUS (AUST GAAP) IFICATION(2) ADJUSTMENTS(3) (POST-ACQUISITION)S$ MILLION A$ MILLION S$ MILLION(1) S$ MILLION S$ MILLION S$ MILLION A$ MILLION(1)

Operating revenue 4,925.5 4,904.4 4,745.5 (8.7) (230.5) 9,431.8 9,747.6Operating expenses (3,036.9) (4,443.9) (4,299.9) (49.4) (326.6) (7,712.8) (7,971.1)Operating profit 1,888.6 460.5 445.6 1,719.0 1,776.5Compensation from IDA 337.0 – – 337.0 348.3Other income 93.2 – – 85.0 178.2 184.2

2,318.8 460.5 445.6 2,234.2 2,309.0Share of results of– associated companies 357.8 – – 357.8 369.8– joint venture companies (8.9) 65.0 62.9 (147.4) (93.4) (96.5)Abnormal items – 55.0 53.2 (53.2) – –Interest and investment income 393.6 – – 49.8 (185.8) 257.6 266.2Interest on borrowings (9.1) (154.5) (149.5) (41.1) (146.5) (346.2) (357.8)Profit on ordinary activities before tax 3,052.2 426.0 412.2 2,410.0 2,490.7Taxation (715.1) (1.5) (1.5) 79.2 (637.4) (658.7)Profit after tax 2,337.1 424.5 410.7 1,772.6 1,832.0Minority interests (12.9) (0.7) (0.7) 24.0 10.4 10.7Profit before extraordinary items 2,324.2 423.8 410.0 1,783.0 1,842.7Extraordinary items (317.9) – – 17.6 (8.4) (308.7) (319.0)Profit attributable to SingTel Shareholders 2,006.3 423.8 410.0 – (942.0) 1,474.3 1,523.7(1) The Optus Income statement expressed in A$ has been translated into S$ for consolidation at the average rate for the year ended 31 March 2001 of

S$0.9676/A$1. For illustrative purposes, the post acquisition Pro-forma Consolidated Income Statement expressed in S$ has been translated into A$ atthe same average rate.

(2) Reclassification: Pro-forma reclassification of Optus Financial Information prepared under Australian GAAP to conform with SingTel’s presentation.(3) Pro-forma Adjustments comprise (a) Pro-forma GAAP adjustments to restate Optus Financial Information prepared under Australian GAAP (“Aust

GAAP”) to conform with SingTel’s accounting policies under Singapore GAAP (“Sing GAAP”); and (b) Pro-forma consolidation adjustments to giveeffect to the goodwill and funding costs arising from the acquisition of Optus by SingTel, and the minority interest’s share of Optus’ results. Anexplanation of these adjustments is set out in Section 4.7.




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Scenario 1Pro-forma Consolidated Balance Sheet (unaudited)As at 31 March 2001

The following unaudited Pro-forma Consolidated Balance Sheet has been prepared to illustrate the pro-formaconsolidated financial position of SingTel, as if SingTel Australia had acquired 52.5% of Optus Shares outstanding on31 March 2001. The accompanying notes in Section 4.7 form an integral part of this statement.


Current assetsCash and cash equivalents 4,095.4 278.6 245.7 (3,637.3) 703.8 797.7Short term investments 2,533.3 – – (827.3) 1,706.0 1,933.8Trade and other debtors 1,228.7 1,636.7 1,443.9 (3.2) (374.4) 2,295.0 2,601.5Inventories 105.0 73.4 64.8 (4.7) 165.1 187.1

7,962.4 1,988.7 1,754.4 4,869.9 5,520.1Non-current assetsProperty, plant and equipment 5,475.8 6,898.4 6,085.8 (333.7) 11,227.9 12,727.2Intangible assets – 1,073.4 947.0 5,147.6 6,094.6 6,908.4Associated companies 1,637.2 – – 1,637.2 1,855.8Joint venture companies 231.0 19.3 17.0 86.5 (74.0) 260.5 295.3Long term investments 782.2 42.6 37.6 819.8 929.3Other non-current assets 64.0 911.7 804.3 (363.7) (279.0) 225.6 255.7

8,190.2 8,945.4 7,891.7 20,265.6 22,971.7Total assets 16,152.6 10,934.1 9,646.1 25,135.5 28,491.8Current liabilitiesTrade and other creditors (2,570.6) (1,878.5) (1,657.2) 26.9 (4,200.9) (4,761.8)Borrowings – (100.2) (88.4) (88.4) (100.2)Current income tax (596.5) – – (596.5) (676.2)Proposed final dividend (640.0) – – (640.0) (725.5)

(3,807.1) (1,978.7) (1,745.6) (5,525.8) (6,263.7)Non-current liabilitiesDeferred income tax (778.1) (292.7) (258.2) 258.2 (778.1) (882.0)Trade and other creditors – (23.2) (20.5) (20.5) (23.2)Borrowings (1,000.0) (3,262.3) (2,878.0) (2,607.0) (6,485.0) (7,350.9)Deferred income (2,051.4) – – (257.5) (2,308.9) (2,617.2)

(3,829.5) (3,578.2) (3,156.7) (9,592.5) (10,873.3)Total liabilities (7,636.6) (5,556.9) (4,902.3) (15,118.3) (17,137.0)Net assets 8,516.0 5,377.2 4,743.8 10,017.2 11,354.8Share capital and reservesShare capital 2,312.0 5,305.5 4,680.5 (4,680.5) 2,312.0 2,620.7Reserves 5,753.7 71.7 63.3 (63.3) 5,753.7 6,522.0Interests of SingTel shareholders 8,065.7 5,377.2 4,743.8 8,065.7 9,142.7Minority interests 450.3 – – 1,501.2 1,951.5 2,212.1

8,516.0 5,377.2 4,743.8 10,017.2 11,354.8(1) The Optus Balance Sheet expressed in A$ has been translated into S$ for consolidation at the 31 March 2001 exchange rate of S$0.8822/A$1. For

illustrative purposes, the post acquisition Pro-forma Consolidated Balance Sheet expressed in S$ has been translated to A$ at the same rate.(2) Reclassification: Pro-forma reclassification of Optus Financial Information prepared under Australian GAAP to conform with SingTel’s presentation.(3) Pro-forma Adjustments comprise (a) Pro-forma GAAP adjustments to restate Optus Financial Information prepared under Australian GAAP (“Aust

GAAP”) to conform with SingTel’s accounting policies under Singapore GAAP (“Sing GAAP”); and (b) Pro-forma consolidation adjustments to giveeffect to the goodwill and funding costs arising from the acquisition of Optus by SingTel, and the minority interest’s share of Optus’ net assets. Anexplanation of these adjustments is set out in Section 4.7.




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Scenario 1Pro-forma Consolidated Cash Flow Statement (unaudited)For the year ended 31 March 2001

The following unaudited Consolidated Cash Flow Statement has been prepared to illustrate the pro-formaconsolidated cash flows of the Combined Group, as if SingTel Australia had acquired 52.5% of Optus Sharesoutstanding on 31 March 2000. The accompanying notes in Section 4.7 form an integral part of this statement.

SINGTEL OPTUS (AUST GAAP) PRO-FORMA SINGTEL(SING GAAP) RECLASSIFIED(2) ADJUSTMENTS(3) (POST-ACQUISITION)S$ MILLION A$ MILLION S$ MILLION(1) S$ MILLION S$ MILLION A$ MILLION(1)

Net profit before tax 3,052.2 407.7 394.6 (1,036.8) 2,410.0 2,490.7Extraordinary items (317.9) 18.3 17.6 (300.3) (310.4)

2,734.3 426.0 412.2 2,109.7 2,180.3Adjustments for:Depreciation and amortisation 622.5 809.5 783.3 276.8 1,682.6 1,739.0Compensation from IDA (337.0) – – (337.0) (348.3)Share of results of joint ventures and associates (348.9) (65.0) (62.9) 147.4 (264.4) (273.3)Net gain from sale of property, plant and equipment (30.6) (87.8) (85.0) (115.6) (119.5)Profit on sale of investments (52.0) (18.3) (17.7) (69.7) (72.0)Interest and investment income (393.6) (51.5) (49.8) 185.8 (257.6) (266.2)Provision for investment 389.4 – – 389.4 402.4Interest expense 9.1 197.0 190.6 146.5 346.2 357.8Others (19.4) 21.6 20.8 (4.2) (2.8) (2.9)

(160.5) 805.5 779.3 1,371.1 1,417.0Operating cash flow before working capital changes 2,573.8 1,231.5 1,191.5 3,480.8 3,597.3Changes in working capital 631.7 (219.0) (211.9) 319.4 739.2 764.0

3,205.5 1,012.5 979.6 4,220.0 4,361.3Dividend received from joint ventures and associates 43.0 154.0 149.0 192.0 198.4Interest paid (8.1) – – (8.1) (8.4)Income tax paid (565.9) (1.5) (1.5) (567.4) (586.4)IDA compensation received 859.0 – – 859.0 887.8Cash Flows from Operating Activities 3,533.5 1,165.0 1,127.1 4,695.5 4,852.7Cash Flows from Investing ActivitiesNet investment in subsidiaries, joint ventures, associates and long term investments (1,220.0) (65.9) (63.8) (1,283.8) (1,326.8)Purchase of property, plant and equipment and intangible assets (1,762.0) (2,054.2) (1,987.6) (34.9) (3,784.5) (3,911.1)Sale of property, plant and equipment 97.5 200.6 194.1 291.6 301.4Net investment in short term investments (782.5) – – (4.8) (787.3) (813.7)Funds from minority shareholders 367.1 – – 367.1 379.4Interest and dividends received 247.8 33.6 32.5 (172.0) 108.3 111.9Others – (9.3) (9.0) (9.0) (9.3)

(3,052.1) (1,895.2) (1,833.8) (5,097.6) (5,268.2)Cash Flows from Financing ActivitiesDividends paid to shareholders (1,493.8) – – (1,493.8) (1,543.8)Net borrowings 900.0 1,056.0 1,021.8 1,921.8 1,986.2Repurchase of shares (142.3) – – (142.3) (147.1)Interest paid – (203.1) (196.5) (146.5) (343.0) (354.5)Others 19.4 – – 19.4 20.0

(716.7) 852.9 825.3 (37.9) (39.2)Net change in cash and cash equivalents (235.3) 122.7 118.6 (323.3)(4) (440.0) (454.7)Cash and cash equivalents at beginning of year 4,330.7 155.9 150.3 (3,637.3)(4) 843.7 875.1Exchange difference (23.2) (23.2) 10.9Cash and cash equivalents at end of year 4,095.4 278.6 245.7 (3,960.6)(4) 380.5(4) 431.3(1) The Optus Cash Flow statement expressed in A$ has been translated into S$ for consolidation at the average rate for the year ended 31 March 2001

of S$0.9676/A$1. For illustrative purposes, the post acquisition Pro-forma Consolidated Cash Flow Statement expressed in S$ has been translated intoA$ at the same average rate.


GAAP”) to conform with SingTel’s accounting policies under Singapore GAAP (“Sing GAAP”); and (b) Pro-forma consolidation adjustments to giveeffect to the goodwill and funding costs arising from the acquisition of Optus by SingTel. An explanation of these adjustments is set out in Section 4.7.

(4) For the purposes of the pro-forma cash flows, it is assumed that payment for SingTel’s acquisition of Optus took effect on 31 March 2000, and theassociated interest costs were paid during the year ended 31 March 2001. Accordingly, the cash and cash equivalents of SingTel (Post Acquisition) isreduced by S$3,637.3 million being Offer Consideration to be paid out of SingTel’s existing cash and cash equivalents for Scenario 1; and S$323.3million, being the pro-forma funding costs of the acquisition.




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(f) Scenario 2(i) Key assumptions

The following assumptions have been used to compile the Pro-forma Consolidated Financial Information underScenario 2:

• Alternative chosen by accepting Optus ShareholdersThe same assumptions made under Scenario 1 with respect to elections by C&W plc in respect of its 52.5%shareholding in Optus have been made in Scenario 2.

It is assumed that the remaining Optus Shareholders (holding 47.5% of Optus Shares) elect the Share andCash Alternative.

• Cost of acquisitionSubject to the maximum pools alloted for cash and SingTel Bonds, the same assumptions made underScenario 1 with respect to elections made by C&W plc to exercise its rights under the Share, Cash and BondAlternative have been made under Scenario 2.

It is assumed that the remaining Optus Shareholders (holding 47.5% of the outstanding Optus Shares) electto receive the cash component of the Offer Consideration in A$.

The following table summarises the total cost of acquisition under Scenario 2. The actual mechanism throughwhich the Optus Shareholders receive additional cash and SingTel Bonds in lieu of SingTel Shares is set out inSection 9.5 of this Bidder’s Statement.

CONSIDERATION IMPLIED VALUEBASE CASE (1) SUBSTITUTION (2) PAID AFTER OF

C&W 47.5% C&W SUBSTITUTION (3) CONSIDERATION (4)

A$ MILLION A$ MILLION A$ MILLION A$ MILLION US$ MILLION S$ MILLION

SingTel Shares 2,103.0 2,818.1 (259.7) 4,661.4 – 4,317.4Cash 3,962.8 4,033.5 – 4,033.5 1,957.6 7,283.9SingTel Bonds 891.6 – 362.1 – 619.4 1,126.0Total 6,957.4 6,851.6 102.4 8,694.9 2,577.0 12,727.3Estimated transaction costs 89.1Cost of acquisition 6,957.4 6,851.6 102.4 8,694.9 2,577.0 12,816.4SingTel Shares issued (million) 1,070.2 1,434.1 (132.1) 2,372.2 2,372.2(1) Base case: The cost of acquisition reflects C&W plc’s choice of the Share, Cash and Bond Alternative and the remaining Optus

Shareholders’ choice of the Share and Cash Alternative.(2) Substitution: Shows the effect on the cost of acquisition of substitution of SingTel Shares for additional cash and SingTel Bonds by

C&W plc, subject to the maximum limits under the Offer.(3) Consideration paid after substitution: Shows the consideration payable in A$ and US$ via cash and SingTel Bonds, with the US$ portions

translated at the fixed exchange rate of US$0.4940/A$1. Also shows the A$ implied value of SingTel Share consideration.(4) Implied value: Shows the total cost of acquisition in S$ translated at the S$/US$ and S$/A$ exchange rates on 30 April 2001 of

S$1.8180/US$1 and S$0.9262/A$1 respectively, adjusted for the effect of foreign exchange hedging contracts up to that date.

The above implied values of the SingTel Shares, cash and SingTel Bond components of the OfferConsideration in S$ may vary depending upon movements in the SingTel Share price and exchange rates inthe period up to the date of acquisition.

The above computation is based on 3,774.0 million Optus Shares issued as at 31 March 2001. It does notinclude any Optus Shares that have been or may be issued from 1 April 2001 to the end of the Offer Period,details of which are set out in Section 11.2(a) of this Bidder’s Statement.

• Financing the acquisition and acquisition funding costsThe acquisition of Optus Shares will be financed by newly issued SingTel Shares, SingTel’s cash reserves andadditional long term debt, as well as newly issued SingTel Bonds. The assumed funding under Scenario 2used for the Pro-forma Consolidated Financial Information is as follows:

IMPLIED VALUECOST OF ACQUISITION FUNDED BY: S$ MILLION

SingTel Shares 4,317.4SingTel’s cash reserves 4,594.4SingTel’s new long term debt 2,778.6SingTel Bonds 1,126.0

12,816.4

For pro-forma purposes, cost of acquisition is assumed to be funded by SingTel’s cash reserves comprisingS$3,767.1 million from cash and cash equivalents and S$827.3 million from short term investments.

For the purposes of the pro-forma consolidation, funding costs are assumed to be S$392.5 million, includingS$181.5 million reduction in interest and investment income due to cash reserves being utilised.

• SynergiesNo synergistic benefits have been factored into the Pro-forma Consolidated Financial Information.




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Scenario 2Pro-forma Consolidated Income Statement (unaudited)For the year ended 31 March 2001

The following unaudited Pro-forma Consolidated Income Statement has been prepared to illustrate the pro-formaconsolidated operating results of SingTel, as if SingTel Australia had acquired 100% of Optus Shares outstanding on31 March 2000. The accompanying notes in Section 4.7 form an integral part of this statement.


Operating revenue 4,925.5 4,904.4 4,745.5 (8.7) (230.5) 9,431.8 9,747.6Operating expenses (3,036.9) (4,443.9) (4,299.9) (49.4) (538.8) (7,925.0) (8,190.4)Operating profit 1,888.6 460.5 445.6 1,506.8 1,557.2Compensation from IDA 337.0 – – 337.0 348.3Other income 93.2 – – 85.0 178.2 184.2

2,318.8 460.5 445.6 2,022.0 2,089.7Share of results of– associated companies 357.8 – – 357.8 369.8– joint venture companies (8.9) 65.0 62.9 (147.4) (93.4) (96.5)Abnormal items – 55.0 53.2 (53.2) – –Interest and investment income 393.6 – – 49.8 (190.5) 252.9 261.4Interest on borrowings (9.1) (154.5) (149.5) (41.1) (211.0) (410.7) (424.5)Profit on ordinary activities before tax 3,052.2 426.0 412.2 2,128.6 2,199.9Taxation (715.1) (1.5) (1.5) 96.2 (620.4) (641.2)Profit after tax 2,337.1 424.5 410.7 1,508.2 1,558.7Minority interests (12.9) (0.7) (0.7) (13.6) (14.1)Profit before extraordinary items 2,324.2 423.8 410.0 1,494.6 1,544.6Extraordinary items (317.9) – – 17.6 (300.3) (310.4)Profit attributable to SingTel shareholders 2,006.3 423.8 410.0 – (1,222.0) 1,194.3 1,234.2(1) The Optus Income Statement expressed in A$ has been translated into S$ for consolidation at the average exchange rate for the year ended 31 March

2001 of S$0.9676/A$1. For illustrative purposes, the post acquisition Pro-forma Consolidated Income Statement expressed in S$ has been translatedinto A$ at the same average rate.






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Scenario 2Pro-forma Consolidated Balance Sheet (unaudited)As at 31 March 2001

The following unaudited Pro-forma Consolidated Balance Sheet has been prepared to illustrate the pro-formaconsolidated financial position of SingTel, as if SingTel Australia had acquired 100% of Optus Shares outstanding at31 March 2001. The accompanying notes in Section 4.7 form an integral part of this statement.


Current assetsCash and cash equivalents 4,095.4 278.6 245.7 (3,767.1) 574.0 650.5Short term investments 2,533.3 – – (827.3) 1,706.0 1,933.8Trade and other debtors 1,228.7 1,636.7 1,443.9 (3.2) (374.4) 2,295.0 2,601.5Inventories 105.0 73.4 64.8 (4.7) 165.1 187.1

7,962.4 1,988.7 1,754.4 4,740.1 5,372.9Non-current assetsProperty, plant and equipment 5,475.8 6,898.4 6,085.8 (333.7) 11,227.9 12,727.2Intangible assets – 1,073.4 947.0 9,391.2 10,338.2 11,718.7Associated companies 1,637.2 – – 1,637.2 1,855.8Joint venture companies 231.0 19.3 17.0 86.5 (74.0) 260.5 295.3Long term investments 782.2 42.6 37.6 819.8 929.3Other non-current assets 64.0 911.7 804.3 (363.7) (279.0) 225.6 255.7

8,190.2 8,945.4 7,891.7 24,509.2 27,782.0Total assets 16,152.6 10,934.1 9,646.1 29,249.3 33,154.9Current liabilitiesTrade and other creditors (2,570.6) (1,878.5) (1,657.2) 26.9 (4,200.9) (4,761.8)Borrowings – (100.2) (88.4) (88.4) (100.2)Current income tax (596.5) – – (596.5) (676.2)Proposed final dividend (640.0) – – (640.0) (725.5)

(3,807.1) (1,978.7) (1,745.6) (5,525.8) (6,263.7)Non-current liabilitiesDeferred income tax (778.1) (292.7) (258.2) 258.2 (778.1) (882.0)Trade and other creditors – (23.2) (20.5) (20.5) (23.2)Borrowings (1,000.0) (3,262.3) (2,878.0) (3,904.6) (7,782.6) (8,821.8)Deferred income (2,051.4) – – (257.5) (2,308.9) (2,617.2)

(3,829.5) (3,578.2) (3,156.7) (10,890.1) (12,344.2)Total liabilities (7,636.6) (5,556.9) (4,902.3) (16,415.9) (18,607.9)Net assets 8,516.0 5,377.2 4,743.8 12,833.4 14,547.0Share capital and reservesShare capital 2,312.0 5,305.5 4,680.5 (4,324.7) 2,667.8 3,024.0Reserves 5,753.7 71.7 63.3 3,898.3 9,715.3 11,012.6Interests of SingTel shareholders 8,065.7 5,377.2 4,743.8 12,383.1 14,036.6Minority interests 450.3 – – 450.3 510.4

8,516.0 5,377.2 4,743.8 12,833.4 14,547.0(1) The Optus Balance Sheet expressed in A$ has been translated into S$ for consolidation at the 31 March 2001 rate of S$0.8822/A$1. For illustrative

purposes, the post acquisition Pro-forma Consolidated Balance Sheet expressed in S$ has been translated to A$ at the same rate.(2) Reclassification: Pro-forma reclassification of Optus Financial Information prepared under Australian GAAP to conform with SingTel’s presentation.(3) Pro-forma Adjustments comprise (a) Pro-forma GAAP adjustments to restate Optus Financial Information prepared under Australian GAAP (“Aust GAAP”)

to conform with SingTel’s accounting policies under Singapore GAAP (“Sing GAAP”); and (b) Pro-forma consolidation adjustments to give effect to thegoodwill and funding costs arising from the acquisition of Optus by SingTel. An explanation of these adjustments is set out in Section 4.7.




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Scenario 2Pro-forma Consolidated Cash Flow Statement (unaudited)For the year ended 31 March 2001

The following unaudited Pro-forma Consolidated Cash Flow Statement has been prepared to illustrate the pro-formaconsolidated cash flows of SingTel, as if SingTel Australia had acquired 100% of Optus Shares outstanding at 31 March2000. The accompanying notes in Section 4.7 form an integral part of this statement.

SINGTEL OPTUS (AUST GAAP) PRO-FORMA SINGTEL(SING GAAP) RECLASSIFIED(2) ADJUSTMENTS(3) (POST-ACQUISITION)S$ MILLION A$ MILLION S$ MILLION(1) S$ MILLION S$ MILLION A$ MILLION(1)

Net profit before tax 3,052.2 407.7 394.6 (1,318.2) 2,128.6 2,199.9Extraordinary items (317.9) 18.3 17.6 (300.3) (310.4)

2,734.3 426.0 412.2 1,828.3 1,889.5Adjustments for:Depreciation and amortisation 622.5 809.5 783.3 489.0 1,894.8 1,958.3Compensation from IDA (337.0) – – (337.0) (348.3)Share of results of joint ventures and associates (348.9) (65.0) (62.9) 147.4 (264.4) (273.3)Net gain from sale of property, plant and equipment (30.6) (87.8) (85.0) (115.6) (119.5)Profit on sale of investments (52.0) (18.3) (17.7) (69.7) (72.0)Interest and investment income (393.6) (51.5) (49.8) 190.5 (252.9) (261.4)Provision for investment 389.4 – – 389.4 402.4Interest expense 9.1 197.0 190.6 211.0 410.7 424.5Others (19.4) 21.6 20.8 (4.2) (2.8) (2.9)

(160.5) 805.5 779.3 1,652.5 1,707.8Operating cash flow before working capital changes 2,573.8 1,231.5 1,191.5 3,480.8 3,597.3Changes in working capital 631.7 (219.0) (211.9) 319.4 739.2 764.0

3,205.5 1,012.5 979.6 4,220.0 4,361.3Dividends received from joint ventures and associates 43.0 154.0 149.0 192.0 198.4Interest paid (8.1) – – (8.1) (8.4)Income tax paid (565.9) (1.5) (1.5) (567.4) (586.4)IDA compensation received 859.0 – – 859.0 887.8Cash Flows from Operating Activities 3,533.5 1,165.0 1,127.1 4,695.5 4,852.7Cash Flows from Investing ActivitiesNet investment in subsidiaries, joint ventures, associates and long term investments (1,220.0) (65.9) (63.8) (1,283.8) (1,326.8)Purchase of property, plant and equipment and intangible assets (1,762.0) (2,054.2) (1,987.6) (34.9) (3,784.5) (3,911.1)Sale of property, plant and equipment and intangible assets 97.5 200.6 194.1 291.6 301.4Net investment in short term investments (782.5) – – (4.8) (787.3) (813.7)Funds from minority shareholders 367.1 – – 367.1 379.4Interest and dividends received 247.8 33.6 32.5 (176.7) 103.6 107.1Others – (9.3) (9.0) (9.0) (9.3)

(3,052.1) (1,895.2) (1,833.8) (5,102.3) (5,273.0)Cash Flows from Financing ActivitiesDividends paid to shareholders (1,493.8) – – (1,493.8) (1,543.8)Net borrowings 900.0 1,056.0 1,021.8 1,921.8 1,986.2Repurchase of shares (142.3) – – (142.3) (147.1)Interest paid – (203.1) (196.5) (211.0) (407.5) (421.1)Others 19.4 – – 19.4 20.0

(716.7) 852.9 825.3 (102.4) (105.8)Net change in cash and cash equivalents (235.3) 122.7 118.6 (392.5)(4) (509.2) (526.1)Cash and cash equivalents at beginning of year 4,330.7 155.9 150.3 (3,767.1)(4) 713.9 740.5Exchange difference (23.2) (23.2) (8.7)Cash and cash equivalents at end of year 4,095.4 278.6 245.7 (4,159.6)(4) 181.5(4) 205.7(1) The Optus Cash Flow statement expressed in A$ has been translated into S$ for consolidation at the average rate for the year ended 31 March 2001

of S$0.9676/A$1. For illustrative purposes, the post acquisition Pro-forma Consolidated Cash Flow Statement expressed in S$ has been translated intoA$ at the same average rate.



(4) For the purpose of the pro-forma cash flows, it is assumed that payment for SingTel’s acquisition of Optus took effect on 31 March 2000, and theassociated interest costs were paid during the year ended 31 March 2001. Accordingly, the cash and cash equivalents of SingTel (Post Acquisition) isreduced by S$3,767.1 million, being Offer Consideration to be paid out of SingTel’s existing cash and cash equivalents for Scenario 2; and S$392.5million, being the pro-forma funding costs of the acquisition.




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(g)Sensitivity analysisThe following analysis builds upon Scenario 2 while modifying certain assumptions with the aim of illustrating thepotential financial impact of Optus Shareholders’ choices on the Pro-forma Consolidated Financial Information. Theprimary aspects affected by these modifications include the number of SingTel Shares issued, the total amount aswell as the mix of cash and SingTel Bonds distributed, and the total acquisition cost.

Summary statistics presented below have been prepared on the basis of the following assumptions.

• Alternative chosen by accepting Optus ShareholdersIt is assumed in Sensitivity Scenario 2a that Optus Shareholders representing 52.5% of the total Optus Sharesoutstanding accept the Share, Cash and Bond Alternative, 37.5% accept the Share and Cash Alternative, and theremaining 10% accept the Share Alternative. This will result in more SingTel Shares being issued, a smaller cashoutlay for SingTel, and more SingTel Bonds being issued than under Scenario 2. It also results in a higherpro-forma goodwill on consolidation.

It is assumed in Sensitivity Scenario 2b that Optus Shareholders representing 62.5% of the total Optus Sharesoutstanding accept the Share, Cash and Bond Alternative, and the remaining 37.5% accept the Share and CashAlternative. This will result in fewer SingTel Shares being issued, a smaller cash outlay for SingTel, and moreSingTel Bonds being issued than under Scenario 2. It will result in a lower pro-forma goodwill on consolidation.

The other assumptions made under Scenario 2 remain unchanged.

(h)Summary of potential financial impactPRO-FORMA SINGTEL (PRE- SINGTEL (POST-ACQUISITION)SHAREHOLDING STRUCTURE ACQUISITION) SCENARIO 1 SCENARIO 2 SCENARIO 2a SCENARIO 2b

Total SingTel Shares (million) 15,413.2 15,413.2 17,785.4 17,800.1 17,714.9New SingTel Shares issued (million) n.a. – 2,372.2 2,386.9 2,301.7Temasek shareholding (%) 78.08 78.08 67.67 67.61 67.93C&W plc shareholding in SingTel (%) n.a. – 5.27 3.53 5.55Free float in SingTel (%) 21.92 21.92 27.06 28.86 26.52

S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION

Operating Cash Flows(1)

– before Net Interest(2) 3,533.5 4,695.5 4,695.5 4,695.5 4,695.5– after Net Interest(2) 3,918.0 4,606.9 4,537.7 4,533.2 4,536.0EBITDA(3) 3,290.2 4,181.2 4,181.2 4,181.2 4,181.2EBIT(4) 2,667.7 2,498.6 2,286.4 2,286.3 2,292.9Net Income (before EI)(5) 2,324.2 1,783.0 1,494.6 1,491.1 1,499.8Net Income (after EI)(5) 2,006.3 1,474.3 1,194.3 1,190.8 1,199.5Net Debt(6) nm 4,163.6 5,591.0 5,567.1 5,588.3EBITDA per share (cents)(7) 21.32 24.36 23.49 23.47 23.58EPS pre-goodwill– before EI (cents) 15.06 13.31 11.11 11.08 11.14– after EI (cents) 13.00 11.31 9.42 9.39 9.45EPS post-goodwill– before EI (cents) 15.06 11.56 8.40 8.37 8.46– after EI (cents) 13.00 9.56 6.71 6.68 6.76EBITDA/Gross Interest 361.56 12.08 10.18 9.96 10.06EBITDA/Net Interest(2) nm 47.19 26.50 25.76 26.21Net Debt Gearing (%)(8) nm 29 30 30 31(1) Operating Cash Flows refers to Cash Flows from Operating Activities in the Pro-forma Consolidated Cash Flow Statement.(2) Net Interest is interest expense less interest and investment income.(3) EBITDA refers to EBIT before depreciation and amortisation.(4) EBIT refers to net profit before Net Interest and taxation, but after attribution of compensation income from IDA, and after share of results of

associates and joint ventures.(5) Net Income refers to net profit after tax and after minority interests.(6) Net Debt comprises borrowings net of cash and cash equivalents and short term investments.(7) For the purpose of computing EBITDA per share for Scenario 1, minority shareholders’ 47.5% interest in Optus’ EBITDA has been excluded.(8) Net Debt Gearing is defined as the ratio of Net Debt to Net Capitalisation. Net Capitalisation comprises the aggregate of Net Debt, shareholders’

equity and minority interests.nm: not meaningful because cash and cash equivalents and short term investments exceed borrowings; and interest income exceeds interest

expense.EPS: Earnings per shareEI: Extraordinary items




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4.7 NOTES TO THE PRO-FORMA CONSOLIDATED FINANCIAL INFORMATION

These notes form an integral part of and should be read in conjunction with the Pro-forma Consolidated FinancialInformation.

(a) GeneralThe translation of foreign currency amounts into and from S$ in the Pro-forma Consolidated Financial Informationat the exchange rates referred to in Section 4.6 should not be construed as a representation that these amountshave actually been, or could actually be, converted at these rates.

(b)Pro-forma adjustmentsPro-forma adjustments comprises both the adjustments to restate Optus Financial Information prepared underAustralian GAAP to conform with SingTel’s accounting policies under Singapore GAAP, and the pro-formaconsolidation entries.

(i) Pro-forma GAAP adjustmentsAs a result of the differences in accounting policies adopted by Optus and SingTel as explained in Section 4.8,the following pro-forma adjustments are made to align Optus Financial Information to Singapore GAAP asadopted by SingTel:

INCREASE/(DECREASE)NET SHARE-

REFER TO OPERATING PROFIT CURRENT HOLDERS ’SECTION REVENUE AFTER TAX ASSETS LIABILITIES ASSETS EQUITY

DESCRIPTION 4.8 S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION

Capacity sales and purchases (b) (142.3) (223.6)* (49.0) 257.5 (15.0) (306.5)Customer acquisition costs (c) – (166.0) (579.5) – (359.4) (579.5)Capitalisation of overhead costs (d)(i) – (7.5) (213.1) – – (213.1)Partial depreciation of network assets (d)(iii) – (17.4) (187.5) – – (187.5)Amortisation of telecommunication licences (f) – (33.1) (255.4) – – (255.4)Others # (88.2) 4.7 (41.4) – – (41.4)

(230.5) (442.9) (1,325.9) 257.5 (374.4) (1,583.4)* The adjustment includes impact on share of joint venture companies’ results arising from the different accounting treatments relating to

capacity sales and purchases.# Comprises (d)(ii), d(iv), (e) and (g).

The above pro-forma GAAP adjustments do not have any cash flow effect and hence do not impact Optus’reported net cash flows.

(ii) Pro-forma Consolidation AdjustmentsThe adjustments to reflect the acquisition of Optus comprise the acquisition funding costs set out in Section 4.6(e)(i) and (f)(i), and the pro-forma consolidation entries based on the following:

SCENARIO 1 SCENARIO 2

Number of SingTel Shares to be issued at S$1.82 per share (millions) – 2,372.2

S$ MILLION S$ MILLION

Share capital at S$0.15 each – 355.8Share premium at S$1.67 each – 3,961.6SingTel Bonds and other borrowings 2,607.0 3,904.6Existing cash reserves 4,464.6 4,594.4Total acquisition cost 7,071.6 12,816.4Net book value of assets acquired(1) 1,659.2 3,160.4Pro-forma goodwill 5,412.4 9,656.0Annual amortisation over 20 years useful life 270.6 482.8(1) Until the conclusion of the Offer, SingTel will not have sufficient information to enable it to ascertain the fair values of these assets.

Accordingly, for the purpose of preparing the Pro-forma Consolidated Financial Information, the excess of the Offer Consideration overSingTel’s interest in the book values of Optus’ net assets has been provisionally assigned to goodwill.




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4.8 SIGNIFICANT DIFFERENCES BETWEEN SINGAPORE GAAP ANDAUSTRALIAN GAAP, AND BETWEEN SINGTEL’S AND OPTUS’ACCOUNTING POLICIES

(a) Introduction(i) The Pro-forma Consolidated Financial Information included in Section 4.6 of this Bidder’s

Statement has been prepared and presented in accordance with Singapore GAAP and SingTel’saccounting policies (“SingTel Policies”), which differs in certain significant respects fromAustralian GAAP and Optus accounting policies (“Optus Policies”). An initial assessment has beenmade of the impact on Optus’ financial statements of the application of SingTel’s accountingpolicies and Singapore GAAP. A complete assessment has not been made as SingTel will not haveavailable to it sufficient information on the exact nature of Optus’ implementation of itsaccounting policies for this purpose until after completion of the acquisition. Certain significantdifferences between SingTel Policies and Optus Policies, relevant to the Pro-forma ConsolidatedFinancial Information are summarised below.

(ii) The following is a list of new standards and revisions to existing standards which will be applicable inSingapore and Australia for the first time to the financial statements of SingTel and Optus, respectively,for the financial year beginning on or after 1 April 2001. The pro-forma consolidated financialinformation has not taken into account these new standards, except that the pro-forma goodwillarising from the acquisition of Optus by SingTel has been accounted for under Singapore Statementsof Accounting Standards (“SAS”) 22 (Revised) in the Pro-forma Consolidated Financial Information.

SingaporeEffective for SingTel reporting periods beginning on or after 1 April 2001SAS 8 (Revised) Net Profit or Loss, Fundamental Errors and Changes in Accounting PoliciesSAS 10 (Revised) Events After the Balance Sheet DateSAS 12 Income TaxesSAS 17 Employee BenefitsSAS 22 (Revised) Business CombinationsSAS 30 Interim Financial ReportingSAS 31 Provisions, Contingent Liabilities and Contingent AssetsSAS 32 Financial Instruments: Disclosure and PresentationSAS 34 Intangible AssetsSAS 35 Discontinuing OperationsSAS 36 Impairment of AssetsSAS 37 Information Reflecting the Effects of Changing PricesSAS 38 Financial Reporting in Hyperinflationary EconomiesEffective for SingTel reporting periods beginning on or after 1 April 2002SAS 33 Financial Instruments – recognition and measurement

AustraliaEffective for Optus reporting periods beginning on or after 1 April 2001AASB 1010 Recoverable Amount of Non-Current AssetsAASB 1018 Statement of Financial PerformanceAASB 1034 Financial Report Presentation and DisclosureAASB 1037 Self-Generating and Regenerating AssetsAASB 1040 Statement of Financial PositionAASB 1041 Revaluation of Non-Current AssetsEffective for Optus reporting periods beginning on or after 1 April 2002AASB 1005 Segment ReportingAASB 1012 Foreign Currency TranslationAASB 1027 Earnings Per ShareAASB 1029 Interim Financial ReportingAASB 1042 Discontinuing OperationsEffective for Optus reporting periods beginning on or after 1 April 2003AASB 1020 Income Taxes

No attempt has been made to identify future differences between Singapore GAAP and AustralianGAAP as a result of prescribed changes in accounting standards, including those accountingstandards listed above, that may affect the Pro-forma Consolidated Financial Information.




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(iii) Regulatory bodies that promulgate Singapore GAAP and Australian GAAP have significant projectsongoing that could affect future comparisons of Singapore GAAP and Australian GAAP, includingproposed standards or changes in existing standards that are exposed for public comment. Noattempt has been made to identify all future differences between Singapore GAAP and AustralianGAAP that may affect the post acquisition consolidated financial statements as a result oftransactions or events that may occur in the future.

(b)Capacity sales and purchases(i) Indefeasible Rights of Use (“IRUs”)

Both Optus and SingTel have entered into IRU contracts to sell capacity on cable systems. UnderAustralian GAAP, leases of land and integral plant are separated into components, and eachcomponent must be accounted for separately. Optus Policies account for these capacity sales as“sales-type” finance leases and recognise profit on sale in the period in which the sale takes place.There is no specific guidance under Singapore GAAP for the treatment of the sale of IRUs, andSingTel follows closely the generally accepted accounting practices in the United States (US GAAP)in regard to IRUs. Under US GAAP, an IRU can only be accounted for as a sales-type lease if the IRUtransfers substantially all the risks and rewards of ownership to the lessee, and provision is made inthe IRU agreement for ownership of the asset to pass to the lessee by the end of the lease.Accordingly, unless the relevant criteria are met, SingTel Policies account for capacity sales asoperating leases and recognise lease income on a straight line basis over the lease term.

(ii) Exchanges of CapacityUnder Australian GAAP, revenue is not recognised on the exchange of goods or services that are ofthe “same” nature and value. Under Singapore GAAP, revenue is not recognised on the exchangeof “similar” assets that have “similar” use in the same line of business and which have “similar” fairvalue. As a result of the difference in definition, exchanges of certain assets that have been treatedas giving rise to revenue under Australian GAAP, have been treated as not resulting in a sale underSingapore GAAP, and have been accounted for as a swap of assets at cost.

(c) Customer acquisition costsUnder Optus Policies, customer acquisition costs are deferred to the extent that these are recoverableout of future revenue, do not relate solely to revenue which has already been brought to account,and will contribute to future earning capacity. These costs are then amortised over the lesser of theaverage customer life or three years. They are reviewed at balance sheet date to determine theamounts, if any, that are no longer recoverable, and all such amounts are written off. Under SingTelPolicies, customer acquisition costs are expensed as incurred.

(d)Property, plant and equipment(i) Capitalisation of overhead costs

Under Optus Policies, the cost of self-constructed assets includes a proportion of general andadministrative overhead costs. Under SingTel Policies, general and administrative overhead costsare expensed as incurred.

(ii) Revaluation of land and buildingsUnder Optus Policies, land and buildings have, in the past, been independently revalued (on thebasis of open market value of the properties in their existing use), and included in the financialstatements at the revalued amounts. Although permissible under Singapore GAAP, SingTel has notadopted a policy of revaluation and accounts for land and buildings at cost net of depreciation.

(iii) Partial depreciation of network assetsUnder Optus Policies, network assets are subject to partial depreciation until they are at expectedoperating capacity or until five years after operation, whichever is earlier. Once at expectedoperating capacity, the asset is depreciated on a straight-line basis over its remaining useful life.Under SingTel Policies, network assets are depreciated on a straight-line basis over their estimateduseful lives from the date such assets are placed in service.

(iv) Change in useful livesDuring the financial year ended 31 March 1997, Optus reassessed the estimate of useful lives ofcertain assets as required under an amendment to the definition of “useful life” set out in a revisedAustralian Accounting Standard. The effect of this change was applied retrospectively inaccordance with the transitional provisions of the revised Australian Accounting Standard. Under




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Singapore GAAP, this retrospective adjustment would not be permissible and the effect of thechange would have been included in the determination of net profit or loss in the period of thechange and future periods.

(e) Construction ContractsUnder Singapore GAAP, both the percentage of completion method and completed contract methodare permissible for construction contracts. Under the percentage of completion method, contractrevenues and contract costs associated with a construction contract are recognised as revenues andexpenses respectively by reference to the stage of completion of the contract activity at the balancesheet date. Under the completed contract method, such contract revenues and contract costs arerecognised as revenues and expenses respectively when the contract is completed or substantiallycompleted. The completed contract method is not permitted under Australian GAAP. Where theoutcome of the contract cannot be reliably estimated, Australian GAAP requires that the revenues berecognised only up to the extent of the contract costs incurred that are probable of being recovered.

Optus Policies apply the percentage of completion method to satellite construction contracts. SingTelPolicies apply the completed contract method to satellite construction contracts.

(f) Amortisation of Telecommunication LicencesOptus Policies account for telecommunication licences at cost on the basis that the life of the licencesis infinite. SingTel Policies amortise such intangible assets over their estimated useful lives. For thepurpose of the Pro-forma Consolidated Financial Information, the Optus telecommunication licence isamortised over 20 years.

(g)GoodwillOptus Policies amortise goodwill, arising on acquisition, on a straight-line basis over three to fiveyears. SingTel Policies currently adjust the goodwill against shareholders’ equity.

A revised Singapore Standard, SAS 22 (Revised), “Business Combinations”, will be applicable inSingapore for financial statements covering periods beginning 1 October 2000. For SingTel, this willtake effect from the financial year beginning 1 April 2001. The choice of adjusting goodwill againstshareholders’ equity will no longer be permissible under Singapore GAAP. Under SAS 22 (Revised),goodwill must be recognised as an asset and systematically amortised over its useful life, and there is arebuttable presumption that the useful life will not exceed 20 years.

As the Transaction will be completed after 1 April 2001, the acquisition goodwill arising from theTransaction has been accounted for under SAS 22 (Revised). The estimated useful life is 20 years.

(h) IDA CompensationSingTel received S$1.5 billion in 1997 and S$859 million in 2000, from the IDA as compensation formodification of its telecommunications licence. Under Australian GAAP, such receipts are recognisedin full when an enterprise has a right to receive them and has no obligation to repay. Under SingTelPolicies, such receipts are recognised as income, on a systematic basis, over the periods necessary tomatch them with the related opportunity loss which they are intended to compensate.

(i) Format of financial statements(i) Income Statement Presentation

The presentation of the income statement under Australian GAAP is different from the presentationunder Singapore GAAP. Under Singapore GAAP, an enterprise is required to present, either on theface of the income statement or in the notes to the income statement, an analysis of expensesusing a classification based on either the nature of expenses or their function within the enterprise.Under Australian GAAP, the requirement to provide such an analysis of expenses has been recentlyintroduced for financial years ending on or after 30 June 2001.

(ii) RevenueThe definitions of “revenue” for financial statement presentation purposes under Australian GAAPand under Singapore GAAP are different. The Australian definition includes gross inflows fromtransactions and other events including gross proceeds on sale of property, plant and equipment.Such gross inflows are not included as “revenue” disclosed under Singapore GAAP.

(iii) Abnormal ItemsUnder both Australian and Singapore GAAP, when items of income and expense within profit orloss from ordinary activities are of such size or nature that their disclosure is relevant to explain theperformance of the enterprise for the period, the nature and amount of such items is disclosed




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separately. These are referred to as abnormal items under Australian GAAP and as exceptionalitems under Singapore GAAP. Optus shows abnormal items on the Income Statement as a separateline. SingTel incorporates the exceptional items within the respective line items in the IncomeStatement, and discloses the amount and nature of exceptional items as part of the notes to theaccounts for these Income Statement items.

(iv) Extraordinary ItemsThe determination of extraordinary items under Singapore GAAP is currently much broader thanAustralian GAAP. A revision to Singapore GAAP, SAS 8 (Revised), Net Profit or Loss for the Period,Fundamental Errors and Changes in Accounting Policies, will take effect for financial statementscovering periods beginning 1 July 2000. For SingTel, this will take effect for reporting periodsbeginning on or after 1 April 2001. Under the revision, only on rare occasions will an event ortransaction give rise to an extraordinary item.

(v) Cash Flow StatementUnder Optus Policies the Consolidated Cash Flow Statement is presented under the “direct”method of presentation. SingTel Policies present the Consolidated Cash Flow Statement underthe “indirect” method of presentation. Further, in reconciling the operating results to net cashprovided by operating activities, Optus Policies disclose non-cash items such as “amounts set asideto provisions” separately. In accordance with general practice in Singapore, SingTel Policies includecertain non-cash items such as “amounts set aside to provisions” within the “changes in workingcapital”. In addition, under Optus Policies, cash flows from Operating Activities is net of interestreceipts and payments. Under Singapore GAAP, interest receipt from investments is classifiedseparately under Cash Flow from Investing Activities and interest expense from borrowings isclassified as Cash Flows from Financing Activities.




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4.9 REPORT FROM PRICEWATERHOUSECOOPERS ON THEUNAUDITED PRO-FORMA CONSOLIDATED FINANCIALINFORMATION

The DirectorsSingapore Telecommunications LimitedSingTel Australia Investment Limited31 Exeter Road, ComcentreSINGAPORE 239732

18 May 2001

Subject: Independent Accountant’s Report on historical financial information

Dear Sirs

We have prepared this report on historical financial information of Singapore Telecommunications Limited(“SingTel”) for inclusion in a Bidder’s Statement dated on or about 18 May 2001 (the Bidder’s Statement)relating to the proposed offer by SingTel Australia Investment Limited to acquire Cable & Wireless OptusLimited (“Optus”).

Expressions defined in the Bidder’s Statement have the same meaning in this report.

ScopeYou have requested PricewaterhouseCoopers and PricewaterhouseCoopers Securities Ltd to prepare anIndependent Accountant’s Report covering the unaudited Pro-forma Consolidated Financial Informationset out in Section 4.6 comprising the Pro-forma Consolidated Income Statements, Balance Sheets andCash Flow Statements of SingTel as if:

• Optus Shareholders holding 52.5% of the total Optus Shares outstanding accept the Offer (Scenario 1)

• Optus Shareholders holding 100% of the total Optus Shares outstanding accept the Offer (Scenario 2)

on the basis of the assumptions relating to the distribution of acceptances among the three OfferConsideration Alternatives detailed under each Scenario, together with a limited sensitivity analysis ofvariations to these assumptions.

This report has been prepared for inclusion in the Bidder’s Statement. We disclaim any assumption ofresponsibility for any reliance on this report, or on the unaudited Pro-forma Consolidated FinancialInformation to which it relates, for any purposes other than for which it was prepared.

Scope of review of historical financial informationThe unaudited Pro-forma Consolidated Financial Information has been extracted from the historicalfinancial statements of SingTel and Optus, and incorporates such adjustments (“the Pro-formaAdjustments”) as the Directors considered necessary to reflect:

(a) the differences arising as a result of preparing the financial statements of Optus under SingaporeGAAP and in accordance with SingTel’s accounting policies. An initial assessment has been made ofthe impact on Optus’ financial statements of the application of SingTel’s accounting policies andSingapore GAAP. A complete assessment has not been made as SingTel will not have available to itsufficient information on the exact nature of Optus’ implementation of its accounting policies for thispurpose until after completion of the acquisition.



The Directors

Singapore Telecommunications Limited

SingTel Australia Investment Limited

31 Exeter Road, Comcentre

SINGAPORE 239732

18 May 2001


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(b) the impact of the acquisition and related costs under various possible scenarios. Each of thesescenarios is based on certain assumptions regarding the level of acceptance by Optus Shareholders ofthe Offer, the distribution of acceptances among the three Offer Consideration Alternatives, theSingTel share price and S$/A$ and S$/US$ exchange rates prevailing on the date of acquisition. Theimpact of the acquisition will vary to the extent that the actual level and distribution of acceptances,and the actual share price and exchange rates prevailing at the date of acquisition deviate from theabove assumptions.

SingTel will record the identifiable assets and liabilities of Optus at their fair values as at the date ofacquisition. However, until conclusion of the Offer SingTel will not have sufficient information to enable itto ascertain the fair values of these identifiable assets and liabilities, especially the identifiable assets forwhich there is no active market. Accordingly, for the purposes of preparing the Pro-forma ConsolidatedFinancial Information, the excess of the Offer Consideration over SingTel’s interest in the book values ofOptus’ net assets have been provisionally assigned to goodwill on consolidation until SingTel has fullaccess to Optus’ Financial Information.

The Pro-forma Consolidated Financial Information is provided for illustrative purposes only. It does notpurport to represent what the actual results of operations or the financial position of SingTel would havebeen had the acquisition of Optus occurred on the dates assumed, nor is it necessarily indicative ofSingTel’s future consolidated operating results, financial position or cash flows.

The Directors are responsible for the preparation of the historical Pro-forma Consolidated FinancialInformation, including determination of the Pro-forma Adjustments.

We have conducted our review of the historical financial information in accordance with AuditingStandards applicable to review engagements. We made such inquiries and performed such procedures aswe, in our professional judgement, considered reasonable in the circumstances including:

• a review of work papers, accounting records, documentation required under the continuousdisclosure requirements of both the Australian and Singapore Stock Exchanges, and other documents

• a review of the Pro-forma Adjustments used to compile the unaudited Pro-forma ConsolidatedFinancial Information

• a comparison of consistency in application of the recognition and measurement principles inAccounting Standards and other mandatory professional reporting requirements in Singapore, andthe accounting policies adopted by SingTel disclosed in Annexure 1 to the Bidder’s Statement, and

• enquiry of directors, management and others.

These procedures do not provide all the evidence that would be required in an audit, thus the level ofassurance provided is less than given in an audit. We have not performed an audit and, accordingly, wedo not express an audit opinion.

Review statement on historical financial informationBased on our review, which is not an audit, nothing has come to our attention which causes us to believethat:

• the Pro-forma Adjustments do not form a reasonable basis for the preparation of the unauditedPro-forma Consolidated Financial Information

• the unaudited Pro-forma Consolidated Financial Information set out in Section 4.6 of the Bidder’sStatement has not been properly prepared on the basis of the Pro-forma Adjustments.

Subsequent eventsApart from the matters dealt with in this Report, and having regard to the scope of our Report, to thebest of our knowledge and belief no material transactions or events outside of the ordinary business ofthe SingTel and Optus (to the extent of publicly available information) have come to our attention thatwould require comment on, or adjustment to, the information referred to in our Report or that wouldcause such information to be misleading or deceptive.

Yours faithfully

PricewaterhouseCoopers, Bob ProsserSingapore Authorised Representative of

PricewaterhouseCoopers Securities Ltd




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SECTION 5ACCEPTANCE CONSIDERATIONS FOR

OPTUS SHAREHOLDERS



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5.1 SUMMARY OF ACCEPTANCE CONSIDERATIONS

SingTel believes that Optus Shareholders should carefully consider the followingconsiderations in particular prior to making a decision on whether to accept the Offer:

• SingTel’s commitment as Optus’ new key strategic shareholder;• benefits of becoming a SingTel Shareholder;• liquidity of SingTel Shares;• risks of becoming a SingTel Shareholder or holding SingTel Bonds;• implications of not accepting the Offer;• individual preferences and circumstances of Optus Shareholders;• taxation implications for Optus Shareholders; and• rights of SingTel Shareholders.

Optus Shareholders should also carefully consider the other information contained in thisBidder’s Statement. If you are in any doubt as to how to deal with this Bidder’s Statementplease consult your financial or other professional adviser.

5.2 SINGTEL’S COMMITMENT AS OPTUS’ NEW KEYSTRATEGIC SHAREHOLDER

In 1999, C&W plc focused its strategy on the fast growing markets for data and IP servicesfor business customers, primarily in Europe, Japan and the United States. As a result, Optus’strategy to provide a full range of communications services to Australian retail and businesscustomers is no longer consistent with C&W plc’s strategy. On 27 September 2000, Optusannounced a strategic review to examine alternatives to optimise the growth prospects ofeach of its businesses and to maximise shareholder value.

SingTel’s Offer is currently the only formal offer being put to Optus’ Shareholders resultingfrom Optus’ strategic review. The Offer will enable C&W plc, if CWAP accepts the Offer, torealise the value of its Optus holding and focus on its core business markets in Europe, Japanand the United States. If another bidder for Optus does emerge, that bidder cannot becertain of acquiring 100%, as C&W plc (through CWAP) has agreed, subject to certainconditions, to accept the Offer in respect of Optus Shares representing 19.8% of Optus’issued share capital and to sell such shares to SingTel Australia, if required by SingTel Australia,if CWAP does not accept the Offer for all of its Optus Shares (see Section 11.15(a)).

If SingTel becomes the majority shareholder in Optus, it will bring to Optus a renewedcommitment to the growth of Optus’ businesses in Australia.

5.3 BENEFITS OF BECOMING A SINGTEL SHAREHOLDER

For an Optus Shareholder accepting the Offer, the potential benefits of an investment inSingTel include the following.

(a) Opportunity to participate in a leading Asia Pacific integratedcommunications service providerOptus Shareholders who accept SingTel’s Offer will become shareholders of SingTel, andtherefore will have the opportunity to participate in the ongoing growth of SingTel,including Optus’ and SingTel’s other businesses and investments. SingTel is anintegrated communications service provider, with significant size and scale, diverserevenue streams, extensive regional infrastructure, focus on growth platforms and acommitment to expand in the Asia Pacific region. SingTel will have a strong presence inkey markets across the region, including India, the Philippines, Singapore and Thailandand (with Optus) Australia. SingTel also has a substantial investment in a new operatorin Taiwan, and other strategic investments in the region. SingTel believes that itsregional expansion strategy will enable it to further differentiate itself from itscompetitors in those markets. These factors present attractive growth prospects forSingTel Shareholders. Furthermore, SingTel believes that Optus would be in a strongercompetitive position in Australia as part of SingTel than as a stand-alone entity. Thepotential benefits of the acquisition and the profile of SingTel if the acquisition proceedsare more fully discussed in Section 4.


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(b)Diversification of certain geographical and operating risksThe risk profile and performance of SingTel is expected to be different from that ofOptus on a stand-alone basis. The combination of diverse revenue streams and a strongpresence in two developed markets in Singapore and Australia is expected to assistSingTel in maintaining greater stability in earnings and cash flows, without sacrificingsubstantial growth opportunities in developing markets.

(c) Entitlement to receive dividends from SingTelAs indicated in Sections 3.15 and 4.5(c), SingTel has a history of paying steadydividends. In its current growth phase, Optus has not yet paid a dividend.

The income that may be derived from shares may fall as well as rise. Past performanceis not necessarily a guide to future performance. Exchange rate movements may affectthe value to shareholders of income denominated in S$.

5.4 LIQUIDITY OF SINGTEL SHARES

SingTel intends to list all SingTel Shares (other than those held by Temasek) on the ASX.SingTel may be included in the S&P/ASX 200 Index. In addition, the weighting of SingTelin the MSCI Singapore Index may (but will not necessarily) increase as a result of the issueof SingTel Shares pursuant to the Offer. If inclusion in the S&P/ASX 200 Index is achievedor index weighting in the MSCI Singapore Index is increased, it may result in greaterdemand for SingTel Shares from investors who track these indices. Inclusion or increasedweighting in these indices may also promote greater trading of SingTel Shares as SingTelShares may become attractive to a broader range of investors.

Optus Shareholders should consider the comparative markets for, and liquidity of, theirOptus Shares and any SingTel Shares that they would acquire upon acceptance of theOffer. Some risk factors associated with the market for, and liquidity of, SingTel Shares aredescribed in Section 6.12.

5.5 RISKS OF BECOMING A SINGTEL SHAREHOLDEROR HOLDING SINGTEL BONDS

Certain risks associated with an investment in SingTel are outlined in Section 6. Some ofthese risks are general business and economic risks that Optus also faces.

5.6 IMPLICATIONS OF NOT ACCEPTING THE OFFER

(a) No opportunity to participate in SingTelIf SingTel becomes the majority shareholder in Optus, those Optus Shareholders whodo not accept the Offer and wish to remain as Optus Shareholders will still be able toparticipate in some of the benefits that SingTel and Optus expect to realise, but only tothe extent that those benefits flow directly to Optus rather than to SingTel as a whole.However, the magnitude of the benefits that can be realised, and the period withinwhich they can be realised, is related to the level of SingTel’s ownership in Optus.Greater ownership by SingTel is likely to lead to greater benefits flowing more quicklyto both Optus and SingTel.

(b)Possible reduction in liquidity of Optus SharesIf a significant number of Optus Shares are accepted into the Offer, but not a sufficientnumber to entitle SingTel Australia to proceed to Compulsory Acquisition, then therewill be fewer Optus Shares available for trading on the ASX. It is expected that, in thesecircumstances, the level of liquidity in the market for Optus Shares may be reduced,and the market price of Optus Shares may be adversely affected.

(c) Possible loss of Optus’ index weightingIf a significant number of Optus Shares are accepted into the Offer, but not a sufficientnumber to entitle SingTel Australia to proceed to Compulsory Acquisition, then Optusmay lose its S&P/ASX 200 Index weighting or may be removed from the index entirely.In these circumstances, it is expected that certain institutional investors may be unable




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or unwilling to hold Optus Shares and may have to sell them on-market. With anincrease in selling activity and a possible decrease in buying activity (for the samereasons), the price of Optus Shares may fall.

(d)Possible Compulsory Acquisition of your Optus SharesIf SingTel Australia becomes entitled to do so, SingTel Australia intends to exercise itsright to compulsorily acquire all remaining Optus Shares that were not accepted intothe Offer.

If your Optus Shares are compulsorily acquired, you will receive the Offer Considerationlater than Optus Shareholders who accept the Offer during the Offer Period.

5.7 INDIVIDUAL PREFERENCES AND CIRCUMSTANCES OFOPTUS SHAREHOLDERS

The specific circumstances and investment risk preferences of each Optus Shareholder willinfluence the Optus Shareholder’s decision as to whether to accept the Offer, and which tochoose of the alternative manners of acceptance and Offer Consideration alternatives.

Optus Shareholders who are in any doubt as to how to deal with the Offer should consulttheir financial or other professional advisers.

5.8 TAXATION IMPLICATIONS FOR OPTUS SHAREHOLDERS

Optus Shareholders should consider the taxation implications of accepting the Offer,electing either the Transfer Alternative or Buy-Back Alternative, and electing one of thethree forms of Offer Consideration. A general description of the taxation implications forOptus Shareholders who accept the Offer (including the potential availablity of scrip-for-scrip CGT rollover relief) is set out in Section 7.

5.9 RIGHTS OF SINGTEL SHAREHOLDERS

Optus Shareholders considering accepting the Offer may be interested in the summaryprovided in Section 8.3 of certain rights attaching to SingTel Shares.




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SECTION 6RISK FACTORS



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6.1 OVERVIEW

Optus Shareholders who accept the Offer will receive SingTel Shares as part of theconsideration for their Optus Shares. Optus Shareholders who choose the Share, Cash andBond Alternative will also receive SingTel Bonds. The financial performance and operationsof SingTel’s businesses within and outside Singapore, the price of SingTel Shares andSingTel Bonds, and the amount and timing of any dividends that SingTel pays, will beinfluenced by a range of factors. Many of these factors are beyond the control of SingTeland the SingTel Board. Many of these factors also affect the businesses of other companiesoperating in the communications industry and in other industries, both within and outsideSingapore.

Optus Shareholders should consider carefully the risk factors set out below and the otherinformation contained in this Bidder’s Statement.

6.2 CHANGES IN ECONOMIC CONDITIONS

Changes in economic conditions within and outside Singapore may have a material adverseeffect on the demand for communications services and therefore on the financialperformance and operations of SingTel.

6.3 CHANGES IN POLITICAL CONDITIONS

Some of the countries in which SingTel operates and has investments have experienced orcontinue to experience political instability. The continuation or re-emergence of suchpolitical instability in the future could have a material adverse effect on economic or socialconditions. This could lead to outbreaks of civil unrest in the affected areas, which couldhave a material adverse effect on the financial performance and operations of SingTel. Suchpolitical instability could also have a material adverse effect on the ownership, control andcondition of SingTel’s assets in those areas.

6.4 CHANGES IN REGULATORY ENVIRONMENT

SingTel’s operations in Singapore and its international operations and investments are subjectto extensive government regulation, which may limit the flexibility of SingTel to respond tomarket conditions, competition, new technologies (such as 3G) or changes in its coststructure. Government policies relating to the communications industry and the regulatory(including taxation) environment in which SingTel operates may change. Such changes couldhave a material adverse effect on SingTel’s financial performance and operations.

The Singapore Government has in the past made compensation payments to SingTel tocompensate for the impact of accelerating the liberalisation of the telecommunicationsmarket in Singapore, but there is no assurance that further or adequate compensationpayments will be made if the Government makes further changes to the regulatoryenvironment in Singapore.

The IDA has established guidelines and a pricing framework for dominant licensees, such asSingTel, that requires them to provide access to their networks to other operators. The IDAalso regulates the prices charged by dominant licensees for their services. In SingTel’s case,this means that SingTel requires approval from the IDA for the prices that it charges fornational and international telephone services. Any changes by the IDA in these guidelinesor regulations could have a material adverse effect on SingTel’s financial performance andoperations.

6.5 COMPETITIVE ENVIRONMENT

As described in Section 3.4, the Singapore communications market is becomingincreasingly competitive. As a result, SingTel has lost market share in some key markets andprices of some of its products and services have fallen. These trends may continue due tointensifying competitive activity, new market entrants and regulation that requires SingTelto allow its competitors to have access to its networks.


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The operations of SingTel’s international businesses are also subject to highly competitivemarket conditions. There is a regional and global market for many of the services thatSingTel provides, particularly international communications and data services offered tobusiness customers. The quality of and rates for these services such as IDD, leased lines,ISDN, switched data, facilities management and other hubbing services, can affect apotential business customer’s decision to subscribe to SingTel’s services, locate or expand itsoffices or communications facilities in Singapore or to use Singapore as a transit hub for itscommunications. Prices for some of these services have shown significant declines in recentyears and are anticipated to continue to decline at similar rates as a result of capacityadditions and general price competition.

In addition, many of SingTel’s international investments operate in highly competitivemarket environments and are subject to similar risks.

6.6 RISKS ASSOCIATED WITH SINGTEL’S REGIONALEXPANSION STRATEGY

Given the limited size of the Singapore market, the future growth of SingTel depends on itsability to carry out its Asia Pacific expansion strategy. There are considerable risks associatedwith this regional expansion strategy.

(a) Ability to extract synergies and to integrate new investmentsIn making acquisitions, SingTel faces challenges from integrating newly acquiredbusinesses with its own operations, managing these businesses in markets where it haslimited experience and financing these acquisitions. There is no assurance that SingTelwill be able to generate synergies from regional acquisitions and that these acquisitionswill not become a drain on SingTel’s management and capital resources.

(b)Partnership relationsThe success of SingTel’s international investments depends, to a large extent, on itsrelationship with, and the strength of, its investment partners. There is no assurancethat SingTel will be able to maintain these relationships, nor that its investment partnerswill remain committed to their partnerships with SingTel.

(c) Ability to make further acquisitionsSingTel continuously looks for investment opportunities that could contribute to itsregional expansion strategy. There is no assurance that SingTel will be successful inmaking further acquisitions due to the limited availability of opportunities, competitionfor the available opportunities from other potential investors, foreign ownershiprestrictions, government policies, political considerations and the specific preferencesof sellers.

6.7 CHANGES IN TECHNOLOGY

The communications industry is undergoing rapid and significant technological changes.These changes may materially affect the capital expenditure and operating costs of SingTel,as well as the demand for its products and services.

SingTel has invested substantial capital and other resources in the development andmodernisation of its network and systems. Technological changes continue to reduce thecosts, and expand the capacities and functions, of new infrastructure capable of deliveringcompeting products and services, resulting in lower prices and more competitive andinnovative products and services. These changes may require SingTel to replace andupgrade its network infrastructure. As a result, SingTel may be required to incur significantadditional capital expenditure in order to maintain the latest technological standards andremain competitive against these newer products and services.

SingTel expects to make substantial investments in the rollout of 3G networks, productsand services in the Asia Pacific region in the near future. The potential long term revenuederived from 3G services is uncertain and may not be sufficient to cover the associatedcosts.




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6.8 PROJECT RISKS

The communications industry is highly capital intensive. SingTel incurs substantial capitalexpenditure in constructing and maintaining its network infrastructure projects. Theseprojects are subject to risks associated with construction, supply and installation of theapplicable network infrastructure. The projects are also subject to risks associated with saleof capacity on the completed project infrastructure including risks of default, disputes,litigation and arbitration involving contractors, suppliers, customers, and other third partiesinvolved in construction or operation of network infrastructure projects. In addition, SingTelfaces risks of loss of, or damage to, network infrastructure from natural and man-madecauses, which are outside the control of SingTel and its Board. Losses and damage causedby risks of this nature may significantly disrupt SingTel’s operations and may materiallyadversely affect the ability of SingTel to deliver its services to customers, notwithstandingthat SingTel may have taken out insurance policies with respect to some or all of theserisks. The current dispute regarding the C2C cable network described in Section 11.7(b)may result in C2C having to obtain additional financing.

6.9 PERCEIVED RISKS ASSOCIATED WITHELECTROMAGNETIC ENERGY

Concerns have been expressed relating to possible adverse health consequences associatedwith the operation of mobile communications devices due to potential exposure toelectromagnetic energy.

While there is no substantiated evidence of public health effects from exposure to the levelsof electromagnetic energy typically emitted from mobile communications devices, there isa risk that an actual or perceived health risk associated with mobile communicationsdevices could result in:

• litigation against SingTel and its Associated Companies;

• reduced demand for mobile communications services; and

• restrictions on the ability of SingTel and its Associated Companies to deploy theirmobile communications networks as a result of government environmental controlswhich exist or may be introduced to address this perceived risk.

6.10 CONTROL OF SINGTEL

(a) Control by a single majority shareholderTemasek currently owns approximately 78% of SingTel Shares. After the acquisition,depending on the relative acceptance levels by Optus Shareholders of the differentOffer Consideration alternatives, Temasek’s shareholding in SingTel could be reduced toas low as 65%. At that level of share ownership, Temasek is able to control the approvalof corporate matters that require an ordinary resolution of SingTel Shareholders,including the election of directors and the approval of dividends. Temasek may also beable to control the approval of corporate matters that require a shareholder’s specialresolution (requiring approval by shareholders representing 75% of the shares presentand voting at a general meeting), including amendments to SingTel’s Memorandum orArticles of Association and a reduction in SingTel’s share capital, share premium accountor capital redemption reserve fund, because even with a reduced shareholding of 65%,Temasek may practically be in a position to control these matters at most generalmeetings of SingTel Shareholders.

As described in Section 8.3(b), the Special Share, which is held by the SingaporeMinister for Finance (Incorporated), carries the right to approve or veto certainresolutions, including any variation of the rights of any shares in the capital of SingTelwhich has the effect of transferring the controlling interest in SingTel, the appointmentof directors, amendments to SingTel’s Memorandum or Articles of Association whichaffect the rights attached to the Special Share and any other matter that may affect thesecurity interests of Singapore.




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All rights attached to the Special Share will be surrended and the Special Share will beconverted into an ordinary SingTel Share with effect from the amendment of SingTel’sArticles of Association which is to be considered at the EGM (as described in Section8.3(b)(ii)). This surrender and conversion is not likely to affect significantly the abilityof Temasek to control SingTel.

Temasek also holds interests in certain companies which hold licences to operatetelecommunications services in Singapore and which compete with SingTel, includingStarHub and MobileOne.

(b)Change of controlThere is no assurance that there will not be a change of control of SingTel or entry ofanother major shareholder with the ability to exert significant influence on the strategicdirection or operations of SingTel, nor that SingTel’s business, financial position andperformance would not adversely be affected by such a change in control or influence.

6.11 CHANGES IN EXCHANGE RATES

Fluctuations of the S$ against the US$ and other currencies may adversely affect the resultsof operations and cash flows of SingTel, as well as the carrying value of SingTel’sinvestments in its Associated Companies and the dividends and other investment returnsfrom operation or sale of those Associated Companies.

From 1 July 1997 to 31 March 2001, the S$ depreciated by approximately 20.8% againstthe US$. To the extent any portion of SingTel’s capital expenditures are denominated inUS$ or other foreign currencies, a further depreciation of the S$ against the US$ or anotherapplicable foreign currency would increase SingTel’s capital costs over time. Competitors inthe Asia Pacific region with costs denominated in weaker currencies would be able to exertpricing pressure on SingTel. Corresponding risks apply in relation to the businesses ofSingTel’s international investments. To the extent that SingTel raises capital in foreigncurrencies to fund its growth and investments, it may be exposed to fluctuations inexchange rates in respect of its payments of principal and interest.

Exchange rate movements may affect the value and/or the price of, and income from,SingTel Shares and, where relevant, SingTel Bonds.

6.12 MARKET FOR AND LIQUIDITY OF SINGTEL SHARES

Historically, there has been limited liquidity of SingTel Shares.

SingTel Shares are currently listed only on the SGX-ST. Trading volumes on the SGX-SThave historically been significantly smaller than on major securities markets in the UnitedStates, Australia and certain other countries.

The average daily trading volume of SingTel Shares on the SGX-ST over the previous sixmonths is set out below.

PERCENTAGE OF PUBLIC FLOATAVERAGE DAILY TRADING SINGTEL SHARES

MONTH VOLUME (MILLION SHARES) AS AT 30 APRIL 2001

November 2000 5.48 0.16%December 2000 5.23 0.16%January 2001 6.38 0.19%February 2001 4.74 0.14%March 2001 27.23 0.81%April 2001 15.95 0.47%

New SingTel Shares to be listed on the ASX and the SGX-ST will be issued pursuant to theOffer, which may increase the liquidity of SingTel Shares. However, the number of SingTelShares to be issued is uncertain (as it depends on the relative acceptance levels of the threeOffer Consideration alternatives) and there is no assurance that there will be any changes inthe liquidity of SingTel Shares after the Offer.




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Another factor affecting the liquidity of SingTel Shares is Temasek’s controlling shareholdingof approximately 78%. That percentage holding will be reduced after the issue of SingTelShares pursuant to the Offer. The extent of the reduction depends on Optus Shareholderacceptances and the resultant number of new SingTel Shares issued pursuant to the Offer,but Temasek’s shareholding will not be reduced below 65%. SingTel’s public float of sharesthat can be freely traded is therefore currently 22% and will be between 22% and 35%after the Offer. If there is a larger public float after the Offer, then it is possible (but notcertain) that the liquidity of SingTel Shares will be greater than historical levels.

Temasek has agreed that it will not dispose of any of its SingTel Shares for a period of sixmonths after the close of the Offer (if C&W plc owns more than 3% of SingTel Shares) orfor a period of three months after the close of the Offer (if C&W plc owns more than 1%but less than or equal to 3% of SingTel Shares). If C&W plc owns 1% or less of SingTelShares, Temasek will not be restricted from disposing of its SingTel Shares.

In certain circumstances, CWAP may have a shareholding in SingTel of up to 6%, whichmay further affect the liquidity of SingTel Shares. SingTel has agreed to assist CWAP indisposing of any SingTel Shares it may receive if it accepts the Offer by participating inroadshows and assisting in the preparation of offer documentation for a bookbuild offeringof those SingTel Shares. If, after that bookbuild, CWAP owns less than 3% of SingTel Shares,it has agreed not to sell its SingTel Shares for three months. If, after that bookbuild, CWAPowns 3% or more of SingTel Shares, it has agreed not to sell its shares for six months.

SingTel has also agreed under the Pre-bid Agreement that, subject to certain exceptions,if at the close of the Offer, C&W plc could hold more than 1% of the issued capital ofSingTel, SingTel will not allot or issue any securities, including shares or options or anyother form of equity in its capital or any instrument which is convertible into equity from25 March 2001 until:

(a) six months after the close of the Offer, if C&W plc could hold more than 3% of theissued capital of SingTel under the terms of the Transaction; or

(b) three months after the close of the Offer, if C&W plc could hold more than 1% and notmore than 3% of the issued capital of SingTel under the terms of the Transaction.

To the extent that SingTel Shares are listed on the ASX after SingTel’s acquisition of Optus,their inclusion in the S&P/ASX 200 Index could have a material effect on the demand forand liquidity of, SingTel Shares, as certain institutional investors are more inclined to buyshares listed on the ASX if they are included in the S&P/ASX 200 Index. Whether SingTelwill be included in the S&P/ASX 200 Index (and at what weighting) are decisions for theAustralian Index Committee of the S&P/ASX 200 Index.

Accordingly, the market price of SingTel Shares after the acquisition of Optus may beadversely affected by the lack of liquidity on the SGX-ST or the ASX. There is no assurancethat particular SingTel Shareholders will be able to find buyers for SingTel Shares atfavourable prices or at prices which approximate fair market prices.

6.13 RISKS ASSOCIATED WITH THE SINGTEL BONDS

No application has been made for the listing of the SingTel Bonds on a stock market of asecurities exchange, either in Australia or elsewhere. However, SingTel may explore a listingof the SingTel Bonds as noted in Section 9.4(c). Neither SingTel nor SingTel Australiarepresents or implies that the SingTel Bonds will be rated or quoted and the Offer is notconditional on any such rating or quotation. Accordingly, the market price, if any, ofSingTel Bonds may be adversely affected by the lack of liquidity. There is no assurance thatholders of SingTel Bonds will be able to find buyers for SingTel Bonds at favourable pricesor at prices which approximate fair market prices.

SingTel has agreed to use reasonable endeavours to obtain a rating for the SingTel Bonds.There is no assurance as to the likely rating that the SingTel Bonds will be assigned. Therating which is assigned to the SingTel Bonds may affect the value of the SingTel Bonds.It is possible that any rating assigned to the SingTel Bonds could change as a result ofchanges to SingTel’s financial and operating conditions, such a change could affect thevalue of the SingTel Bonds.




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6.14 DIFFERENT SHAREHOLDER RIGHTS

SingTel is incorporated in Singapore and is subject to the provisions of Singapore law(including the Singapore Companies Act). The rights of shareholders under Singapore laware not the same in some respects as the rights of Optus Shareholders under legislation inAustralia.

Section 8.3 provides a summary of certain rights attaching to SingTel Shares underSingapore law.




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SECTION 7TAXATION

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7.1 AUSTRALIAN TAX IMPLICATIONS FOR OPTUSSHAREHOLDERS

The following is a general description of the Australian income and capital gains taxconsequences for Optus Shareholders upon the disposal of their shareholding to eitherSingTel under the Transfer Alternative or to Optus under the Buy-Back Alternative.

The following description is based upon the law in effect at the date of this Bidder’sStatement, but it is not intended to be an authoritative or complete statement of the lawapplicable to the particular circumstances of every Optus Shareholder. In particular, OptusShareholders should be aware that the levels and bases of taxation can change and thatwhere reference is made to tax relief, this is to tax relief as currently applying. It isrecommended that each shareholder seek independent professional advice in relation totheir own particular circumstances.

Any persons who may be subject to tax in any jurisdiction outside Australia should obtainindependent professional advice on their particular circumstances.

The description below is relevant to Optus Shareholders who hold their Optus Shares ascapital assets for the purposes of investment and who do not (and would not) hold thoseshares in connection with the conduct of a business or otherwise on revenue account. ThisSection 7.1 in particular does not address in detail the tax considerations applicable toOptus Shareholders that may be subject to special rules, such as banks, insurancecompanies, tax exempt organisations, superannuation funds, dealers in securities orshareholders who change their tax residence while holding Optus Shares.

You can dispose of your Optus Shares by choosing either:

• the Transfer Alternative, which involves selling your Optus Shares direct to SingTel; or• the Buy-Back Alternative which involves having your Optus Shares bought back by

Optus.

The tax implications of choosing the Transfer Alternative or the Buy-Back Alternative aredifferent, as examined below.

Under either alternative, you have the following three Offer Consideration alternatives(see Sections 2.1 and 9):

• the Share Alternative; or• the Share and Cash Alternative; or• the Share, Cash and Bond Alternative.

(a) Accepting the Transfer Alternative

General comments

The tax implications arising from a transfer of Optus Shares from you to SingTel willdepend on the circumstances in which the Optus Shares are held by you. Thecomments below consider the situation where you hold your Optus Shares as a capitalinvestment. It is recommended that where you hold your Optus Shares as trading stockor as part of an income generating arrangement, you should seek independentprofessional advice.

For CGT purposes, a “CGT event” will occur when you dispose of your Optus Shares toSingTel under the Transfer Alternative. This should take place on the date of acceptanceof the Offer. Any capital gain or loss from the CGT event will be worked out bycomparing the “Capital Proceeds” received with the CGT cost base of the Optus Shares.The Capital Proceeds received by you will be equal to the sum of the following:

• the A$ cash component of the Offer Consideration received (if any); and• the market value (in A$) on the day of acceptance of the Offer of the US$ Cash

Alternative, SingTel Shares, SingTel Bonds and/or Unsecured Notes received (if any).

The Capital Proceeds received by you in respect of an Unsecured Note under the Share,Cash and Bond Alternative will be A$1.48 (rather than the value of any cash, SingTelBonds or SingTel Shares which you receive on redemption of the Unsecured Note).

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After you work out the relevant capital gain or loss arising, the resulting tax implicationsdepend upon whether or not you are an Australian resident.

(i) Non-Australian residents

Capital gains or capital losses made by Optus Shareholders who are not residentsof Australia and who hold less than 10% of the issued Optus Shares (by value in thefive years prior to sale) will be disregarded. Non-resident shareholders holding morethan 10% of the issued Optus Shares will be subject to CGT. They will not beeligible for CGT rollover relief (as described below), but could benefit from doubletax treaty relief in some circumstances.

(ii) Australian residents

If you acquired your Optus Shares before 21 September 1999, the cost base ofthose shares may be indexed for inflation to 30 September 1999.

Alternatively, if you have held your Optus Shares for at least one year, you should beentitled to a CGT concession. For individuals or trusts, this CGT concession is a 50%discount, and for complying superannuation funds, the CGT concession is a 33%discount. No CGT concession is available for companies.

It is anticipated that the Australian Taxation Office will confirm, in a Class Ruling,that CGT rollover relief will be available for Optus Shareholders who choose theTransfer Alternative and either the Share Alternative or the Share and CashAlternative, provided SingTel reaches the 80% ownership threshold. This CGTrollover relief would apply to the SingTel Share component of the OfferConsideration and is commonly termed “scrip-for-scrip” CGT rollover relief.

The requirements for scrip-for-scrip CGT rollover relief are:

• an Optus Shareholder exchanges an Optus Share for a SingTel Share;• the exchange is in consequence of a “single arrangement” which results in

SingTel owning 80% or more of Optus and on the conditions that all OptusShareholders could participate in the arrangement on substantially the sameterms;

• the Optus Shares were acquired after 19 September 1985 (when CGT wasintroduced to Australia);

• CGT rollover relief will not apply if a capital loss eventuates; and• the Optus Shareholder chooses to obtain the scrip-for-scrip CGT rollover relief.

The consequences of CGT rollover relief are that:

• any capital gain made from accepting the Transfer Alternative is disregarded;• the Optus Shareholder’s CGT cost base in its Optus Shares is transferred into the

SingTel Shares received in exchange;• scrip-for-scrip CGT rollover relief is only available in respect of the SingTel Share

component (and not in respect of any cash component) of the OfferConsideration. This has two implications:– a capital gain or loss will still arise on the proportion of the Offer Consideration

that is not made up of SingTel Shares (that is, the cash component of the OfferConsideration); and

– the Optus Shareholder’s CGT cost base which is transferred to the replacementSingTel Shares is proportionately reduced by the amount of the cashcomponent (as it has already been “used up” in reducing the capital gain onthe cash component); and

• when CGT rollover relief is applied to the SingTel Shares, the date of acquisitionof these SingTel Shares in relation to the CGT discount factor, is the date ofacquisition of the original Optus Shares.

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It should be noted that CGT rollover relief will not be available for the Share, Cashand Bond Alternative, as your Optus Shares are not exchanged for SingTel Sharesbut rather for cash, SingTel Bonds and Unsecured Notes (although SingTel Sharesmay subsequently be issued upon redemption of the Unsecured Notes).

(iii) Table 1 – Examples of the CGT implications under the Transfer Alternative

The following examples will illustrate the CGT consequences for you if you choosethe Transfer Alternative.

The calculations in the following examples have been based on opening pricesfor Optus Shares and SingTel Shares and the S$/A$ exchange rate as at 8 May2001. It is recommended that each Optus Shareholder should review their ownposition taking into account the current prices and exchange rates and theirindividual circumstances.

Example 1 considers the position where you choose the Share Alternative.

Example 2 considers the position where you choose the Share and Cash Alternative.

An example based on the Share, Cash and Bond Alternative has not been provided.If this Offer Consideration alternative is chosen, the assumptions used to calculatethese examples would change in respect of the value of the Offer Consideration.

Example 1 – Assumptions used

It is assumed for the purposes of this example that you choose the Share Alternative,and that the Share Alternative is valued at A$2.95, based on opening prices forOptus Shares and SingTel Shares and the S$/A$ exchange rate as at 8 May 2001.Example 1 is based on the following assumptions.

Offer Consideration A$2.95CGT cost base (ignoring indexation) A$1.85(1)

Tax rate for Australian resident individuals 48.5%(2)

Tax rate for Australian resident superannuation funds 15%Tax rate for Australian resident companies 30%(3)

Dividend withholding tax rate – treaty country 15%Dividend withholding tax rate – non-treaty country 30%CGT concession for individuals holding Optus Shares for at least one year 50%CGT concession for superannuation funds holding Optus Shares for at least one year 33%(1) This was the buy-in price for retail investors when Optus was floated in 1998.(2) Includes Medicare levy of 1.5%.(3) 34% if the settlement date is within the taxpayer’s 2001 year of income.

CGT implications

No scrip-for-scrip CGT rollover relief is chosen

The following tables set out the Australian CGT implications for a range of OptusShareholders that do not choose to obtain scrip-for-scrip CGT rollover relief.

Individuals

AUSTRALIAN(50% CGT AUSTRALIAN

CONCESSION – NO CGT AVAILABLE) CONCESSION FOREIGN

A$ A$ A$

Total Offer Consideration 2.95 2.95 2.95Capital Gain 1.10 1.10 1.10CGT 0.27 0.53 –Net consideration retained 2.68 2.42 2.95

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Companies

FOREIGN-OWN FOREIGN-OWN AUSTRALIAN > 10% (1) OF <10% OF

RESIDENT OPTUS SHARES OPTUS SHARESA$ A$ A$


(1) It is assumed that no Treaty protection is available in these circumstances. As it is possible that Treatyprotection from Australian CGT could apply, shareholders in these circumstances should seek their owntax advice.

Superannuation Funds



A$ A$ A$


The capital gain will be disregarded for foreign Optus Shareholders holding lessthan 10% of issued Optus Shares. However, the capital gain will be included in theassessable income of Australian resident shareholders, subject to the availability ofany unrecouped capital losses carried forward and any applicable CGT concessions.

Scrip-for-scrip CGT rollover relief is chosen

In this situation, all of the capital gain of A$1.10 is disregarded as a result ofscrip-for-scrip CGT rollover relief. Also, the CGT cost base in your Optus Shares istransferred to your replacement SingTel Shares.

Example 2 – Assumptions used

It is assumed for the purposes of this example that you choose the Share and CashAlternative, and that the Share and Cash Alternative is valued at A$3.67, based onopening prices for Optus Shares and SingTel Shares and the S$/A$ exchange rate asat 8 May 2001. Example 2 is also based on the following assumptions.

Offer Consideration A$3.67CGT cost base (ignoring indexation) A$1.85(1)



Dividend withholding tax rate – treaty country 15%Dividend withholding tax rate – non-treaty country 30%CGT concession for individuals holding Optus Shares for at least one year 50%CGT concession for superannuation funds holding Optus Shares for at least one year 33%

(1) This was the buy-in price for retail investors when Optus was floated in 1998.(2) Includes Medicare levy of 1.5%.(3) 34% if the settlement date is within the taxpayer’s 2001 year of income.

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CGT implications

No scrip-for-scrip CGT rollover relief is chosen

The following tables set out the Australian CGT implications for a range of OptusShareholders that do not choose to obtain scrip-for-scrip CGT rollover relief.

Individuals



A$ A$ A$


Companies

FOREIGN-OWN FOREIGN-OWN AUSTRALIAN > 10% OF <10% OF

RESIDENT OPTUS SHARES OPTUS SHARESA$ A$ A$





A$ A$ A$


The capital gain will be disregarded for foreign Optus Shareholders holding less than10% of Optus Shares. However, the capital gain will be included in the assessableincome of Australian resident shareholders, subject to the benefit of any unrecoupedcapital losses carried forward and any applicable CGT concessions.

Scrip-for-scrip CGT rollover relief is chosen

Basically, the effect of scrip-for-scrip rollover relief is that any capital gain on theproportion of the Offer Consideration representing the SingTel Share component isdisregarded.

Your CGT cost base in each Optus Share must be apportioned to reflect a“non-SingTel Share proportion” and a “SingTel Share proportion”. The “non-SingTelShare proportion” is worked out as follows.

Non-SingTel Share component of Offer Consideration x Cost Base

Total Offer Consideration

Applying the assumed numbers above, the “non-SingTel Share proportion” (thecash component) of the CGT cost base is A$1.13, calculated as follows:

2.25 x 1.85 = A$1.13

3.67

The capital gain on the “non-SingTel Share” cash component of the OfferConsideration (that is ineligible for CGT rollover relief) is worked out as follows.

Non-SingTel Share Capital Proceeds – Non-SingTel Share CGT cost base

Accordingly, the capital gain to the Optus Shareholder is A$1.12 (A$2.25 – A$1.13).

The value of the SingTel Share in this example is A$1.42 (A$3.67 – A$2.25). Theremaining cost base of your Optus Share is A$0.72 (A$1.85 – A$1.13).

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The capital gain that is disregarded because of scrip-for-scrip CGT rollover relief isA$0.70 (A$1.42 – A$0.72). Further, the “SingTel Share proportion” of the original costbase in your Optus Shares (A$0.72) is transferred to the replacement SingTel Shares.This will be used in working out the CGT implications of a future disposal of SingTelShares.

The tax implications for various Australian resident Optus Shareholders are set outbelow. Please note that, as foreign shareholders are not entitled to CGT rollover relief,their tax outcomes are as above.

Individuals


CONCESSION – NO CGTAVAILABLE) CONCESSION

A$ A$

Total Offer Consideration 3.67 3.67Capital Gain on non-scrip component 1.12 1.12CGT 0.27 0.54Net consideration retained 3.40 3.13

Companies

AUSTRALIANRESIDENT

A$

Total Offer Consideration 3.67Capital Gain on non-scrip component 1.12CGT 0.33Net consideration retained 3.34



CONCESSION – NO CGTAVAILABLE) CONCESSION

A$ A$

Total Offer Consideration 3.67 3.67Capital Gain on non-scrip component 1.12 1.12CGT 0.11 0.17Net consideration retained 3.56 3.50

(b)Accepting the Buy-Back Alternative

General comments

If you choose the Buy-Back Alternative, SingTel Australia will act as your agent intransferring your Optus Shares to Optus and in receiving payment of the A$ Equivalentof your chosen Offer Consideration (less any Withholding Tax deducted by Optus).SingTel Australia will then allocate this payment on your behalf to acquire the applicableamounts of cash, SingTel Shares, SingTel Bonds and Unsecured Notes as provided inyour chosen Offer Consideration alternative.

The Buy-Back Consideration paid by Optus to you (irrespective of which OfferConsideration alternative you have chosen) will contain a “capital return” componentand an “unfranked dividend” component.

It is proposed to treat a portion of the Offer Consideration payable under the Buy-BackAlternative as a return of capital by Optus. That portion will be treated as the capitalreturn component of the Buy-Back Consideration, and the balance of the Buy-BackConsideration will be treated as an unfranked dividend. The portion of the Buy-BackConsideration to be treated as a return of capital by Optus will be the proportion that thenumber of Optus Shares bought back by Optus represents of Optus’ total issued shares.

Discussions with the Australian Taxation Office indicate, but do not confirm, that theproposed allocation between the capital return and unfranked dividend componentsshould generally be acceptable for Australian tax purposes, in which case the taxconsequences outlined below should result.

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Optus has requested an administratively binding advice from the Australian TaxationOffice to confirm that the proposed allocation between the capital return andunfranked dividend components is appropriate for withholding tax purposes.

Shareholders should however obtain and rely on their own professional advice. You maychoose to seek a private binding ruling from the Australian Taxation Office specific toyour own circumstances, but you should consult with your professional adviser beforedoing so.

(i) Unfranked dividend component

Australia has special tax rules setting out the tax implications that arise when acompany, in an “off-market” transaction, buys back shares in itself.

The Buy-Back by Optus will be regarded as an “off market” transaction as it is notmade in the ordinary course of stock exchange trading.

When the Buy-Back is carried out “off market”, Australian tax law deems the Buy-Back Consideration to include a dividend component, with the sale still beingsubject to CGT (with appropriate measures to ensure that no double taxationoccurs). In Optus’ case, this deemed dividend will be an unfranked dividend, so thatthere is no franking credit available in respect of the tax payable by you on thedividend component.

The dividend will be wholly taxable if you are an Australian resident. If you are anon-resident of Australia, the dividend will be subject to the relevant dividendWithholding Tax. The dividend Withholding Tax rate will depend on whether youare a resident in a country with which Australia has negotiated a double tax treaty(in which case dividend Withholding Tax is generally 15% of the total dividend), orin a country with which Australia has not negotiated a double tax treaty (in whichcase dividend Withholding Tax is generally 30% of the total dividend). AnyWithholding Tax will be deducted from your Buy-Back Consideration and will bepaid by Optus to the Australian Taxation Office on your behalf.

(ii) CGT implications

There are also CGT implications for Optus Shareholders who choose the Buy-BackAlternative and hold their Optus Shares as a capital investment. It is recommendedthat where you hold your Optus Shares as trading stock or part of an incomegenerating arrangement, you should seek independent professional advice.

The Australian CGT rules are structured so that they have a “catch-all” approach.However, to avoid double taxation from this “catch-all” approach, there arereconciliation provisions to reduce any calculated capital gains by any amountsotherwise assessable as a deemed dividend.

The CGT rules provide that a capital gain or loss will generally arise (ignoring anyavailable inflation indexation benefits) equal to the difference between the capitalproceeds (in this case the Buy-Back Consideration) and the shareholder’s CGT costbase in the Optus Shares bought back. Importantly, however, to avoid doubletaxation, the deemed dividend component of the Buy-Back Consideration issubtracted, reducing the amount of any capital proceeds (referred to above as thecapital return component). Capital gains or losses incurred are deemed to occur onthe date of the Buy-Back by Optus (that is, the Settlement Date).

The cost base for SingTel Shares, SingTel Bonds and US$ foreign currency isdiscussed in detail below.

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(iii) Table 2 – Examples of the CGT implications under the Buy-Back Alternative

These tax rules are complex, and best illustrated by an example.

The calculations in the following example have been based on opening pricesfor Optus Shares and SingTel Shares and the S$/A$ exchange rate as at 8 May2001. It is recommended that each Optus Shareholder should review their ownposition taking into account the current prices and exchange rates and theirindividual circumstances.

It is assumed for the purposes of this example that you choose the Share andCash Alternative.

Examples based on the Share Alternative or the Share, Cash and Bond Alternativehave not been provided. If these Offer Consideration alternatives were chosen, theassumptions used to calculate this example would change in respect of the Buy-BackConsideration and the unfranked dividend component (as explained above, this isthe difference between the Buy-Back Consideration and the share capital returned).

It is assumed for the purposes of this example that the Share and Cash Alternativeis valued at A$3.67, based on opening prices for Optus Shares, SingTel Shares andthe S$/A$ exchange rate as at 8 May 2001. This example is based on thefollowing assumptions.

Buy-Back Consideration A$3.67Share Capital Returned A$1.41Unfranked dividend component A$2.26(1)

CGT cost base (ignoring indexation) A$1.85(2)



Dividend withholding tax rate – treaty country 15%Dividend withholding tax rate – non-treaty country 30%

(1) Calculated by subtracting A$1.41 capital component from the Buy-Back Consideration of A$3.67.(2) This was the buy-in price for retail investors when Optus was floated in 1998.(3) Includes Medicare levy of 1.5%.(4) 34% if the settlement date is within the taxpayer’s 2001 year of income.

Individuals

FOREIGN-AUSTRALIAN TREATY FOREIGN-NO

RESIDENT COUNTRY TREATYA$ A$ A$

Buy-Back Consideration 3.67 3.67 3.67Taxable Dividend 2.26 2.26 2.26Tax on dividend 1.10 0.34 0.68CGT – – –Net consideration retained 2.57 3.33 2.99

Companies




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Superannuation funds




In the examples above the Optus Shareholder made a capital loss of A$0.44 perOptus Share. This capital loss is calculated as the amount by which the OptusShareholder’s CGT cost base of A$1.85 exceeds the capital proceeds component ofthe Buy-Back Consideration. The capital proceeds component is A$1.41, being theamount by which the total Buy-Back Consideration of A$3.67 exceeds the deemeddividend component of A$2.26.

(c) SingTel Shares

Where you are an Australian tax resident and accept the Offer you will become ashareholder in SingTel.

Taxation of SingTel dividends for Australian residents

Dividends paid to you by SingTel should be taxable in Australia. There should be noSingapore taxes creditable as a foreign tax credit against your Australian tax liability. It isexpected that no Singapore withholding tax will be imposed on the payment of adividend, as discussed in Section 7.2 – Singapore Taxation Considerations.

Where you are not a tax resident of Australia, there will generally be no Australian taxpayable on dividends you receive from SingTel.

Future disposal of SingTel Shares by Australian residents

The disposal of SingTel Shares will give rise to a capital gain or loss for AustralianCGT purposes.

If you accept the Offer and choose to obtain scrip-for-scrip CGT rollover relief(if available) in respect of the SingTel Shares acquired in exchange for your OptusShares you will acquire the cost base and history of the Optus Shares. The cost baseof the SingTel Shares will represent an apportionment of the original cost of theOptus Shares which is illustrated in the above example. The date of acquisition forCGT purposes (in particular the CGT concession) is the date of acquisition of theOptus Shares.

If you accept the Offer and do not choose to obtain scrip-for-scrip CGT rollover relief(or where it was not available), the date of acquisition is either the date of acceptanceof the Offer under the Transfer Alternative or the date of acceptance of the Buy-Back byOptus (that is, the Settlement Date) under the Buy-Back Alternative. The cost base ofany SingTel Shares should be the market value of those SingTel Shares on that day(which is used to calculate either your capital gain or Buy-Back Consideration).

The exception will be where an Optus Shareholder receives Unsecured Notes (uponacceptance of the Share, Cash and Bond Alternative). The date of acquisition of SingTelShares acquired upon redemption of the Unsecured Notes will be the redemption date.The CGT cost base of the SingTel Shares will be the portion of the Redemption Amountallocated to acquire the SingTel Shares.

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(d)SingTel Bonds

Taxation of interest received by Australian residents

Australian residents will be subject to Australian tax on interest received in respect of theSingTel Bonds. The treatment under Singapore tax law of interest on the SingTel Bondsis discussed in Section 7.2. If interest paid on the SingTel Bonds is exempt fromSingapore tax when it is received by a non-resident of Singapore and not subject to anySingapore withholding taxes, there will be no foreign tax credit available for offsetagainst your Australian tax liability.

Future redemption of SingTel Bonds by Australian residents

Australian residents should have a cost base in the SingTel Bonds equal to the BondIssue Price (or the portion of the Unsecured Note Redemption Amount allocated toacquire SingTel Bonds) at the relevant date of acquisition.

A capital gain or loss may arise to Australian resident holders of the SingTel Bonds onredemption of the SingTel Bonds, based on movements in the A$/US$ exchange rateand the redemption price.

It is not anticipated that the SingTel Bonds will be disposed of prior to redemption orwill be redeemed early. Holders who dispose of their SingTel Bonds prior to redemptionor have their SingTel Bonds redeemed early should seek independent professionaladvice in relation to their own particular circumstances.

(e) Foreign currency

Foreign currency is treated as an asset for Australian CGT purposes. Australian residentshareholders who choose to receive US$ as part of their Offer Consideration willtherefore hold a CGT asset. The cost base of the US$ should be the relevant A$ marketvalue of the US$ (or the portion of the Unsecured Note Redemption Amount allocatedto acquire US$) on the relevant date of acquisition. Therefore, disposal of the US$ at alater time will give rise to a capital gain or loss.

(f) Unsecured Notes

No income will be received on issue to you of any Unsecured Notes.

The Unsecured Notes will be issued in A$ and therefore no capital gain or loss equal toan exchange gain or loss should arise on redemption of the Unsecured Notes for theirface value of A$1.48.

The allocation of the A$ redemption proceeds to acquire SingTel Shares, SingTel Bondsor cash should establish the cost base of the SingTel Shares, SingTel Bonds or US$ forAustralian CGT purposes. SingTel Shares will be issued at A$2.74 each. SingTel Bondswill be issued at the Bond Issue Price. Any US$ cash will be acquired by OptusShareholders under the Announcement Exchange Rate of US$0.4940/A$1.

7.2 SINGAPORE TAXATION CONSIDERATIONS

The following is a general summary of certain Singapore income tax, stamp duty andestate duty consequences under present law of the purchase, ownership and disposal ofSingTel Shares, SingTel Bonds, and Unsecured Notes.

This summary is for general information only, and is not a comprehensive description of allthe tax considerations that may be relevant to a decision to purchase, own or dispose ofSingTel Shares, SingTel Bonds or Unsecured Notes. This summary should not be regardedas advice on the taxation position of any person and does not purport to deal with taxconsequences applicable to all categories of investors, some of which (such as dealers insecurities) may be subject to special rules. Optus Shareholders considering accepting theOffer should consult their own tax adviser concerning the tax consequences of theirparticular situations. In particular, Optus Shareholders should be aware that the levels andbases of taxation can change and that where reference is made to tax relief, this is to taxrelief as currently applying.

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Optus Shareholders who are not tax residents of Singapore are advised to consult their owntax advisers to take into account the tax laws of their respective countries of residence andthe existence of any double taxation agreement which their country of residence may havewith Singapore.

This summary is based on laws and their interpretation in effect as of the date of thisBidder’s Statement, all of which are subject to change, possibly with retroactive effect.

(a) SingTel Shares

(i) Income Tax

General

Singapore resident taxpayers, which broadly include individuals who are residing inSingapore and companies which are controlled or managed in Singapore, aresubject to Singapore income tax on:

• income that is accrued in or derived from Singapore; and• foreign income received or deemed to be received in Singapore.

The corporate tax rate in Singapore is 25.5% for the year of assessment 2001.The corporate tax rate has been reduced to 24.5% for the year of assessment 2002.The year of assessment 2002 relates to the calendar year ending 31 December 2001for individuals and for corporations, their financial year ending in 2001.

Non-resident corporate taxpayers are broadly also subject to Singapore income taxon the same income. Non-resident corporate taxpayers not located in Singaporeand with no permanent establishment in Singapore are not taxable on foreignsource income remitted to Singapore.

Non-resident individuals are (subject to certain exceptions) only subject toSingapore income tax on income accruing in or derived from Singapore.

Gain on disposal of shares

Singapore currently does not have a capital gains tax regime. However, capital gainsmay be construed to be income and subject to Singapore income tax if:

• they arise from activities properly regarded as the carrying on of a trade orbusiness in Singapore; or

• they are short term (that is, if the asset disposed of had been held for three yearsor less) investment gains from the sale of real property or shares in unlistedcompanies with substantial real property or real property related assets inSingapore.

Any profits from the disposal of SingTel Shares are not taxable in Singapore unlessthe seller is regarded as carrying on a trade in those shares in Singapore, in whichcase, the disposal profits would be taxable as trading income.

Dividend distributions

Singapore income tax paid by SingTel is imputed as a tax credit to SingTelShareholders in Singapore when they are paid a dividend. The tax credit isconsidered a prepayment of tax. It can be set off against any Singapore income taxliability on a SingTel Shareholder’s Singapore taxable income. SingTel Shareholdersresident in Singapore will be taxed on the gross amount of dividends, that is, thedividends received plus the tax credit. If the amount of Singapore tax payable by theSingTel Shareholder is less than the tax credit, the SingTel Shareholder will be entitledto a refund of the difference from the Inland Revenue Authority of Singapore.

A SingTel Shareholder who is not a tax resident of Singapore will be taxed at thesame income tax rate on which the credit is imputed. Consequently, non-residentSingTel Shareholders will not need to pay any further Singapore tax on thedividends received.

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Dividends declared out of the tax-exempt profits of SingTel will be exempt from taxin the hands of SingTel Shareholders who are Singapore tax residents. This wouldalso generally be the case for non-resident SingTel Shareholders. Both resident andnon-resident SingTel Shareholders should seek their own advice on the implicationsof receiving tax-exempt dividends.

Where SingTel receives foreign dividends in Singapore and is allowed tax creditrelief against the Singapore tax payable, it is able to pay the net foreign dividendsreceived to its SingTel Shareholders as tax-exempt dividends. The tax-exemptdividends are exempt from Singapore tax in the hands of both resident andnon-resident SingTel Shareholders. Non-resident SingTel Shareholders should,however, consult their own tax advisers in relation to how such dividends will betreated in their country of residence.

(ii) Stamp duty

No stamp duty is payable on the allotment or holding of SingTel Shares.

Stamp duty is payable on the instrument of transfer of SingTel Shares at the rate ofS$2.00 for every S$1,000 of consideration payable for the transfer of the shares.The purchaser is liable for the stamp duty unless otherwise agreed. Broadly, nostamp duty is payable if no instrument of transfer is executed or if the instrumentof transfer is executed outside Singapore.

Stamp duty is not applicable to electronic transfers of shares through CDP. SeeSection 8.7.

(iii) Estate duty

SingTel Shares held by an individual, are subject to Singapore estate duty upon suchindividual’s death, whether or not such individual is domiciled in Singapore.

(b)SingTel Bonds

(i) Interest payments

Ordinarily, any interest in connection with the SingTel Bonds derived by any personwould be subject to tax in Singapore.

Where any payment of interest (and this may include a discount arising on bondsissued and realised on maturity) which is chargeable to tax is made by a person inSingapore to a person not known to be a resident in Singapore for tax purposes,such payment would be subject to Singapore withholding tax (currently 24.5%).However, if the interest is derived by a person not resident in Singapore fromsources other than its trade, business, profession or vocation carried on or exercisedin Singapore and is not effectively connected with any permanent establishment ofthat person in Singapore, the withholding tax rate is 15%. The rate of 15% may bereduced by applicable tax treaties.

As the issue of the SingTel Bonds is lead-managed by Morgan Stanley Dean WitterAsia (Singapore) Pte, which is an Approved Bond Intermediary and SingTel Bondsare issued during the period from 10 May 1999 to 27 February 2003, SingTel Bondsare “qualifying debt securities”, subject to all conditions as prescribed under theSingapore Income Tax Act (Chapter 134) (the “ITA”) and the regulations having beenmet. Two of the conditions referred to in section 13(1)(a) of the ITA are as follows:

• the exemption from tax shall not apply to any interest derived by a permanentestablishment in Singapore; and

• SingTel includes in all offering documents a statement to the effect that whereinterest is derived from any qualifying debt securities issued during the periodfrom 27 February 1999 to 27 February 2003 by any person who is not residentin Singapore and who carries on any operation in Singapore through apermanent establishment in Singapore, the tax exemption shall not apply if suchperson acquires such securities using funds from Singapore operations. Fundsfrom Singapore operations means, in relation to a person, the funds and profitsof that person’s operations through a permanent establishment in Singapore.

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Accordingly (subject to the exceptions mentioned further below concerning SingTelBonds):

• interest on SingTel Bonds received by a holder who is not resident in Singaporeand who does not have any permanent establishment in Singapore is exemptfrom Singapore tax. It is hereby stated in compliance with the relevant conditionreferred to in section 13(1)(a) of the ITA that, where interest is derived fromSingTel Bonds by any person who is not resident in Singapore and who carrieson any operation in Singapore through a permanent establishment in Singapore,the tax exemption shall not apply if such person acquires such SingTel Bondsusing funds from Singapore operations; and

• subject to certain conditions having been fulfilled (including the submission bySingTel of a return on the debt securities to the Singapore Comptroller ofIncome Tax (“Comptroller”)) interest on SingTel Bonds received by anycompany in Singapore is subject to tax at a concessionary rate of 10%.

The following exceptions apply in respect of the tax exemptions and concessionsmentioned above.

• The SingTel Bonds will not qualify as “qualifying debt securities” if during theprimary launch of the SingTel Bonds, the SingTel Bonds are issued to less thanfour persons and 50% or more of the principal amount of such SingTel Bonds isbeneficially held or funded, directly or indirectly, by related parties of SingTel.

• Even though the SingTel Bonds are “qualifying debt securities”, if, at any timeduring the tenor of the SingTel Bonds, 50% or more of the principal amount ofthe SingTel Bonds is held beneficially or funded, directly or indirectly, by anyrelated parties of SingTel, interest derived from the SingTel Bonds held by anyrelated parties of SingTel, or any other person where the funds used by suchperson to acquire the SingTel Bonds are obtained, directly or indirectly, from anyrelated party of SingTel, shall not be eligible for the tax exemption or theconcessionary rate of tax of 10%.

A “related party” of SingTel for these purposes is a person who, directly or indirectly,controls SingTel, or is controlled, directly or indirectly, by SingTel, or a person who,directly or indirectly, is under the control of another person who also controlsSingTel.

As a general rule, interest paid to a person not known to be a resident of Singaporeis subject to Singapore withholding tax at the rates of tax specified above.

However, by virtue of section 45(9) of the ITA, interest paid on SingTel Bonds wouldnot be subject to withholding tax provided the following conditions are satisfied:

• SingTel includes in all offering documents a statement to the effect that anyperson whose interest derived from those securities is not exempt from tax shallinclude such interest in a return of income made under the ITA; and

• SingTel, or such other person as the Comptroller may direct, furnishes to theComptroller a return on the debt securities within such period as theComptroller may specify and such other particulars in connection with thosesecurities as the Comptroller may require.

Accordingly, it is hereby stated in compliance with the relevant condition referred toin section 45(9) of the ITA that any person whose interest derived from the SingTelBonds is not exempt from tax shall include such interest in a return of income madeunder the ITA.

The terms and conditions of the SingTel Bonds (set out in Annexure 3) includespecific provisions relating to the obligations of SingTel if it is required by law todeduct withholding tax from payments of interest under the SingTel Bonds.

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(ii) Trading Income

Income derived by financial institutions in Singapore from trading in the SingTelBonds during the period from 28 February 1998 to 27 February 2003 is subject toSingapore tax at a concessionary rate of 10%.

(iii) Capital gains

Any gains in the nature of capital made from the sale of the SingTel Bonds will notbe taxable in Singapore. However, any gains from the sale of the SingTel Bondsderived by a person as part of a trade or business carried on by that person may betaxable in Singapore as such gains are considered revenue in nature.

(c) Unsecured Notes

The Unsecured Notes will not be transferable. Accordingly, no issue arises as to taxationof any proceeds on transfer of the Unsecured Notes. The Unsecured Notes will beconverted into SingTel Shares, SingTel Bonds or cash, and no liability to Singaporeincome tax or stamp duty is expected to arise on such conversion.

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SECTION 8INFORMATION ON SINGTEL SHARES

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8.1 SHARE CAPITAL OF SINGTEL

SingTel’s authorised capital at the date of this Bidder’s Statement is S$5,000,000,000 divided into33,333,333,330 ordinary shares of par value S$0.15 each and one Special Share of par value S$0.50.

As at 30 April 2001, the issued capital of SingTel was S$2,311,974,619.40 divided into 15,413,164,126 fullypaid ordinary shares and one Special Share (see Section 8.3(b) for information regarding the Special Share).

It is proposed that the Special Share be converted into an ordinary share of par value S$0.15 (see Section8.3(b)(ii)). Upon the conversion taking effect, SingTel’s authorised capital will be S$4,999,999,999.65,divided into 33,333,333,331 ordinary shares of par value S$0.15 each.

8.2 RECOGNITION OF OTHER EXCHANGES

Following the issue of SingTel Shares pursuant to the Offer, SingTel Shares will be listed on the SGX-ST.Application will also be made to list SingTel Shares (other than the SingTel Shares held by Temasek) onthe ASX.

SingTel Shareholders will consider amendments to SingTel’s Articles of Association at the EGM which, ifapproved, will accommodate the ASX Listing Rules in addition to the SGX-ST Listing Manual. Where theASX Listing Rules impose obligations on SingTel which are more stringent than the SGX-ST ListingManual, SingTel will comply with the ASX Listing Rules provided that, in so doing, SingTel does notbreach or contravene the Singapore Companies Act or the SGX-ST Listing Manual.

The SingTel Board will also be given the power to make rules which are not in conflict with SingTel’sexisting Articles of Association or the Singapore Companies Act and which would not materially andadversely affect the rights of SingTel Shareholders, so as to allow holders of SingTel Shares acquiredthrough the ASX, as far as reasonably practicable, to have rights generally equivalent to the rights ofholders of SingTel Shares held through CDP.

Temasek has agreed to vote in favour of the necessary amendments to SingTel’s Articles of Association.

8.3 RIGHTS ATTACHING TO AND REGULATIONS AFFECTINGSINGTEL SHARES

This Section 8.3 sets out a general summary of certain rights attaching to SingTel Shares which derivefrom the Memorandum and Articles of Association of SingTel, the Singapore Companies Act and theSGX-ST Listing Manual.

SingTel Shareholders are to consider amendments to the Articles of Association of SingTel at the EGM,which are referred to in Section 8.2 and Section 8.3(b)(ii). Where the proposed amendments affect therights described in the summary below, reference is made to such proposed amendments.

The description which follows does not purport to be complete and is qualified by reference to each ofthe documents referred to in this Section 8.3.

(a) Classes of sharesSingTel may issue shares of different classes with such preferential, deferred, qualified or special rights,privileges or conditions as the SingTel Board may think fit, including redeemable preference shares.

If SingTel Shares are issued at a premium, a sum equal to the aggregate amount or value of thepremium will generally be transferred to a share premium account.

(b)The Special Share (i) Rights attached to the Special Share

SingTel’s Articles of Association provide for the allotment of a Special Share. The Special Share wasallotted on the incorporation of SingTel to the Singapore Minister for Finance (Incorporated) whoholds the Special Share as at the date of this Bidder’s Statement.

The holder of the Special Share has rights not held by other SingTel Shareholders, including therights set out in this Section.

No resolution on any of the following matters may currently be passed without the prior writtenapproval of the holder of the Special Share:

• any modification of SingTel’s Memorandum or Articles of Association which affects the rightsattached to the Special Share;

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• any issue of any shares ranking equally with, or in priority to, the Special Share;

• any variation of the rights of any SingTel Share which has the effect of transferring acontrolling interest in SingTel;

• the appointment, reappointment, termination or removal of any director (or alternatedirector);

• any disposal or any other matter which, in the opinion of the holder of the Special Share,affects the security interests of the Republic of Singapore;

• the winding up or dissolution of SingTel; and

• an issue of shares that would result in a person or a related group of persons (other thanTemasek) having, directly or indirectly, an interest in more than 15% of SingTel’s issued sharecapital for the time being.

A decision or opinion expressed by the holder of the Special Share is final, conclusive and bindingon all parties concerned and is not subject to judicial review.

(ii) Proposed conversion of Special ShareSingTel announced on 27 April 2001 that the holder of the Special Share had given written noticeto SingTel of the surrender of all rights attaching to the Special Share and the conversion of theSpecial Share into an ordinary SingTel Share. This surrender and conversion take effect from theamendment of SingTel’s Articles of Association in accordance with the resolutions to be consideredat the EGM.

(c) Issue of new sharesThe SingTel Board may only issue new SingTel Shares with the prior approval of SingTel Shareholders.SingTel Shareholders may confer on the SingTel Board a general authority to issue new SingTel Shares.The SGX-ST Listing Manual restricts the aggregate number of SingTel Shares which may be issuedunder such an authority to not more than 50% of the number of SingTel Shares on issue for the timebeing, of which the aggregate number of SingTel Shares to be issued other than on a pro rata basis toSingTel’s Shareholders may not exceed 20% of the number of SingTel Shares on issue for the timebeing.

On 25 September 2000, SingTel’s Shareholders gave the SingTel Board a general authority to issueshares up to the maximum permitted by the SGX-ST Listing Manual. The authority will lapse on theearlier of the conclusion of the next annual general meeting or 30 August 2001 (being the date bywhich the next annual general meeting is required by the Singapore Companies Act to be held).

The SingTel Board may issue new shares with such rights and restrictions as they may determine,provided that:

• the issue is consistent with the SGX-ST Listing Manual (considered above), the SingaporeCompanies Act and the rights attaching to existing shares;

• unless with the prior approval of the holder of the Special Share, no shares are issued to anyperson or related group of persons (other than to Temasek) if, in the opinion of the SingTel Board,the issue would result in such persons having, directly or indirectly, an interest in more than 15%of SingTel’s issued shares. (The rights attaching to the Special Share will be extinguished followingthe approval of the resolutions to be considered at the EGM (see Section 8.3(b)(ii)), and thediscretion to approve such an issue will be conferred on the SingTel Board);

• no shares are to be issued which will result in the transfer of a controlling interest in SingTelwithout prior approval of SingTel Shareholders in general meeting;

• no shares may be issued at a discount except in accordance with the Singapore Companies Act; and

• unless with the approval of SingTel Shareholders, any issue of shares for cash to holders of sharesof any class shall be offered pro rata to them in accordance with their shareholding.

(d)Bonus and rights issuesThe SingTel Board may, with the approval of SingTel Shareholders, capitalise any reserves or profitsand distribute them as fully paid bonus shares to SingTel Shareholders pro rata in accordance withtheir shareholding. The SingTel Board may, with the approval of SingTel Shareholders, also issue rightsto take up additional shares to SingTel Shareholders in proportion to their shareholdings. See Section8.3(c) above on the existing general authority conferred on the SingTel Board to issue new shares.


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(e) Variation of rightsThe rights attached to any class of SingTel shares may be varied or abrogated with the writtenconsent of the holders of three quarters in nominal value of the issued shares of that class or thesanction of a special resolution passed at a separate meeting of the holders of the shares of that class(attended by at least two persons or their proxies holding or representing at least one third innominal value of the issued shares of that class). Where the necessary majority is not obtained at ameeting, the resolution may be passed within a further two months by the written consent of at leastthree quarters in nominal value of the issued shares in the relevant class.

(f) Register of membersOnly persons who are registered in SingTel’s register of members (other than CDP) or persons namedas depositors in the depository register maintained by CDP and who have SingTel Shares enteredagainst their names in the depository register, are recognised as SingTel Shareholders. Amendments toSingTel’s Articles of Association are to be considered at the EGM which will allow the SingTel Board tomake rules allowing for persons who hold SingTel Shares in the form of CDIs on ASX to be recognisedas having rights equivalent, as much as practicable, to those of holders of SingTel Shares throughCDP.

SingTel does not, except as required by law, recognise any equitable, contingent, future or partialinterest in any share, or any interest in any fractional part of a share, or (subject to limited exceptions)other rights in respect of any share other than the absolute right of the person (other than CDP)whose name is entered in the register of members as the registered holder, or the person whosename is entered in the depository register maintained by CDP, in respect of that share.

SingTel may close the register of members at any time provided that the register of members shall notbe closed for more than 30 days in any year. SingTel is required to give the Singapore Registrar ofCompanies at least 14 days’ notice and the SGX-ST at least 10 clear Market Days’ notice of any suchclosure.

(g)Transfer of SingTel SharesThere are no restrictions on the transfer of SingTel Shares except where required by law or SingTel’sArticles of Association. Restrictions may apply where shares are not fully paid. The procedure fortransfer of SingTel Shares is set out in SingTel’s Articles of Association.

The SingTel Board may decline to register any transfer of shares if it would result in any person orrelated group of persons (other than Temasek or a person approved by the holder of the Special Shareor, following the surrender of the rights attaching to the Special Share, a person approved by theSingTel Board) having an interest in more than 15% of SingTel’s issued share capital. The SingTelBoard may serve a notice requiring any SingTel Shareholder to dispose of any interest which exceeds15% of SingTel’s issued share capital.

The right of the holder of the Special Share to approve transfers of more than 15% of SingTel’s issuedshare capital will be removed if the proposed amendments to SingTel’s Articles of Association areapproved at the EGM.

A description of the transfer arrangements for SingTel Shares traded on the ASX or the SGX-ST is setout in Section 8.7.

(h)Repurchase of SingTel SharesSingTel may purchase its own shares in accordance with its Articles of Association and the SingaporeCompanies Act. SingTel must obtain shareholder approval to purchase or otherwise acquire its ownshares.

On 25 September 2000, SingTel Shareholders renewed a general shareholders’ mandate authorisingthe SingTel Board to purchase or otherwise acquire SingTel Shares on the terms set out in themandate. The mandate will expire (unless revoked earlier) on the date of SingTel’s next annualgeneral meeting, expected to be in August 2001 or the date on which SingTel’s next annual generalmeeting is required by law to be held, whichever is earlier.

The total number of SingTel Shares which may be purchased or acquired pursuant to the mandate islimited to that number of SingTel Shares representing 5% of the issued ordinary SingTel share capitalas at the date of the general meeting (being 25 September 2000).

Purchases or acquisitions of SingTel Shares may be made on-market and/or off-market. In the case ofoff-market acquisitions, an offer must be made to all SingTel Shareholders in accordance with an


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equal access scheme prescribed by the Singapore Companies Act. The mandate limits the maximumprice that SingTel may pay to purchase or acquire SingTel Shares.

Any SingTel Share purchased or acquired by SingTel is deemed cancelled immediately on purchase oracquisition. All rights and privileges attached to that SingTel Share expire on cancellation.

Except in certain circumstances permitted by the Singapore Companies Act, SingTel may not providefinancial assistance for the acquisition or proposed acquisition of SingTel Shares.

Pursuant to the current mandate, SingTel has acquired 11,116,000 SingTel Shares by way ofon-market purchases transacted on the SGX-ST. The following table sets out details of the SingTelShares acquired by SingTel between 1 January 2001 and 30 April 2001.

TOTAL NUMBER OF HIGHEST PRICE LOWEST PRICE TOTALDATE OF SINGTEL SHARES PER SINGTEL PER SINGTEL CONSIDERATIONTRANSACTION ACQUIRED SHARE (S$) SHARE (S$) (S$)

8 January 2001 1,300,000 2.57 2.57 3,343,855.9826 March 2001 8,816,000 2.18 2.15 19,139,427.6627 March 2001 1,000,000 2.09 2.09 2,091,717.53

11,116,000 2.57 2.09 24,575,001.17

(i) The SingTel BoardThe SingTel Board is responsible for the overall management of SingTel.

SingTel’s Articles of Association set the minimum number of directors at two. SingTel currently has11 directors.

A number of directors retire at each annual general meeting of shareholders and are eligible forre-election. The number of directors retiring and eligible to stand for re-election each year varies, butgenerally it is equal to one third of the number of directors in office, with the directors who havebeen in office longest since their re-election or appointment standing for election, except that themanaging director (being the President and Chief Executive Officer) is not subject to retirement byrotation.

If the proposed alterations to SingTel’s Articles of Association to comply with the ASX Listing Rules areapproved at the EGM, directors (other than the President and Chief Executive Officer) must retire ifthey would be in office for more than three years at the next annual general meeting and the numberof managing directors who may be excluded from retirement by rotation is restricted to one (beingthe President and Chief Executive Officer).

SingTel’s Articles of Association permit a director to appoint an alternate director to act in place ofsuch director should the director be unable to perform his or her duties as a director for a period oftime.

(j) Officers’ and auditors’ indemnitySingTel’s Articles of Association provide that, subject to and so far as may be permitted by theSingapore Companies Act, the directors, officers and auditors shall be entitled to be indemnified bySingTel against any liability incurred in the execution and discharge of his or her duties or indefending any proceedings, whether civil or criminal:

• which relate to anything done or omitted to have been done as an officer or employee of SingTel;and

• in which judgment is given in his or her favour or in which he or she is acquitted or in connectionwith any application under any statute for relief in respect thereof in which relief is granted to himor her by the court.

SingTel may not indemnify its directors, officers and auditors against any liability which by law wouldotherwise attach to them in respect of any negligence, default, breach of duty or breach of trust ofwhich they may be guilty in relation to SingTel.

(k) SingTel Shareholder meetingsSingTel must hold an annual general meeting every year within 15 months after the date of theprevious annual general meeting, and within five months after the end of its financial year. SingTel isrequired to lay its audited accounts for adoption by SingTel Shareholders at its annual generalmeeting.


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The directors may convene an extraordinary general meeting whenever they think fit, and must do soif a written request to call a meeting is made by SingTel Shareholders representing not less than 10%of the total voting rights. In addition, two or more SingTel Shareholders holding not less than 10% ofSingTel’s issued share capital may call a general meeting.

Voting at SingTel’s general meetings is generally by ordinary resolution, requiring the approval of asimple majority of the votes cast at the meeting. However, a special resolution, requiring the approvalof at least 75% of the votes cast at the meeting, is required for certain matters, including (but notlimited to) the following:

• voluntary winding up;

• amendments to SingTel’s Memorandum of Association and Articles of Association;

• a change of corporate name; and

• a reduction in share capital, share premium account or capital redemption reserve fund.

SingTel must give at least 21 days’ notice in writing for every general meeting convened for thepurpose of passing a special resolution. Ordinary resolutions generally require at least 14 days’ noticein writing. The notice must be given to every SingTel Shareholder who has supplied SingTel with anaddress in Singapore for the giving of notices. Amendments are to be made to SingTel’s Articles ofAssociation (if approved at the EGM) that require notices of general meetings to be given to ASX.

(l) Voting rightsA SingTel Shareholder is entitled to attend, speak and vote at any general meeting, in person or byproxy. Proxies need not be a SingTel Shareholder. A SingTel Shareholder may appoint not more thantwo proxies to attend and vote at the same general meeting except that this restriction does notapply to CPF, and, if the amendments to be made to the Articles of Association are approved at theEGM, will not apply to CDN.

A person who holds SingTel Shares through the SGX-ST book-entry settlement system will only beentitled to vote at a general meeting as a SingTel Shareholder if his name appears in the depositoryregister maintained by CDP 48 hours before the general meeting.

Except as otherwise required by SingTel’s Articles of Association or by law, two or more SingTelShareholders must be present in person or by proxy to constitute a quorum at any general meeting.Under SingTel’s Articles of Association:

• on a show of hands, every SingTel Shareholder present in person or by proxy has one vote; and

• on a poll, every SingTel Shareholder present in person or by proxy has one vote for each SingTelShare which he or she holds or represents.

A poll may be demanded in certain circumstances, including:

• by the chairman of the meeting; or

• by any two SingTel Shareholders present in person or by proxy and entitled to vote; or

• by any SingTel Shareholder present in person or by proxy and representing not less than 10% ofthe total voting rights of all SingTel Shareholders having the right to vote at the meeting; or

• by any SingTel Shareholder present in person or by proxy and holding shares conferring a right tovote at the meeting, being shares on which an aggregate sum has been paid up equal to not lessthan one-tenth of the total sum paid on all shares conferring that right.

However, no poll may be demanded on the question of the choice of a chairman or on a question ofthe adjournment of the meeting. In the case of a tied vote, whether on a show of hands or a poll, thechairman of the meeting shall be entitled to a casting vote.

To facilitate the listing of SingTel Shares on the ASX and the holding of SingTel Shares through CDN,it is proposed that SingTel’s Articles of Association be amended at the EGM to provide a mechanismto allow holders of SingTel CDIs through CDN or their nominees to be appointed as proxies of CDNin respect of their CDIs as shown in their CDN accounts as at a time not earlier than 48 hours beforethe time of the general meeting. In respect of each CDI holder’s SingTel Shares, that CDI holder willbe able to appoint himself or herself as the first-named proxy and another person in his or her place,as the proxy of CDN in respect of those shares. CDN will be entitled under these arrangements toappoint any number of proxies. This will enable CDI holders to attend, speak and vote (both on ashow of hands and on a poll) as proxies of CDN at any SingTel general meeting.


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(m)DividendsSingTel may, by ordinary resolution at a general meeting of SingTel Shareholders, declare dividends,but no dividend may exceed the amount recommended by the SingTel Board. The SingTel Board maypay interim dividends without approval from SingTel Shareholders.

Dividends may only be paid out of profits. However, it is provided in the Singapore Companies Actthat SingTel may capitalise its share premium account and apply it to pay dividends, if such dividendsare satisfied by the issue of shares to SingTel Shareholders.

Dividends are payable pro rata in proportion to the amount paid-up on each SingTel Share, unless therights attaching to any SingTel Share provide otherwise.

Pursuant to the listing of SingTel Shares on the ASX and the holding of SingTel Shares through CDN,it has been proposed that SingTel’s Articles of Association be amended at the EGM to deal withpayment of dividends in currencies other than S$.

(n)Substantial shareholdingsUnder the Singapore Companies Act, a person has a substantial shareholding in SingTel if he or shehas an interest (or interests) in one or more SingTel Shares and the nominal amount of that share (orthe aggregate of the nominal amounts of those shares) is not less than 5% of the aggregate of thenominal amount of all issued SingTel Shares. (An “interest” is a similar but not identical concept to“relevant interest” under the Corporations Law.)

A person having a substantial shareholding in SingTel is required to make certain disclosures toSingTel under the Singapore Companies Act, including the particulars of his or her interests and thecircumstances by which he or she has such interests. Legislation is proposed, which, if passed, wouldrequire disclosure, as a matter of statutory duty, of these matters by substantial shareholders to theSGX-ST.

(o) TakeoversThe Singapore Companies Act and the Singapore Code on Takeovers and Mergers regulate theacquisition of ordinary shares of public companies and contain certain provisions that may delay,deter or prevent a future takeover or change in control of SingTel.

Any person acquiring an interest, either alone or together in concert with other parties (as defined inthe Singapore Code on Takeovers and Mergers), in 25% or more of the voting shares in SingTel mustextend a takeover offer for the remaining voting shares in accordance with the provisions of theSingapore Code on Takeovers and Mergers.

An offer for consideration other than cash must be accompanied by a cash alternative at not less thanthe highest price paid by the offeror or parties acting in concert with the offeror within the preceding12 months. A person is also required to make a takeover offer if the person holds, either alone ortogether with parties acting in concert, between 25% and 50% of the voting shares and acquiresadditional voting shares representing more than 3% of the voting shares in any 12 month period.

(p)Liquidation or other return of capitalOn a liquidation or other return of capital, SingTel Shareholders are entitled to participate in anysurplus assets in proportion to their shareholdings, subject to any special rights attaching to any otherclass of shares.

(q)Minority rightsSection 216 of the Singapore Companies Act protects the rights of minority shareholders ofSingapore-incorporated companies by giving the Singapore courts a general power to make anyorder, upon application by any SingTel Shareholder if:

• SingTel’s affairs are being conducted or the powers of the SingTel Board are being exercised in amanner oppressive to, or in disregard of the interests of, one or more SingTel Shareholders; or

• SingTel takes an action or threatens to take an action, or SingTel Shareholders pass or propose topass a resolution which unfairly discriminates against, or is otherwise prejudicial to, one or moreSingTel Shareholders.

Singapore courts have wide discretion as to the relief they may grant to remedy such oppressive orunfairly discriminatory conduct.


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(r) Reporting requirementsUnder the SGX-ST Listing Manual, SingTel is required, as soon as reasonably practicable, to discloseto the SGX-ST for public release factual information of a material nature relating to SingTel or itssubsidiaries which is necessary to avoid the establishment of a false market in SingTel Shares or whichmight reasonably be expected to affect market activity and the price of its securities or which isnecessary for appraisal of the position of SingTel and its subsidiaries by the SGX-ST, holders of SingTelsecurities and the public.

SingTel is required to make immediate announcements on certain matters specified in the SGX-STListing Manual to the SGX-ST. These matters include amendments to SingTel’s Memorandum andArticles of Association, appointments and resignations of its directors and officers, notices and resultsof general meetings, receipt of substantial shareholder notices, certain proposed acquisitions anddisposals and the declaration of dividends.

SingTel is required to release to the SGX-ST half-yearly consolidated financial statements and annualfinancial statements as soon as available and in any event not later than three months after the expiryof the relevant half-year or financial year. SingTel has commenced a practice of also issuing quarterlyfinancial statements.

SingTel is required to issue an annual report to its members and the SGX-ST, and to lay its auditedaccounts within five months after the end of its financial year for adoption by SingTel Shareholders atits annual general meeting.

If SingTel becomes listed on ASX, it will be a disclosing entity under Australian company law and willbecome subject to Australian continuous disclosure requirements under the Corporations Law and theASX Listing Rules.

(s) Interested person transactionsSingTel, its subsidiaries and target associated companies (as defined in the SGX-ST Listing Manual) arerestricted in certain circumstances from entering into transactions with interested persons withoutmaking an announcement to SGX-ST or obtaining shareholder approval or both. Broadly, interestedpersons include the Chief Executive Officer, SingTel directors, substantial SingTel Shareholders andtheir associates (as defined in the SGX-ST Listing Manual).

Shareholders’ approval and/or an immediate announcement is required in respect of interestedperson transactions if the value of the transaction is equal to or exceeds certain financial thresholds.In particular, shareholders’ approval is required where:

(i) the value of such transaction (a “Threshold 2 transaction”) is:

(A) equal to or above 3% of SingTel’s latest audited consolidated net tangible assets; and

(B) below Threshold 2 (as defined below),

and such amount, when aggregated with the values of all other Threshold 2 transactionspreviously entered into with the same interested person in the current financial year, is equal to, orexceeds, Threshold 2; or

(ii) the value of such transaction is equal to or exceeds Threshold 2.

Threshold 2, for these purposes, is an amount equal to 5% of SingTel’s latest audited consolidated nettangible assets.

SingTel Shareholders may authorise SingTel, its subsidiaries and target associated companies to enterinto transactions with interested parties which are of a revenue or trading nature or those necessaryfor its day-to-day operations. The authorisation may not extend to the acquisition or sale of assets,undertakings or businesses.

SingTel Shareholders have issued SingTel, its subsidiaries and target associated companies with amandate (which is subject to annual renewal) to enter into a broad range of transactions related tothe business of SingTel, its subsidiaries and target associated companies, with each of Temasek,SingTel directors, SingTel’s Chief Executive Officer, substantial shareholders (other than Temasek) andtheir respective associates on arm’s length, commercial terms.

Following the listing of SingTel Shares on the ASX, SingTel will also be subject to the ASX ListingRules’ restrictions on transactions with persons in a position of influence.


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8.4 TEMASEK’S ROLE AS MAJORITY SHAREHOLDER

SingTel’s majority shareholder is Temasek, a Singapore-incorporated company that is wholly-owned bythe Singapore Government. At present, Temasek holds about 78% of the SingTel Shares. If the Offerproceeds, Temasek’s shareholding may be reduced to as low as 65% depending on the relative levels ofacceptance by Optus Shareholders of the Offer Consideration available to them under the Offer.

Before Temasek was established, the Singapore Government directly owned a number of companiesinvolved in major industrial and infrastructure projects. The origins of these companies can be tracedback to the early 1960s, when the Singapore Government embarked on an industrialisation drive andtook a pro-active entrepreneurial role by acquiring interests in a wide range of companies in themanufacturing, financial, trading, transportation, shipbuilding and services sectors. Many of these earlycompanies were joint ventures with foreign investors which assisted in the transfer of technology. Somewere of strategic and national importance.

The Singapore Government’s stakes in these companies were originally held directly by the Minister forFinance (Incorporated). In 1974, Temasek was incorporated to hold and manage all these investmentsand to provide focus and direction to the companies. Today, Temasek’s sole shareholder is the Ministerfor Finance (Incorporated).

Temasek has privatised many of these companies to subject them to market discipline. The privatisationsalso helped to broaden and deepen Singapore’s stock market. More importantly, Singaporeans were thusgiven opportunities to own a part of these national assets.

Temasek has hundreds of subsidiaries and other associates including DBS Group Holdings, KeppelCorporation, Neptune Orient Lines, PSA Corporation, SembCorp Industries, Singapore Airlines, SMRTCorporation, Singapore Power, Singapore Technologies and SingTel. Often an entity in which Temasekholds an interest has a large number of subsidiaries and other associates below it.

As a major shareholder, Temasek monitors the performance of its companies at the strategic level, andhelps them aspire to become world-class players through a framework of good corporate governancepractices. However, Temasek does not interfere in the day-to-day operations of its companies. Thecompanies are run on a commercial basis like any other private company. Temasek’s guiding philosophyis to put the right people in charge, make sure that the decision-making process is transparent, and thenlet them carry on with the business.

8.5 SINGTEL EMPLOYEE INCENTIVE PLANS

SingTel has two employee share option schemes – the Singapore Telecom Executives’ Share OptionScheme (the “1994 Scheme”) and the Singapore Telecom Share Option Scheme 1999 (the “1999Scheme”). This Section 8.5 focuses on the 1999 Scheme as no further options may be granted under the1994 Scheme.

SingTel has granted options to subscribe for new SingTel Shares under both the 1994 Scheme and the1999 Scheme. Each option entitles the holder to subscribe for one SingTel Share. As of 30 April 2001, thefollowing options were outstanding:

NUMBER OF NUMBER OF OPTIONS EXERCISE PERIODS EXERCISE PRICES HOLDERS

1994 Scheme 7,596,231 31 July 1997 to S$2.05 to S$3.15 75317 June 2003

1999 Scheme 46,132,500 10 November 2000 S$2.26 to S$3.03 1,637to 19 February 2011

Non-executive directors and executives of SingTel may participate in the 1999 Scheme. Options may begranted to participants in the 1999 Scheme based on their rank, past performance, years of service,potential for future development and in respect of non-executive directors, their contributions to thesuccess and development of SingTel and its subsidiaries. Options are granted for nominal consideration.

The number of options which may be granted under the 1999 Scheme is limited to that number ofoptions which, when aggregated with all SingTel Shares issued or which would be issued assuming theexercise of all outstanding options under the 1999 Scheme, would not exceed 5% of SingTel’s issuedshare capital.

Options may not be transferred (other than to personal representatives on death), charged, assigned,pledged or otherwise disposed of, without the approval of the Compensation Committee.


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Options may be granted under the 1999 Scheme with an exercise price equal to, or at a discount of upto 20% of, the average of the closing SingTel Share prices on the SGX-ST over the five consecutivetrading days preceding the grant of the option (the “Market Price”).

Options with an exercise price equal to the Market Price may be exercised after the first anniversary butbefore the tenth anniversary (in the case of a person who is an employee at the date of grant of theoption) or the fifth anniversary (in respect of all other optionholders) of the grant of the option. Optionswith an exercise price at a discount to the Market Price may be exercised after the second anniversary butbefore the tenth anniversary (in the case of a person who is an employee at the date of grant of theoption) or the fifth anniversary (in respect of all other optionholders) of the grant of the option.

An option lapses immediately if not exercised by the end of the exercise period or if the holder becomesbankrupt, disposes of the option, engages in misconduct or (unless otherwise determined by theCompensation Committee administering the scheme) ceases to be an employee or a non-executivedirector.

Except where optionholders are properly compensated, options may be exercised early in the event of atakeover offer for SingTel Shares, the approval of a scheme for the reconstruction of SingTel or itsamalgamation with another company or a winding up resolution is passed.

8.6 SUBSTANTIAL SHAREHOLDERS OF SINGTEL

As at 30 April 2001, SingTel has been notified of the following persons who, directly or indirectly, areinterested in 5% or more of the issued SingTel Shares.

NUMBER OF SINGTEL SHARES% OF ISSUED SHARE

NAME DIRECT INTEREST DEEMED INTEREST CAPITAL OF SINGTEL

Temasek Holdings (Private) Limited 12,034,480,466 29,088,009 78.27

As at 30 April 2001, the range of shareholdings of SingTel is as set out below.

NO OF % OF NO. OF % OF ISSUED RANGE OF SHAREHOLDINGS SHAREHOLDERS SHAREHOLDERS SHARES SHARE CAPITAL

1-1,000 326,314 88.88 74,193,913 0.481,001-10,000 35,649 9.71 119,812,811 0.7810,001-1,000,000 5,132 1.40 152,560,151 0.991,000,001 and above 33 0.01 15,066,597,252 97.75Totals 367,128 100.00 15,413,164,127 100.00

8.7 TRADING ARRANGEMENTS FOR SINGTEL SHARES

The SingTel Shares which will be issued as a result of acceptances of the Offer (and any other SingTelShares which are listed by the ASX and are to be traded on the ASX’s stock market) will be issued in theform of CDIs. CHESS is the ASX’s electronic transfer system and allows for the transfer and settlement oftransactions in securities quoted on the ASX to be effected electronically. This means that, in the case ofAustralian companies, no share certificates need be issued and no transfer forms need be executed.

In the case of companies like SingTel whose governing legislation does not allow direct use of CHESS,CDIs have been created which will enable SingTel Shares to be transferred and settled electronically usingCHESS. This is similar to CDP’s computerised book-entry (scripless) settlement system in relation totransactions in shares traded on the SGX-ST. The system is not directly compatible with CHESS; however,trading is enabled with the use of CDIs.

Unlike a shareholding in certificated form, CDIs are units of beneficial interests in securities where thelegal title is held by an Australian depository entity. That entity in the present case will be CDN, awholly-owned subsidiary of the ASX. CDN will be entered in the records of CDP as the holder of theSingTel Shares issued pursuant to acceptances of the Offer and will hold on behalf of, and for the benefitof, the relevant CDI holder. CDN will be recognised under Singapore law as the holder of such SingTelShares (notwithstanding that the entry on the register of SingTel is in the name of CDP).

CDIs provide holders with the following benefits:

• there is no need for share certificates (or for production on sale or for their safe custody);

• holders are able to transfer and settle their share transactions electronically;


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• settlement cash flows are more predictable and settlement risks are reduced as a result of theregulation of electronic transfers; and

• holders receive holding statements just like a bank statement.

The holding statement will set out the number of SingTel CDIs issued to (or subsequently transferred toor by) each holder. The holding statement will also advise the holder of the holder reference number oftheir holding. A holding statement will be provided to holders on a periodic basis if there is a change intheir holding of SingTel CDIs.

A summary of the rights and entitlements of CDI holders is set out below. Further information about CDIsis available from Computershare Investor Services Pty Limited (SingTel’s Australian share registry) or anystockbroker.

(a) Number of CDIs issued in relation to SingTel SharesAccepting Optus Shareholders will be issued with one CDI for every SingTel Share to which theybecome entitled.

(b)Converting from a CDI holding to a CDP holdingA holder of SingTel CDIs may convert a holding of SingTel Shares to a holding in CDP by:

• if the CDIs are in an Issuer Sponsored Holding, notifying SingTel’s Australian share registry(Computershare Investor Services Pty Limited); or

• if the CDIs are in a CHESS Holding, notifying the Controlling Participant in relation to thoseSingTel CDIs.

In both cases, once SingTel’s Australian share registry has been notified of your wish to do this andof the CDP securities account to which you wish to transmit the SingTel Shares, it will arrange for thattransmission to occur. A holder of CDIs wishing to take advantage of this will first need to establish asecurities account with CDP. A stockbroker in Singapore or an Australian stockbroker with arrangementswith a Singapore stockbroker will be able to inform you of the mechanism for achieving this.

All dealings in and transactions of the SingTel Shares in Singapore on the SGX-ST shall be effected forsettlement through the CDP system. Settlement of trades through the CDP system may be effectedonly by CDP Depository Agents (usually stockbrokers) or through your own direct securities accountswith CDP, and shall be made in accordance with the “Terms and Conditions for Operation ofSecurities Account with CDP” as amended from time to time, copies of which are available from CDP.

(c) Converting to a certificated holdingSingTel is required by Singapore law to issue physical share certificates for all SingTel Shares issued byit. A SingTel Shareholder who holds SingTel Shares through CDP will not receive physical sharecertificates for such SingTel Shares because they are registered in the name of CDP and the physicalshare certificates are held by or for CDP. The SingTel Shares to be issued as a result of acceptances ofthe Offer will be issued by SingTel to CDP which will enter them in the depository register maintainedby it in the name of CDN to hold for and on behalf of accepting Optus Shareholders.

If an accepting Optus Shareholder (or any other person holding SingTel CDIs) converts that holdinginto a holding through a securities account with CDP (as explained above), it is entitled bywithdrawing those shares from CDP to be registered directly on the SingTel share register. The abilityto do this will be governed by the rules of CDP.

(d)Trading on the ASX or the SGX-ST stock marketsThe existing SingTel Shares (which are held through CDP) can currently only be traded on the SGX-STstock market. All traded SingTel Shares will be the subject of the application for listing on the ASXalong with the SingTel Shares issued (in CDI form) as a result of acceptances of the Offer. Accordingly,existing holders of SingTel Shares will be able, by converting their holdings into CDIs, to trade on theASX stock market. This will be achieved by the holder instructing CDP to transmit the securities toCDN and informing them of the relevant CHESS Holding in which they are to be held followingtransmission to CDN (or if there is none, the CDIs will be held on SingTel’s issuer sponsoredsub-register). Once that has occurred, those SingTel Shares will be tradeable in CDI form on the ASX.

Similarly, any holder of CDIs by converting the CDIs into a holding through a securities account withCDP, will be able to trade the SingTel Shares on the SGX-ST stock market.


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(e) Dividends, rights and other shareholder entitlementsThe SCH Business Rules, which have statutory recognition under the Corporations Law, require SingTelto treat CDI holders as if they were holders of the underlying SingTel Shares. The SCH Business Rulesseek to ensure that CDI holders have all the direct economic benefits of legal ownership (for example,the right to receive the same dividends, rights issues and bonus issues) as holders of SingTel Sharesthrough CDP. If a cash dividend or any other cash distribution is made in a currency other than A$,SingTel’s Australian share registry (acting as CDN’s agent) will convert the dividend or other cashdistribution into A$ (unless the foreign currency is not readily convertible into A$). That dividendor distribution will then be distributed to CDI holders in A$ in accordance with each holder’sentitlement. As mentioned in Section 8.3(m), SingTel proposes to amend its Articles of Association todeal with payment of dividends to CDN to be in currencies other than S$.

(f) Voting entitlementsCDI holders will not appear on the SingTel share register as the legal holder of SingTel Shares and willnot obtain the benefit of the concession under the Singapore Companies Act recognising personsentered in the depository register maintained by CDP as the holders of SingTel Shares. Therefore,amendments to SingTel’s Articles of Association are proposed to be made as described in Sections 8.2and 8.3(l) to address this matter.

(g)Other rightsCDI holders will not appear on either the SingTel share register or the depository register maintainedby CDP as the legal holders of SingTel Shares. Accordingly, other rights conferred on SingTelShareholders (including the rights summarised in Section 8.3) may only be capable of enforcement byCDI holders by instructing CDN or by converting the holding to one entered in the depositoryregister maintained by CDP or registered directly on the SingTel share register.

(h)FeesA CDI holder will not incur any additional fees or charges as a result of being a CDI holder.

(i) CDI trading and the transfer restrictions in the Articles of AssociationThe restrictions on transfer set out in Section 8.3(g) will not apply in relation to CDIs because theywill be transferred electronically through the CHESS system without any interference. However, if aperson, through a holding of CDIs comes to exceed the 15% shareholding interest level mentioned inSection 8.3(g), the SingTel Board (if the amendments to SingTel’s Articles of Association proposed atthe EGM are approved) will be entitled under SingTel’s Articles of Association to direct CDN (as thelegal holder) to dispose of any relevant SingTel Shares. In addition, a holding of SingTel Shares in theform of CDIs will need to be taken into account fully by a person in determining the number ofSingTel Shares in which the person has an interest for the purposes of the substantial shareholdingprovisions under the Singapore Companies Act. (See Section 8.3(n).)


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SECTION 9THE OFFER

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9.1 THE OFFER

(a) Offer for Optus Shares

SingTel Australia invites you to dispose of all or any of your Optus Shares on the terms set out in thisOffer.

(b)Shares issued after Register Date

This Offer extends to Optus Shares that are issued during the period from the Register Date to theend of the Offer Period:

(i) due to the conversion of, or exercise of rights attached to, Optus Options which are on issue onthe Register Date; or

(ii) issued to participants in Optus Employee Share Plans in accordance with an announcement madeby Optus before 25 March 2001 or under the Q1 2001 Plan or the Q2 2001 Plan where SingTelAustralia has given its consent to the issue before the Instrument Date.

(c) Disposal includes Rights

If you dispose of any of your Optus Shares under this Offer, you also dispose of any Rights attached tothose Optus Shares.

(d)Optus Options

If you are a participant in the EOP or SPP and, in accordance with the EOP or SPP rules, Optus givesyou notice that you can exercise your Optus Options during the Offer Period, then you may acceptthe Offer in respect of the Optus Shares you receive on exercise of your Optus Options.

9.2 CONSIDERATION

(a) Alternatives

You are invited to dispose of your Optus Shares for one of the following forms of consideration (the“Offer Consideration”):

(i) 1.66 SingTel Shares for each Optus Share (the “Share Alternative”);

(ii) A$2.25 in cash (or the US$ Cash Alternative) and 0.8 SingTel Shares for each Optus Share (the“Share and Cash Alternative”); or

(iii) A$2.00 in cash (or the US$ Cash Alternative) plus A$0.45 worth of SingTel Bonds (determined byreference to the Bond Issue Price) and 1 Unsecured Note (the “Share, Cash and BondAlternative”).

You may choose only one of these Offer Consideration alternatives.

(b)US$ Cash Alternative

If you choose the Share and Cash Alternative or the Share, Cash and Bond Alternative, you maychoose to receive the US$ Cash Alternative in lieu of the A$ amount.

(c) If you do not make a choice

If you accept this Offer but do not indicate a choice of which of the Offer Consideration alternativesyou wish to receive, or you give conflicting indications, you will, subject to Section 9.11(b), be takento have chosen the Share and Cash Alternative (but not the US$ Cash Alternative).

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9.3 SINGTEL SHARES

(a) Allotment

The SingTel Shares issued pursuant to this Offer will:

(i) be allotted credited as fully paid; and

(ii) rank equally in all respects with the existing SingTel Shares.

(b)Dividends

If you are registered as the holder of SingTel Shares on or before the Dividend Record Date, you willbe entitled to SingTel’s final dividend for the year ended 31 March 2001.

(c) Listing

As required by Section 9.12(a)(v) (the Listing Condition), SingTel is applying for the admission toquotation of the SingTel Shares to be issued under this Offer on the ASX. Permission for admission toquotation will not be granted automatically but will depend on compliance with the requirements ofthe ASX. SingTel cannot guarantee (and nothing in this Bidder’s Statement states or implies) thatpermission for admission to quotation will be granted.

(d)CDIs

The SingTel Shares issued pursuant to this Offer will be issued in the name of CDP which will enterthem in the Depository Register maintained by it in the name of CDN. CDN will issue CDIs in respectof those SingTel Shares and, if you accept this Offer, you will be sent a holding statement in respect ofthe CDIs so issued in respect of your acceptance. For further information on CDIs see Section 8.7.

(e) Rounding

If you accept this Offer and the number of SingTel Shares to be issued to you is not a whole number,the number of SingTel Shares which will be issued to you will be rounded up to the nearest wholenumber.

If SingTel Australia reasonably believes that an Optus shareholder’s holdings have been manipulated totake advantage of this rounding up, or the rounding up under Section 9.4(b) then any fractionalelement will be rounded down.

9.4 SINGTEL BONDS

(a) Terms

The principal terms and other features of the SingTel Bonds are summarised in Section 10 and the fulltext of the terms and conditions of the SingTel Bonds will be substantially in the definitive form setout in Annexure 3.

(b)Tranches, denomination and interest accrual

If you accept the Offer and choose the Share, Cash and Bond Alternative you will be issued withSingTel Bonds from each of the two tranches identified in Section 10 (that is, Tranche A Bonds andTranche B Bonds).

The SingTel Bonds may be denominated in amounts of US$1,000 or US$1 to the extent required toaccommodate individual accepting Optus Shareholders. Amounts of less than US$1 will be roundedup to the nearest whole US$ amount – that is, if the face value of a SingTel Bond to be issued to anOptus Shareholder as a result of acceptance of the Offer by that shareholder is not a multiple ofUS$1, the shareholder will be issued with a SingTel Bond with a face value of US$1 in respect of thatamount of less than US$1. (Note that SingTel Bonds issued pursuant to the Unsecured Note Provisionswill be rounded down to the nearest US$1 of face value.)

All SingTel Bonds, whether in Tranche A or Tranche B, will be issued at the Bond Issue Price, andaccrue interest at the same rate as the SingTel Bonds of that tranche which are issued on the FirstSettlement Date. Any SingTel Bond issued after the First Settlement Date will accrue interest from (andincluding) the First Settlement Date. The SingTel Bonds will be valued at the Bond Issue Price for thepurpose of determining the extent to which the SingTel Bond component of the Offer Considerationdue to any Optus Shareholder has been fulfilled. Interest will accrue on such SingTel Bonds from (andincluding) the First Settlement Date. With regard to SingTel Bonds which are issued after the First

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Settlement Date, no adjustment needs to be made to the Bond Issue Price to take into accountinterest accruing between the First Settlement Date and the issue date of such SingTel Bonds.

(c) No listing

No application has been made for the listing of the SingTel Bonds on a stock market of a securitiesexchange, either in Australia or elsewhere. SingTel will use reasonable endeavours to obtain creditratings for the SingTel Bonds from Standard & Poor’s and Moody’s Investors Service as soon aspracticable, and in any event within six months of the date on which the SingTel Bonds are issued.SingTel may explore a listing of the SingTel Bonds on the London Stock Exchange or the LuxembourgStock Exchange after such ratings are obtained. However, SingTel and SingTel Australia do notrepresent or imply that the SingTel Bonds will be rated, or quoted on any stock market, and this Offeris not conditional on any such rating or quotation.

(d)Clearing details

In order to choose the Share, Cash and Bond Alternative, you must give SingTel Australia the detailsof an account with Euroclear or Clearstream in which you wish to hold the SingTel Bonds (seeSection 9.8(e)(iv)). SingTel will issue those SingTel Bonds so that they are credited to that account.

9.5 UNSECURED NOTES

(a) Operation of Unsecured Notes

Clauses 3.4, 3.5, 3.5A, 3.5B and 3.6 of the Implementation Agreement (the “Unsecured NoteProvisions”) describe the operation and effect of the Unsecured Notes. The Unsecured NoteProvisions are incorporated into this Offer as if set out in full, including all clauses of theImplementation Agreement which are:

(i) referred to in the Unsecured Note Provisions; or

(ii) otherwise necessary to give the same content to the Unsecured Note Provisions in this Offer asthat in the Implementation Agreement.

The Unsecured Note Provisions have been extracted in full from the Implementation Agreement andare set out in Annexure 2.

The following provisions of this Section 9.5 do not limit the foregoing but rather expand on the rightsand obligations in respect of the Unsecured Notes.

(b)Obligations relating to Unsecured Notes

If you accept the Offer and choose the Share, Cash and Bond Alternative, you:

(i) subscribe for an Unsecured Note;

(ii) are bound by the Unsecured Note Provisions and the Unsecured Note Trust Deed as a holder ofUnsecured Notes;

(iii) agree to apply the Redemption Amount and any Partial Redemption Amount in accordance withthe Unsecured Note Provisions; and

(iv)agree that SingTel Australia will apply the Redemption Amount and any Partial RedemptionAmount in accordance with the Unsecured Note Provisions on your behalf.

(c) No listing

The Unsecured Notes will not be listed on a stock market of any securities exchange and are nottransferable.

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9.6 ALTERNATIVE DISPOSAL MECHANISMS

(a) Transfer or Buy-Back

You have the choice to dispose of all or any of your Optus Shares by either:

(i) selling and transferring all or any of your Optus Shares to SingTel Australia (the “TransferAlternative”); or

(ii) subject to Section 9.6(c), appointing SingTel Australia as your agent and having SingTel Australiaoffer your Optus Shares to Optus to be bought back (the “Buy-Back Alternative”).

You may choose the Transfer Alternative for some of your Optus Shares and the Buy-Back Alternativefor others.

(b) If you do not make a choice

If you accept this Offer, but you do not indicate a choice of either the Transfer Alternative or theBuy-Back Alternative, or you give conflicting indications, you will be taken to have chosen the TransferAlternative.

(c) Foreign Shareholders

The Buy-Back Alternative is not available to Optus Shareholders resident in countries other thanAustralia, Singapore, New Zealand, the United States, the United Kingdom, The Netherlands orHong Kong. Foreign Shareholders should also refer to Section 9.11(b).

9.7 BUY-BACK ALTERNATIVE

(a) General operation

Clauses 4.1 to 4.8 of the Implementation Agreement (the “Buy-Back Provisions”) describe the stepsby which Optus Shares in respect of which the Buy-Back Alternative is chosen are bought back byOptus. As a result of those steps, if you choose the Buy-Back Alternative you will receive the OfferConsideration alternative chosen by you under Sections 9.2 and 9.8 (subject to Section 9.11(b)) lessWithholding Tax (as applicable) deducted in accordance with the Buy-Back Provisions. The Buy-Backprovisions have been extracted in full from the Implementation Agreement and are set out inAnnexure 2.

(b)Effect of choosing the Buy-Back Alternative

If you accept this Offer and choose the Buy-Back Alternative, you irrevocably appoint SingTel Australiaas your exclusive agent, with irrevocable instructions to:

(i) prepare and enter into a Buy-Back Agreement on your behalf in respect of your Acceptance Shareswhich you choose to be bought back;

(ii) present the Cheque which SingTel Australia will receive on your behalf pursuant to clause 4.5(b)(ii)of the Implementation Agreement for purchase in accordance with clause 4.7 of theImplementation Agreement;

(iii) as contemplated by clause 4.8(a) of the Implementation Agreement, subject to Sections 9.7(c)and 9.11(b):

(A) pay to you from the proceeds of purchase of the Cheque (that is, the Subscription Funds) thecash component (if any) of the Offer Consideration chosen by you less the amount ofWithholding Tax (if applicable); and

(B) apply the balance of the Subscription Funds on your behalf in subscribing for the relevantnumber of SingTel Shares, SingTel Bonds and Unsecured Notes (as the case may be) chosen byyou pursuant to Sections 9.2 and 9.8 in accordance with clause 4.8 of the ImplementationAgreement; and

(iv)perform all other actions on your behalf necessary to comply with the Buy-Back Provisions andgive effect to the terms of the Buy-Back Agreement and the presentation of the Cheque forpurchase.

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(c) If you choose the Share Alternative

If you accept this Offer, choose the Buy-Back Alternative and also choose the Share Alternative,SingTel Australia will, on your behalf, pursuant to Section 9.7(b), only subscribe for that number ofSingTel Shares calculated by dividing the Subscription Funds by the A$ Equivalent of the Market Valueof one SingTel Share, rounded up to the nearest whole number of SingTel Shares. (If you are aForeign Shareholder and you choose the Share Alternative, the effect of this provision is that theWithholding Tax payable will be deducted from the Offer Consideration and only the remaining partof the Offer Consideration will be provided in the form of SingTel Shares.)

(d)SingTel Australia’s role as agent

SingTel Australia, in its role as your agent pursuant to Section 9.7(b), is permitted to perform actionswhich will give a commercial benefit to SingTel Australia or SingTel.

9.8 HOW TO ACCEPT THIS OFFER

(a) Your Acceptance Shares

You may accept this Offer for all or any of your Optus Shares. If you accept the Offer for some of yourOptus Shares you can still accept the Offer for more or all of your Optus Shares during the OfferPeriod. You will be taken to have accepted the Offer for all of your Optus Shares if you do not specifya lesser number in accordance with the instructions on the Acceptance Form.

(b)To choose the Transfer Alternative – CHESS Holdings

If you want to accept this Offer and choose the Transfer Alternative for Acceptance Shares which arein a CHESS Holding, you must comply with the SCH Business Rules. To accept in accordance withthose rules, you must:

(i) instruct your Controlling Participant (usually your broker) to initiate acceptance of this Offer underrule 16.3 of the SCH Business Rules; or

(ii) if you are a Broker or a Non-Broker Participant, yourself initiate acceptance under that rule,

so as to be effective before the end of the Offer Period.

You may instead complete and sign the Acceptance Form and return it to the address on the reverseside (you can use the addressed envelope provided). This will authorise SingTel Australia to instructyour Controlling Participant to initiate acceptance of this Offer on your behalf. For return of theAcceptance Form to be an effective acceptance of the Offer, you must ensure it is received by SingTelAustralia in time for SingTel Australia to give instructions to your Controlling Participant and yourControlling Participant to carry out those instructions, before the end of the Offer Period.

(c) To choose the Transfer Alternative – Issuer Sponsored Holdings

If you want to accept this Offer and choose the Transfer Alternative for Acceptance Shares which areheld on Optus’ issuer sponsored sub-register, or of which at the time of acceptance you are entitled tobe registered as the holder, or to which at the time of acceptance you are otherwise able to givegood title, you must:

(i) complete and sign the Acceptance Form in accordance with the instructions on it; and

(ii) send the Acceptance Form together with all other documents required by the instructions on it tothe address specified on the Acceptance Form (you can use the addressed envelope provided) sothat, if posted, the envelope in which they are sent is post-marked before the end of the OfferPeriod or, if otherwise delivered, they are received at that address before the end of the OfferPeriod.

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(d)To choose the Buy-Back Alternative – Issuer Sponsored Holdings only

If you want to accept this Offer and choose the Buy-Back Alternative, you must:

(i) ensure that your Acceptance Shares are in an Issuer Sponsored Holding (if they are in a CHESSHolding, you must arrange with your Controlling Participant for your Acceptance Shares to beconverted to an Issuer Sponsored Holding);

(ii) complete and sign the Acceptance Form and indicate your choice of the Buy-Back Alternative, inaccordance with the instructions on it; and

(iii) send the Acceptance Form together with all other documents required by the instructions on it tothe address specified on the Acceptance Form (you can use the addressed envelope provided) sothat, if posted, the envelope in which they are sent is post-marked before the end of the OfferPeriod or, if otherwise delivered, they are received at that address before the end of the OfferPeriod.

(e) Choosing your Offer Consideration

To choose your Offer Consideration:

(i) if you accept this Offer by instructing your Controlling Participant to do so (in accordance withSection 9.8(b)(i)), you must also instruct your Controlling Participant to specify the TakeoverConsideration Code for the Offer Consideration you want;

(ii) if you are a Broker or a Non-Broker Participant and accept this Offer by yourself initiatingacceptance (in accordance with Section 9.8(b)(ii)), you must specify the Takeover ConsiderationCode for the Offer Consideration you want when you initiate acceptance;

(iii) if you accept this Offer by returning the Acceptance Form (in accordance with Sections 9.8(b),9.8(c) or 9.8(d)), you must specify the Takeover Consideration Code in the appropriate place onthe Acceptance Form for the Offer Consideration you want, in accordance with the instructions onthe Acceptance Form; and

(iv) if you accept this Offer and wish to choose the Share, Cash and Bond Alternative, you must alsogive SingTel Australia the details of an account with Euroclear or Clearstream in which you wish tohold the SingTel Bonds in accordance with the instructions on the Acceptance Form. If you donot do this, you will be taken to have chosen the Share and Cash Alternative (but not the US$Cash Alternative).

(f) Foreign laws

Neither this Offer nor the SingTel Shares, SingTel Bonds or Unsecured Notes to be issued as OfferConsideration are registered in any jurisdiction outside Australia (unless an applicable foreign lawtreats them as registered as a result of the Bidder’s Statement being lodged with ASIC). It is your soleresponsibility to satisfy yourself that you are permitted by any foreign law applicable to you to acceptthis Offer and to receive SingTel Shares, Unsecured Notes or SingTel Bonds (if any) as consideration.

(g)Optus Options

If you hold Optus Options under the EOP or SPP you should complete the Notice of Exercise on thereverse of your Option certificate and send it to the Optus Registry together with, if you hold yourOptus Options under the EOP, your cheque for the exercise price of A$4.11 per option. When youreceive notice of the issue of your Optus Shares you should complete the Acceptance Form inaccordance with the instructions in this Section 9.8.

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9.9 OFFER PERIOD

(a) Date of this Offer

This Offer is dated 23 May 2001.

(b)Offer Period

Unless withdrawn or extended, this Offer is open for you to accept during the period that begins onthe date of this Offer and ends at 7.00 pm (Sydney time) on 3 July 2001.

(c) Automatic extension

If, within the last seven days of the Offer Period:

(i) SingTel Australia varies the Offer to improve the Offer Consideration; or

(ii) SingTel Australia’s voting power in Optus increases to more than 50%,

then the Offer Period is extended so that it ends 14 days after that event.

(d)Other extension

If at the Unconditional Date, SingTel Australia is not entitled to proceed with compulsory acquisitionof Optus Shares under Part 6A.1 of the Corporations Law as modified by ASIC, then SingTel Australiawill extend the Offer Period by a period of not less than two weeks.

(e) Limitation to extensions

SingTel has agreed with Optus under the Implementation Agreement that, from the UnconditionalDate, the Offer Period will be extended by no more than three extensions of two weeks each. Thisdoes not imply that the Offer Period will be extended.

9.10 YOUR AGREEMENT RESULTING FROM ACCEPTANCE

(a) Effect of Acceptance

By accepting this Offer in accordance with Section 9.8, or otherwise, you will have irrevocably:

(i) accepted this Offer in respect of your Acceptance Shares;

(ii) authorised SingTel Australia and its officers and agents to correct any errors in or omissions fromthe Acceptance Form necessary to make it an effective acceptance of this Offer and, if you choosethe Transfer Alternative and your Acceptance Shares are not in a CHESS Holding, to enable thetransfer of your Acceptance Shares to SingTel Australia, and to ask Optus to reserve yourAcceptance Shares for the benefit of SingTel Australia;

(iii) if you choose the Transfer Alternative and your Acceptance Shares are in a CHESS Holding,authorised SingTel Australia and its officers and agents to:

(A) instruct your Controlling Participant to initiate acceptance of this Offer in respect of yourAcceptance Shares under the SCH Business Rules; and

(B) give to your Controlling Participant on your behalf any other instructions in relation to yourAcceptance Shares under the sponsorship agreement between you and your ControllingParticipant;

(iv) if you choose the Transfer Alternative:

(A) agreed to transfer your Acceptance Shares to SingTel Australia in accordance with this Offer;and

(B) agreed to accept the SingTel Shares (in the form of CDIs), and the SingTel Bonds andUnsecured Notes (if any) to which you become entitled by acceptance of this Offer, subject tothe terms of this Offer, the Memorandum and Articles of Association of SingTel, and the TrustDeeds constituting the SingTel Bonds and Unsecured Notes (as applicable) and the provisionsrelating to the holding of those SingTel Shares in the form of CDIs, and authorised appropriateentries to be placed in the relevant register of holders (including CDN being entered in theDepository Register of CDP and CDP being entered in the share register of SingTel in relationto those SingTel Shares);

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(v) if you choose the Buy-Back Alternative:

(A) represented and warranted to SingTel Australia and Optus that your Acceptance Shares are anIssuer Sponsored Holding;

(B) offered to Optus to sell your Acceptance Shares to Optus on the terms of the Buy-BackAgreement and asked Optus to reserve your Acceptance Shares for the purposes of the Buy-Back Agreement;

(C) appointed SingTel Australia as your agent to do the things referred to in Section 9.7(b);

(D)authorised SingTel Australia to represent and warrant, and agree with, Optus on your behalfthe matters referred to in clauses 7 and 8 of the Buy-Back Agreement and all other matterswhich you warrant or represent to SingTel Australia under this Section 9.10(a);

(E) applied for the SingTel Shares and the SingTel Bonds and Unsecured Notes (if any) chosen byyou pursuant to Sections 9.2 and 9.8; and

(F) agreed to accept the SingTel Shares (in the form of CDIs), and the SingTel Bonds andUnsecured Notes (if any) to which you become entitled by acceptance of this Offer subject tothe terms of this Offer, the Memorandum and Articles of Association of SingTel, and the TrustDeeds constituting the SingTel Bonds and Unsecured Notes (as applicable) and the provisionsrelating to the holding of those SingTel Shares in the form of CDIs, and authorised appropriateentries to be placed in the relevant register of holders (including CDN being entered in theDepository Register of CDP and CDP being entered in the share register of SingTel in relationto those SingTel Shares);

(vi) represented and warranted to SingTel Australia and, if you choose the Buy-Back Alternative, also toOptus, that your Acceptance Shares are at the time of your acceptance and of transfer to SingTelAustralia or Optus (as the case may be) free of any encumbrances and, if you choose the TransferAlternative, that SingTel Australia will acquire good title to and beneficial ownership of them;

(vii)if and when the contract resulting from acceptance of this Offer becomes unconditional,appointed each of the directors and officers of SingTel Australia for the time being individually asyour attorney to:

(A) attend and vote in respect of your Acceptance Shares of which you are the registered holderfor the time being at all general meetings of Optus; and

(B) execute all forms, notices, documents (including a document appointing a director or officer ofSingTel Australia as a proxy in respect of any of your Acceptance Shares and an application toOptus for a replacement certificate for any share certificate that has been lost or destroyed)and resolutions relating to your Acceptance Shares and generally to exercise all powers andrights which you have as the registered holder of your Acceptance Shares; and

(C) do all things necessary or convenient to obtain a replacement certificate for any sharecertificate that has been lost or destroyed or to vest good title in your Acceptance Shares inSingTel Australia or Optus,

and agreed that, in exercising those powers, the attorneys may act in the interests of SingTelAustralia as the beneficial owner and intended registered holder of those Optus Shares;

(viii)agreed not to attend or vote in person at any general meeting of Optus or to exercise, or topurport to exercise (in person, by proxy or otherwise) any of the powers conferred on thedirectors and officers of SingTel Australia by Section 9.10(a)(vii);

(ix)represented and warranted to SingTel Australia and, if you choose the Buy-Back Alternative, also toOptus, that you are not and are not acting on behalf of a Restricted Foreign Shareholder, unlessotherwise indicated on the Acceptance Form;

(x) acknowledged and agreed that if you are unable to make the representation and warranty inSection 9.10(a)(ix) or if SingTel Australia believes that you are or are acting on behalf of a UnitedStates Shareholder or any other Restricted Foreign Shareholder, a nominee approved by ASIC (the“Nominee”) will sell the SingTel Shares and SingTel Bonds (if any) which would otherwise beissued to you (including any SingTel Shares or the SingTel Bonds issued following the redemptionof Unsecured Notes pursuant to the Unsecured Note Provisions), as described in Section 9.11(b);

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(xi)acknowledged and agreed that, except as permitted by and in accordance with applicable law,you will not offer or resell in, or to persons in, the United States of America any SingTel Shares orthe SingTel Bonds which you acquire at any time, although that does not prohibit any sale on theASX or SGX-ST if neither you nor any person acting on your behalf knows, or has reason to know,that the sale has been prearranged with, or that the purchaser is, a person in the United States ofAmerica; and

(xii)instructed SingTel to issue the CDIs applicable to your acceptance of the Offer, if your OptusShares are in a CHESS Holding, with the same holder identification number as affects your OptusShares; and if your Optus Shares are held as an Issuer Sponsored Holding, on SingTel’s issuersponsored CDI sub-register.

(b)Validation of otherwise ineffective acceptances

Except in relation to Optus Shares which are in a CHESS Holding, if you choose the TransferAlternative, SingTel Australia may in its absolute discretion treat the receipt by it of the AcceptanceForm as a valid acceptance although it does not receive the other documents required by theinstructions on the Acceptance Form or any of the other requirements for acceptance have not beencomplied with. If SingTel Australia does so, then, subject to Section 9.11, SingTel Australia will notbe obliged to make the consideration available until it receives all those documents and all of therequirements for acceptance referred to in Section 9.8 and in the Acceptance Form have been met.If you do not give SingTel Australia all necessary transfer documents for the Acceptance Shares withinone month after the end of the Offer Period, SingTel Australia may avoid the contract that resultsfrom your acceptance of this Offer.

9.11 PROVISION OF OFFER CONSIDERATION

(a) Timing

SingTel Australia will provide, or procure the provision of, the Offer Consideration due for yourAcceptance Shares, subject to Section 9.7 (if you choose the Buy-Back Alternative) as follows:

(i) if you accept this Offer on or prior to the Unconditional Date, on the day which is seven days afterthe Unconditional Date (the “First Settlement Date”);

(ii) if you accept this Offer after the Unconditional Date, on a date nominated by SingTel Australia toOptus pursuant to clause 4.2(b) of the Implementation Agreement (“Second Settlement Date”)which is no later than the earlier of:

(A) one month after the Unconditional Date; and

(B) 21 days after the end of the Offer Period.

SingTel Australia may nominate more than one Second Settlement Date under clause 4.2(b) of theImplementation Agreement.

(b)Foreign Shareholders

(i) If you are (or are acting on behalf of) a citizen or a resident of a jurisdiction other than residents ofAustralia, or (subject to paragraph 9.11(b)(iii)) New Zealand or Singapore or the United Kingdom,or your address shown in Optus’ register of members is a place outside Australia and its externalterritories or New Zealand or Singapore or the United Kingdom or you are acting on behalf ofsuch a person then, unless SingTel Australia otherwise determines (being satisfied that it is notprevented from lawfully making the Offer to you and issuing you with SingTel Shares or SingTelBonds or Unsecured Notes (“SingTel Securities”) on acceptance of the Offer and that it is notunlawful for you to accept the Offer by the law of that place), you will not be entitled to receiveSingTel Securities as part of the consideration for your Optus Shares by reason of your acceptanceof this Offer and you will be a Restricted Foreign Shareholder for the purposes of this Section9.11(b).

(ii) Generally, if you are a United States Shareholder you will be a Restricted Foreign Shareholder forthe purposes of this Section 9.11(b). Furthermore, if you are such a United States Shareholder, theShare, Cash and Bond Alternative does not form part of the Offer Consideration and if you purportto choose the Share, Cash and Bond Alternative you will be deemed to have chosen instead theShare and Cash Alternative (but not the US$ Cash Alternative).

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(iii) Optus Shareholders who are resident in New Zealand are Restricted Foreign Shareholders if theychoose the Share, Cash and Bond Alternative.

(iv) If you are a Restricted Foreign Shareholder with respect to SingTel Securities that you have chosenas Offer Consideration under Sections 9.2 and 9.8, SingTel Australia will:

(A) arrange for the allotment to the Nominee of the number of SingTel Securities to be issued inaccordance with the Offer to which you and all other Restricted Foreign Shareholders wouldhave been entitled but for this Section 9.11(b);

(B) cause the SingTel Shares and SingTel Bonds so allotted (including any SingTel Shares or SingTelBonds issued following the redemption of Unsecured Notes pursuant to the Unsecured NoteProvisions) to be offered for sale in such manner, at such price and on such other terms andconditions as are determined by the Nominee;

(C) pay to you the amount ascertained in accordance with the relevant formula:

for SingTel Shares:

Net Proceeds of Sale x NFSTFS

where:

(I) Net Proceeds of Sale is the amount remaining after deducting from the proceeds of sale bythe Nominee the expenses of the sale;

(II) NFS is the number of SingTel Shares which would otherwise be issued to you; and

(III)TFS is the total number of SingTel Shares issued to the Nominee under this Section 9.11(b).

for the SingTel Bonds:

Net Proceeds of Sale x NFSTFS

where:

(I) Net Proceeds of Sale is the amount remaining after deducting from the proceeds of sale bythe Nominee the expenses of the sale;

(II) NFS is the number of SingTel Bonds which would otherwise be issued to you; and

(III)TFS is the total number of SingTel Bonds allotted to the Nominee under thisSection 9.11(b).

Payment will be made in A$. The Net Proceeds of Sale, if in a currency other than A$, will beconverted to A$ at the time of payment using the relevant exchange rate for value on the dateof payment.

(c) Cash payments generally

Payment of any cash amount to which you are entitled will be made by cheque in A$ or US$ if youhave chosen an Offer Consideration with a US$ component. The cheque will be sent to you by pre-paid ordinary mail (or in the case of overseas shareholders, by airmail) to your address as shown onthe Acceptance Form or such other address as you may notify to SingTel Australia in writing beforedespatch.

(d)Clearances for cash payments

If at the time you accept the Offer you are resident in, or a resident of, a place outside Australia towhich the Banking (Foreign Exchange) Regulations apply, you will not be entitled to receive any cashconsideration (including without limitation any amount payable under Section 9.11(b)) until allrequisite authorities or clearances of the Reserve Bank of Australia (whether under the Regulations orotherwise), or the Australian Taxation Office, have been obtained by SingTel Australia. SingTelAustralia undertakes to make prompt application for all such authorities or clearances. The Banking(Foreign Exchange) Regulations currently apply to Iraq, Libya, Taliban, the government andgovernmental authorities of Yugoslavia and the National Union for the Total Independence of Angola(and its senior officials and their families and its members).

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(e) Costs and stamp duty

SingTel Australia will pay all costs and expenses of the preparation and circulation of the Offer and thestamp duty (if any) payable on transfers of Optus Shares to SingTel Australia or (if you choose theBuy-Back Alternative) to Optus.

(f) Handling fee

A handling fee may be paid by SingTel Australia, at its expense and not as a deduction from theamount payable to you, to any broker member of ASX whose stamp appears on the Acceptance Formin respect of any Optus Shares other than those held by that broker.

9.12 CONDITIONS

(a) Defeating Conditions

This Offer and the contract resulting from its acceptance (the “Contract”) are subject to theseconditions:

(i) Foreign investment approval

Before the end of the Offer Period, notice in writing (either unconditional or subject only toconditions that are acceptable to SingTel Australia (acting reasonably)) is issued by or on behalf ofthe Australian Treasurer stating that the Treasurer consents, or that the Treasurer does not haveany objection, under the Australian Government’s foreign investment policy, to the acquisition bySingTel Australia of all of the Optus Shares the subject of the Offer or the Placement, or theTreasurer ceases to be entitled to make an order under Part II of the Foreign Acquisitions andTakeovers Act regarding the acquisition of those shares.

(ii) Minimum acceptance

At any time during or at the end of the Offer Period, SingTel Australia receives acceptances inrespect of more than 50% (by number) of the Optus Shares the subject of the Offers.

(iii) No prescribed occurrences

None of the following events occurs during the period beginning on 26 March 2001 and endingat the end of the Offer Period other than as strictly necessary to implement the Offers, eachContract, the Buy-Back or the Placement:

(A) Optus converts all or any of its shares into a larger or smaller number of shares;

(B) Optus or a subsidiary of Optus resolves to reduce its share capital in any way;

(C) Optus or a subsidiary of Optus:

(I) enters into a buy-back agreement; or

(II) resolves to approve the terms of a buy-back agreement under section 257C(1) or 257D(1)of the Corporations Law;

(D)Optus or a subsidiary of Optus issues shares (other than Optus Shares issued as the result ofthe exercise of Optus Options or issued under Optus Employee Share Plans during the periodfrom the Register Date to the end of the Offer Period in accordance with an announcementmade by Optus before 25 March 2001 or under the Q1 2001 Plan or the Q2 2001 Plan whereSingTel Australia has given its consent to the issue before the Instrument Date) or grants anoption over its shares, or agrees to make such an issue or grant such an option;

(E) Optus or a subsidiary of Optus issues, or agrees to issue, convertible notes;

(F) Optus or a subsidiary of Optus disposes, or agrees to dispose, of the whole, or a substantialpart, of its business or property unless that disposal is associated with an upgrade of any partof Optus’ networks and/or infrastructure;

(G)Optus or a subsidiary of Optus charges, or agrees to charge, the whole, or a substantial part,of its business or property;

(H) Optus or a subsidiary of Optus resolves to be wound up;

(I) the appointment of a liquidator or provisional liquidator of Optus or of a subsidiary of Optus;

(J) a court makes an order for the winding up of Optus or of a subsidiary of Optus;

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(K) an administrator of Optus, or of a subsidiary of Optus, is appointed undersection 436A, 436B or 436C of the Corporations Law;

(L) Optus or a subsidiary of Optus executes a deed of company arrangement; or

(M) a receiver, or a receiver and manager, is appointed in relation to the whole, or asubstantial part, of the property of Optus or of a subsidiary of Optus,

in each case, except to the extent that SingTel or its officers, employees, agents oradvisers have actual knowledge at 25 March 2001 of the prospect of the event.

(iv)FSSA and IATA

Before the end of the Offer Period, notice in writing approving the acquisition ofOptus in accordance with the Offers is issued by or on behalf of:

(A) the Treasurer, in relation to any approval that is required under the FinancialSector (Shareholdings) Act 1998; and

(B) the relevant Minister in relation to any approval that is required under theInsurance Acquisitions and Takeovers Act 1991.

(v) ASX Listing Condition

Before the end of the Offer Period, ASX approves the listing of SingTel andquotation of new SingTel Shares to be issued pursuant to the Offer.

(vi)Material adverse change

During the period beginning on 26 March 2001 and ending at the end of the OfferPeriod:

(A) no change occurs in relation to the business, financial or trading position orcondition, or the assets, liabilities or profitability, of Optus or a subsidiary ofOptus which has or is likely to have one of the following effects:

(I) the net profit after tax and abnormal items of the consolidated Optus Groupfor the 12 months ended 31 March 2001 is 25% or more lower than for the12 months ended 31 March 2000 (as shown in Optus’ published auditedfinancial statements); or

(II) the net assets of the consolidated Optus Group are 10% or more lower thannet assets of the consolidated Optus Group as at 31 March 2000 (as shownin Optus’ published audited financial statements) (the “2000 Net Assets”);

(B) neither Optus nor any subsidiary of Optus acquires (as defined in the ASX ListingRules) or disposes (as defined in the ASX Listing Rules) of:

(I) any single asset, or collection of assets (if the assets are acquired or disposedof in what is in substance one transaction), where the book value or thevalue of the consideration exceeds an amount which is 10% of the 2000 NetAssets; or

(II) any business (whether by means of the acquisition or disposition of assetsand goodwill or a body corporate which conducts the business), where thebook value or the value of the consideration exceeds an amount which is 2%of the 2000 Net Assets;

(C) neither Optus nor any subsidiary of Optus enters into any joint venture orpartnership which requires it to dedicate to the joint venture or partnership anysingle asset or collection of assets having a book value exceeding an amountwhich is 2% of the 2000 Net Assets or which commits it to expend an amountexceeding an amount which is 2% of the 2000 Net Assets;

(D) the Optus Group taken as a whole does not make or commit to make capitalexpenditure of more than A$150 million in excess of the capital expenditurewhich it is committed or has planned (ie, approved in accordance with capitalplanning governance procedures even though it is not yet committed) to makeas at 26 March 2001,

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in each case, except to the extent that SingTel or its officers, employees, agents oradvisers have actual knowledge at 25 March 2001 of the prospect of the event.

(vii)SingTel shareholder approval

Before the end of the Offer Period, a resolution to approve the performance bySingTel or any of its subsidiaries of its obligation in connection with funding theBuy-Back for the purpose of, and all procedures required under, section 76 of theSingapore Companies Act (if it is required by law or any Government Agency orregulatory authority) are passed and complied with.

(b)Nature of conditionsEach of the Defeating Conditions in each paragraph and each sub-paragraph of Section9.12(a) is and must be construed as a separate, several and distinct condition. TheDefeating Condition in Section 9.12(a)(i) (the “FIRB Condition”) is a conditionprecedent. The other Defeating Conditions are conditions subsequent, and so do notprevent a contract resulting from acceptance of this Offer coming into effect, but anybreach or non-fulfilment of any of them entitles SingTel Australia, by notice to you, torescind the contract resulting from your acceptance of this Offer.

(c) The benefit of the Defeating ConditionsSubject to the Corporations Law, and until the end of the Offer Period, SingTel Australiaalone is entitled to the benefit of the Defeating Conditions or to rely on anynon-fulfilment of any of them.

(d)Offer declared free of conditions(i) Subject to section 650F of the Corporations Law, SingTel Australia may declare the

Offer and each Contract free from all or any of the Defeating Conditions (otherthan the Minimum Acceptance Condition and the FIRB Condition), generally or inrelation to any specific occurrence by giving notice in writing to Optus. Any suchnotice must be given not less than seven days before the end of the Offer Period.

(ii) If, at the end of the Offer Period, the Defeating Conditions have not been fulfilledand SingTel Australia has not declared the Offer and the Contracts (or they have notbecome) free from those conditions, all Contracts will be automatically void.

(e) Statutory noticeThe date for giving the notice on the status of the Defeating Conditions is 25 June 2001(subject to extension in accordance with the Corporations Law if the Offer Period isextended).

9.13 OFFEREES

(a) Registered holdersSingTel Australia is making an offer in the form of this Offer to:

(i) holders of Optus Shares on Optus’ register of members on the Register Date;

(ii) holders of Optus Shares issued during the period from the Register Date to the endof the Offer Period, as a result of the conversion of, or exercise of rights attached toOptus Options on Optus’ register of option holders on the Register Date; and

(iii) holders of Optus Shares issued under Employee Share Plans during the periodfrom the Register Date to the end of the Offer Period, in accordance with anannouncement made by Optus before 25 March 2001 or under the Q1 2001 Planor the Q2 2001 Plan where SingTel Australia has given its consent to the issuebefore the Instrument Date.

An offer in the form of this Offer is being sent to holders of Optus Shares and OptusOptions on the Register Date and to participants in the Optus employee share planswho will be issued with Optus Shares after the Register Date and before the end of theOffer Period in accordance with an announcement made by Optus before 25 March2001 or with the prior consent of SingTel Australia.

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(b)Beneficial holdersA person who is able during the Offer Period to give good title to a parcel of OptusShares may, in accordance with section 653B of the Corporations Law, accept as if anOffer had been made to that person in relation to those Optus Shares.

9.14 VARIATION AND WITHDRAWAL

(a) VariationSingTel Australia may vary this Offer in accordance with the Corporations Law.

(b)WithdrawalSingTel Australia may withdraw this Offer with the consent of ASIC and subject to theconditions (if any) which apply to that consent.

9.15 GOVERNING LAW

This Offer and any contract resulting from its acceptance is governed by the law in force inNew South Wales.

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SECTION 10SUMMARY OF SINGTEL BOND TERMS

AND CONDITIONS

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10.1 SUMMARY

The following is a general summary of the terms of the SingTel Bonds. This summary isderived from and should be read in conjunction with, the full text of the terms andconditions of the SingTel Bonds (set out in Annexure 3), the Trust Deed (as defined in the“Terms and Conditions of the SingTel Bonds”) and the Agency Agreement relating to theSingTel Bonds. The terms and conditions set out in Annexure 3, the Trust Deed and theAgency Agreement prevail to the extent of any inconsistency with the terms set out in thisSection 10.

Issuer Singapore Telecommunications Limited.

Description Up to US$494 million Bonds due 2006 (the “Tranche ABonds”) and up to US$494 million Bonds due 2008 (the“Tranche B Bonds”, and together with the Tranche A Bonds,the “SingTel Bonds”).

Issue Size The aggregate nominal amount of SingTel Bonds to be issuedwill be determined by acceptance levels under the Share, Cashand Bond Alternative of the Offer subject to a maximum issuesize of US$988 million, which is the equivalent of A$2.0 billionat a fixed exchange rate of A$1.00 = US$0.4940.

Further Issues Subject to a maximum issue size of US$988 million, SingTelmay, from time to time, without the consent of Bondholders(as defined in the “Terms and Conditions of the Bonds”),create and issue additional SingTel Bonds having the sameterms and conditions as previous series of SingTel Bonds in allrespects (save for the date of issue) so that such additionalSingTel Bonds shall be consolidated and form a single serieswith the SingTel Bonds.

Bond Issue Price The SingTel Bonds will be issued at 100% of the principalamount of the SingTel Bonds, subject to any roundingadjustment made to the Interest Rate as determined below.

Interest Rate Tranche A Bonds: The Tranche A Bonds will bear interest at therate per annum (expressed as a percentage) equal to the sumof (i) 80 basis points and (ii) the Reference Rate, as determinedby Morgan Stanley Dean Witter Asia (Singapore) Pte twobusiness days prior to the First Issue Date (as defined below).

Tranche B Bonds: The Tranche B Bonds will bear interest at therate per annum (expressed as a percentage) equal to the sumof (i) 90 basis points and (ii) the Reference Rate, as determinedby Morgan Stanley Dean Witter Asia (Singapore) Pte twobusiness days prior to the First Issue Date.

Reference Rate Tranche A Bonds: The five year US$ swap mid-rate asdetermined by Morgan Stanley Dean Witter Asia (Singapore)Pte by reference to page 19901 of the Dow Jones TelerateService, at 3.00 pm (London time), two business days prior tothe First Issue Date.Tranche B Bonds: The seven year US$ swap mid-rate asdetermined by Morgan Stanley Dean Witter Asia (Singapore)Pte by reference to page 19901 of the Dow Jones TelerateService, at 3.00 pm (London time), two business days prior tothe First Issue Date.

“business day” means a day on which commercial banks inNew York City and London are open or not authorised to close.

Interest Payment Dates Interest will be payable semi-annually in arrear, commencingsix months after the First Issue Date.

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Issue Date The first series of SingTel Bonds will be issued on the FirstSettlement Date (as defined in Section 9.11(a)(i)) (the “FirstIssue Date”) being seven days after the Unconditional Date (asdefined in Section 12.1). Further series of SingTel Bonds, if any,may be issued with the same terms and conditions as theoriginal issue of SingTel Bonds at any time after the First IssueDate, with accrued interest from the First Issue Date.

Arranger and Morgan Stanley Dean Witter Asia (Singapore) PteLead Manager

Trustee Citicorp Trustee Company Limited

Principal Paying Agent Citibank, N.A., London Branch

Status of the Bonds The SingTel Bonds will constitute direct, unconditional andunsecured obligations of SingTel and will rank pari passu andrateably without any preference or priority among themselves,and pari passu with all other present and future unsecuredobligations (other than subordinated obligations and prioritiescreated by law) of SingTel.

Negative Pledge So long as any of the SingTel Bonds remains outstanding (asdefined in the Trust Deed), SingTel shall not create or permit tosubsist any mortgage, charge, pledge, lien or other form ofencumbrance or security interest upon the whole or any partof the undertaking, assets, property or revenues present orfuture of SingTel to secure any Relevant Debt, or any guaranteeor indemnity in respect of any Relevant Debt; unless, at thesame time or prior thereto, SingTel’s obligations under theSingTel Bonds and the Trust Deed:

(i) are secured equally and rateably therewith; or

(ii) have the benefit of such other security, guarantee,indemnity or other arrangement as shall be approved by anExtraordinary Resolution (as defined in the Trust Deed) ofthe Bondholders.

“Relevant Debt” means any present or future indebtedness ofSingTel in the form of, or represented by, bonds, notes,debentures, loan stock or other similar securities that are forthe time being, or are capable of being, quoted, listed orordinarily dealt in on any stock exchange, over-the-counter orother securities market, having an original maturity of morethan 365 days from its date of issue and denominated, payableor optionally payable in a currency other than S$.

Redemption Unless previously redeemed, or purchased and cancelled, theTranche A Bonds will be redeemed at their principal amount onthe fifth anniversary of the First Issue Date in 2006 and theTranche B Bonds will be redeemed at their principal amount onthe seventh anniversary of the First Issue Date in 2008. TheSingTel Bonds may not be redeemed, in whole or in part, priorto that date other than for taxation reasons.

Optional Tax SingTel may redeem all (but not some only) of the SingTel Redemption Bonds at their principal amount (together with interest accrued

to the date fixed for redemption), if:

(i) SingTel has or will become obliged to pay additionalamounts as a result of any change in, or amendment to,the laws (or any regulations, rulings or other administrativepronouncements promulgated thereunder) of Singapore orany political subdivision or any authority thereof or therein


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having power to tax, or any change in the application orofficial interpretation of such laws or regulations, whichchange or amendment becomes effective after the FirstIssue Date; and

(ii) such obligation cannot be avoided by SingTel takingreasonable measures available to it, provided that no suchnotice of redemption shall be given earlier than 90 daysprior to the earliest date on which SingTel would beobliged to pay such additional amounts were a payment inrespect of the Bonds then due.

Form and Denomination The SingTel Bonds will be issued in registered form only and in of Bonds the denomination of US$1.00 and US$1,000 and integral

multiples thereof. The SingTel Bonds will initially berepresented by interests in two global Bonds (each a “GlobalBond”) representing the Tranche A and Tranche B Bonds,respectively, which will be deposited on the Issue Date with acommon depositary for, and registered in the name of anominee of, Euroclear Bank S.A./N.V., as operator of theEuroclear System (“Euroclear”) and Clearstream Banking,société anonyme (“Clearstream”, and together with Euroclear,the “Clearing Systems”).

Clearance The SingTel Bonds will be cleared through the ClearingSystems. The Clearing Systems each hold securities for theircustomers and facilitate the clearance and settlement ofsecurities transactions by electronic book-entry transferbetween their respective account holders.

Global Bonds For as long as the SingTel Bonds are represented by the GlobalBonds and the Global Bonds are held by a nominee for theClearing Systems payments of principal and interest in respectof SingTel Bonds represented by the Global Bonds will bemade against presentation for endorsement and, if no furtherpayment falls to be made in respect of the SingTel Bonds,surrender of the Global Bonds to or to the order of thePrincipal Paying Agent or such other Paying Agent as shall havebeen notified to the Bondholders for such purpose. SingTelBonds which are represented by the Global Bonds will betransferable only in accordance with the rules and proceduresfor the time being of the relevant Clearing System.

Taxation All payments of principal and interest in respect of the SingTelBonds shall be made free and clear of, and withoutwithholding or deduction for, any taxes, duties, assessments orgovernmental charges of whatever nature imposed, levied,collected, withheld or assessed by or within Singapore or anyauthority therein or thereof having power to tax, unless suchwithholding or deduction is required by law. In that event,SingTel shall pay such additional amounts as will result in thereceipt by the bondholders of such amounts as would havebeen received by them had no such deduction or withholdingbeen required, except that no such additional amounts shall bepayable in respect of any SingTel Bond:

(i) to a holder (or third party on behalf of a holder) who isliable to such taxes, duties, assessments or governmentalcharges in respect of such SingTel Bond by reason of hishaving some connection with Singapore otherwise than the


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mere holding of such SingTel Bond or the receipt of anysums due in respect of such SingTel Bond (including,without limitation, the holder being a resident of, or havinga permanent establishment in, Singapore); or

(ii) the definitive SingTel Bond in respect of which issurrendered (where required to be surrendered) more than30 days after the Relevant Date (as defined in the “Termsand Conditions of the SingTel Bonds”), except to the extentthat the holder thereof would have been entitled to suchadditional amounts on surrender of such definitive SingTelBond for payment on the last day of such period of30 days.

Singapore Taxation The SingTel Bonds will be “qualifying debt securities” forthe purposes of the Income Tax Act, Chapter 134 of Singapore.Accordingly, subject to certain exceptions and prescribedconditions:

(i) interest on the SingTel Bonds received by a holder who isnot resident in Singapore and who does not have anypermanent establishment in Singapore is exempt fromSingapore tax. Where interest is derived from SingTel Bondsby any person who is not resident in Singapore and whocarries on any operation in Singapore through a permanentestablishment in Singapore, the tax exemption shall notapply if such person acquires such SingTel Bonds usingfunds from Singapore operations; and

(ii) subject to certain conditions having been fulfilled (includingthe submission by SingTel of a return on debt securities tothe Singapore Comptroller of Income Tax), interest on theSingTel Bonds received by any company in Singapore issubject to tax at a concessionary rate of 10%.

For a further description of certain Singapore taxationconsiderations, see Section 7.2.

Rating of Issuer SingTel will use reasonable endeavours to seek credit ratingsfrom Moody’s Investors Service and from Standard and Poor’sRatings Services, a division of the McGraw-Hill Companies, Inc.,for the SingTel Bonds as soon as practicable, and in any eventwithin six months of the First Issue Date.

Selling Restrictions The SingTel Bonds have not been and will not be registeredunder the United States Securities Act of 1933, as amended.Subject to certain exceptions, SingTel Bonds may not beoffered, sold or delivered within the United States or to USpersons. For a description of certain restrictions on offers, salesand deliveries of the SingTel Bonds, see Section 9.10.

Governing Law The SingTel Bonds will be governed by, and construed inaccordance with, the laws of England.


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SECTION 11OTHER INFORMATION



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11.1 IDENTITY OF BIDDER

SingTel Australia will make an Offer constituting a takeover bid for Optus Shares.

SingTel Australia was incorporated in The British Virgin Islands on 1 May 2001. Its businesswill be the holding of Optus Shares.

At the date of this Bidder’s Statement, SingTel Australia had on issue two ordinary shares ofA$1 each. SingTel Australia is an indirectly wholly owned subsidiary of SingTel. Furtherinformation about SingTel is set out in Section 3.

The director of SingTel Australia is Sin Hang Boon.

11.2 CASH CONSIDERATION

(a) Optus Shares to which the Offer relates and maximum cash required

The information in this Section 11.2 is given to the knowledge of SingTel Australiabased on publicly available information concerning Optus.

There are at the date of this Bidder’s Statement:

• 3,786,766,521 Optus Shares; and

• 9,652,417 Optus Options, each of which, if exercisable and exercised, would resultin the issue of one Optus Share.

The maximum amount that SingTel Australia could be required to pay in cash for OptusShares if every holder of Optus Shares accepted the Offer in respect of the Optus Sharesreferred to above, chose the Share and Cash Alternative (except CWAP which, for thepurposes of this calculation is assumed to choose the Share, Cash and Bond Alternative)and elected to receive the cash in A$ is A$8,024,879,100.

In addition:

(i) if every holder of Optus Options referred to above exercised their options andaccepted the Offer in respect of those Optus Shares and chose the Share and CashAlternative and elected to receive the cash in A$; and

(ii) if all additional Optus Shares which may be issued during the period from theRegister Date to the end of the Offer Period under the Employee Share Plans areissued (being 7,187,736 additional Optus Shares) and the holders of these OptusShares accepted the Offer in respect of those Optus Shares and chose the Share andCash Alternative,

an additional A$37,890,344 would be payable in cash by SingTel Australia in respect ofthe Offer.

The maximum total amount payable by SingTel Australia in cash under the Offer basedon the assumptions set out above, would therefore be A$8,062,769,444. Based oninformation provided by Optus, there are no Optus Shares or Optus Options which maybe issued or exercised during the Offer Period, other than as set out above.

Note that the amounts referred to above do not take into account that OptusShareholders may choose to receive the cash component in A$ or US$ under the OfferConsideration alternatives under the terms of the Offer, and potential exchange ratefluctuations until the close of the Offer.


O T H E R I N F O R M A T I O N


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(b)Source of cash consideration

SingTel Australia will fund the cash consideration component payable for AcceptanceShares using cash provided by SingTel. There are no conditions precedent to SingTelAustralia drawing down these funds from SingTel. SingTel will source these funds:

(i) firstly, from internal cash resources; and

(ii) secondly, under a bridge finance facility, being a non-revolving acquisition loanfacility of up to A$3 billion, with usual terms and conditions and conditionsprecedent for drawdown. SingTel proposes that in due course the bridge financefacility will be replaced by some form of debt issue in the capital market or by longterm bank debt. As at the date of this Bidder’s Statement, SingTel has not drawndown any amount under the bridge finance facility. The following is a generalsummary (which does not purport to be comprehensive or exhaustive) of the termsof the bridge finance facility.

Borrower Singapore Telecommunications Limited.

Facility Amount Up to A$3,000,000,000.

Type of Facility A Non-Revolving Acquisition Loan Facility (“Facility”).

Purpose To partially finance the Borrower’s acquisition of Optus ascontemplated by the Offer.

Mandated Lead Citicorp Investment Bank (Singapore) Limited (“Citicorp”) Arranger/ and/or Citibank, N.A. (“Citibank”) or any of its affiliates.Coordinator/Book-runner

Underwriters Citibank and/or any of its affiliates.

Lenders Citibank, and other financial institutions acceptable to theLead-Arranger to fund out of their respective branches inSingapore.

Closing Date 11 May 2001.

Availability Period The Facility is available to be drawn at any time after thesatisfaction of all Conditions Precedent to the earlier of:

(a) 120 days after the Closing Date or such other date asagreed with the group of banks to whom more than 50%of the loan is owed or whose aggregate commitment tothe Facility is more than 50% of the Facility Amount; and

(b) the withdrawal of the Offer.

Any undrawn amount will be cancelled without premiumor penalty.

Interest Rates Interest is calculated by reference to a commercial margin overthe average bid rate for bank accepted bills of exchange aspublished on the Reuters page “BBSY”.

Conditions Precedent Customary for financings of this nature, including but not to First Advance limited to:

(a) board resolutions;

(b) legal opinions from counsel reasonably acceptable to theAgent; and

(c) delivery of a certified copy of the announcement of theOffer having become unconditional in all respects.




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Conditions Precedent (a) Certain representations and warranties are true and to all Advances correct in all material respects on and as of the date of

the borrowing, as though made on and as of such date.

(b) No Event of Default or event, which with the giving ofnotice or passage of time or both, would be an Event ofDefault, has occurred and is continuing, or would resultfrom such borrowing.

Events of Default Customary for financings of this nature, including but notlimited to the following:

(a) failure to pay principal, interest or any other amountpayable under the legal documentation when due (withcure periods where appropriate for technical default);

(b) representations or warranties materially incorrect whenmade or deemed made (with cure periods for appropriateincorrect representations or warranties which are capableof cure);

(c) failure to comply with covenants (with cure periods whereappropriate which are capable of cure);

(d) reorganisation, liquidation, voluntary or involuntarybankruptcy or insolvency proceedings;

(e) material unsatisfied judgment or order;

(f) cross default to other material debt of SingTel or Optus;and

(g) change resulting in a Material Adverse Effect (to be definedin legal documentation).

Agent Citicorp Investment Bank (Singapore) Limited.

Governing Law English law.

11.3 CONTRACTS WITH C&W PLC AND OPTUS

(a) Separation Deed

C&W plc and Optus entered into the Separation Deed on 25 March 2001 to govern therelationship between them on and from the date the C&W Group ceases to hold anyshares in Optus (the “Separation Date”).

(i) Agreements to continue after the Separation Date

The Separation Deed provides that all agreements between members of the OptusGroup and members of the C&W Group (other than the agreements referred to inparagraph (ii) below) will continue to be in force after the Separation Date (the“Continuing Agreements”). The Continuing Agreements include:

• Agreement for Australian Backhaul Capacity dated 15 November 2000 betweenOptus Networks Pty Limited and Cable & Wireless Global Business Services PtyLimited;

• Global Services Agreement and Side Letter dated 17 July 2000 between OptusNetworks Pty Limited and Cable & Wireless Global Business Services Pty Limited;

• Bilateral Interconnection Agreement for International Internet Gateway Servicedated 24 March 2000 between Optus Networks Pty Limited and Cable &Wireless IDC INC;

• Construction and Maintenance Agreement – Asia Pacific Cable Network 2 dated18 April 2000 between Optus Networks Pty Limited and Cable & Wireless GlobalNetwork Limited and others;




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• PTAT-1 Submarine System Indefeasible Right of Use Agreement dated 27 July1996 between Optus Networks Pty Limited and Cable & Wireless NetworkServices Limited;

• Global Customer Network Reports Capital and Operating Costs Agreementdated 15 December 1997 between Optus Networks Pty Limited and C&W plc;

• Provision of Australian Components of Global Network Services for Exco NoonanInc, undated, between Optus Networks Pty Limited and C&W plc;

• Telecommunications Supply Agreement dated 26 February 1999 between OptusNetworks Pty Limited and Cable & Wireless Global Card Services Pty Limited;

• Global Telecommunications Services Agreement dated 5 April 2000 betweenOptus Networks Pty Limited and Cable & Wireless Global Markets Limited;

• International Telecommunications Services Agreement dated 14 September 1992between Optus Networks Pty Limited and MCL;

• UK Transit Agreement dated 1 May 1996 between Optus Networks Pty Limitedand MCL;

• North American Dedicated Transit Service Multilateral Agreement dated25 March 1993 between Optus Networks Pty Limited, Australian and OverseasTelecommunications Corporation Limited and others;

• Pre-Paid Distribution Agreement dated 15 October 1999 between Optus MobilePty Limited, Optus Internet Pty Limited and Cable & Wireless Global CardServices Pty Limited;

• Pre-Paid Distribution Agreement dated 2 August 1999 between Optus MobilePty Limited and Cable & Wireless Global Card Services Pty Limited;

• Agreement for the Supply and Licence of the Integrated Fraud Detection Systemdated 30 March 1999 between Optus Systems Pty Limited and C&W plc;

• Agreement for Transfer and Acquisition of a Line Business dated 26 February1999 between Optus Networks Pty Limited, Optus Systems Pty Limited, OptusAdministration Pty Limited and Cable & Wireless Global Card Services PtyLimited; and

• Card Services Agency Agreement dated 26 February 1999 betweenOptus Administration Pty Limited and Cable & Wireless Global Card ServicesPty Limited.

At any time after the date that is six months after the Separation Date, either partymay elect to terminate any Continuing Agreement if, having consulted each other ingood faith, the parties are not willing to have that Continuing Agreement remain inplace on the same or amended terms.

(ii) Agreements to be terminated after the Separation Date

Unless Optus and C&W plc determine otherwise, the following agreements enteredinto between Optus and C&W plc are to be terminated on and from the SeparationDate:

• General Services Agreement dated 28 September 1998 which relates to theestablishment of the framework for the provision of services by C&W plc and itsassociated companies to Optus; and

• Secondment Agreement dated 28 September 1998 which relates to theprovision for the secondment of employees from C&W plc or its associatedcompanies to Optus or its associated companies.




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(iii) Use of intellectual property

The Separation Deed makes provision for the following matters:

• The right to use trade marks and licences

Optus has the right to use certain C&W plc names and trade marks (whetherregistered or unregistered), names and logos and any trade marks, names andlogos licensed to Optus and its subsidiaries by a member of the C&W Group.

The use of these trade marks, names or logos will be terminated six months afterthe Separation Date, unless Optus has a continuing right to use a trade markunder a continuing agreement, or otherwise agreed between Optus or SingTeland C&W plc.

• Domain names

Optus may use any Internet domain names including a C&W plc name or thetrade marks specified under the Separation Deed for a maximum period of sixmonths after the Separation Date. After that date, Optus must either transfer orcancel the registration of the domain names specified.

• Change of name

Within six months after the Separation Date, Optus must change the name ofany Optus subsidiary whose name includes the words “Cable & Wireless” to aname not including those words.

Within six months after the Separation Date, Optus must either remove, cancelor transfer to C&W plc certain trade marks and business names registered in thename of Optus’ subsidiaries.

Optus must not represent itself as being associated with the C&W Group afterthe Separation Date, except as permitted by the Separation Deed.

• Information sharing systems

Optus and C&W plc must terminate computer information sharing systemswithin three months after the Separation Date.

(iv)Employees

All secondments of either C&W plc or Optus’ employees will be terminated on theSeparation Date.

SingTel or Optus may offer employment to secondees of C&W plc on terms andconditions determined by SingTel or Optus which are no less favourable to thosepreviously offered by C&W plc or which are acceptable to the employees.

Similarly, C&W plc may offer employment to secondees of Optus on terms andconditions determined by C&W plc which are no less favourable to those previouslyoffered by Optus or which are acceptable to the employees.

(b) Implementation Agreement

Extracts from the Implementation Agreement between SingTel and Optus are set out inAnnexure 2. The key terms of the Implementation Agreement are summarised below.

(i) Details and implementation of the Offer

The Implementation Agreement sets out the key terms of the Offer and containsdetailed provisions relating to its implementation, particularly the implementation ofthe Buy-Back and the arrangements applicable to the issue and redemption of theUnsecured Notes.

(ii) Placement

SingTel Australia may subscribe for shares in Optus on a one for one basis to replacethe Optus Shares bought back, and must do so if required by Optus (unless SingTelAustralia is proceeding with Compulsory Acquisition, or an insolvency event subsistsin relation to Optus).




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(iii) Co-operation in relation to information

Each party must use all reasonable endeavours in good faith to provide such informationabout itself to the other party as the other party reasonably requests to enable the otherparty to prepare, complete, print and despatch documentation required of it before theend of eight weeks after the date of the Implementation Agreement.

(iv)Co-operation in relation to due diligence

Each party must give the other access to, and the right to participate in, any duediligence procedures or materials commissioned by the party to allow the otherparty to verify that statements made by the other party regarding the first party inany of the documents referred to in paragraph (iii) above are true and notmisleading.

(v) Co-operation in seeking regulatory approvals

Each party must co-operate with and provide assistance in good faith to the otherparty in relation to obtaining all regulatory approvals required to implement theOffer and associated transactions.

(vi)Conduct of Optus business

Optus must ensure that, from the date of the announcement of the Offer until theend of the Offer Period, the Optus Group taken as a whole will conduct its businessin the ordinary course. Optus must co-operate and provide reasonable assistance ingood faith in obtaining consents or waivers under material contracts of Optus whichmay be impacted by the transaction.

(vii)Cessation of negotiations and non-solicitation

During the six-month period after the date of the Implementation Agreement,Optus must ensure that it and its directors, employees and officers:

• discontinue any negotiations or discussions; and

• do not, except with the prior written consent of SingTel, directly or indirectlysolicit or initiate any negotiations or discussions with respect to any potentialexpression of interest, offer or proposal to acquire all or a substantial part of thebusiness of Optus or its share capital.

Optus may consider and respond to any new proposal if required by the fiduciaryduties of its directors or otherwise by law.

(viii)Provision of information

During the six-month period after the date of the Implementation Agreement, otherthan in the ordinary course of business, Optus must not disclose any non-publicinformation concerning its business or affairs to any person who Optus knows orshould know (if it made reasonable enquiry) is a significant competitor of Optus or aperson who may make an offer or proposal to acquire all or a substantial part of thebusiness of Optus or its share capital.

Optus may disclose information if required by the fiduciary duties of its directors, bylaw or if required in the ordinary course of the ordinary business of the Optus Group.




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11.4 DIRECTORS’ INTERESTS AND CORPORATEGOVERNANCE

(a) Compensation of directors

For the year ended 31 March 2001, the aggregate compensation paid or accrued bySingTel to or for the SingTel directors for services in all capacities was S$1,493,440.This compensation was primarily in the form of fees for non-executive directors, andsalaries and bonuses for executive directors. Bonuses paid to SingTel executive directorsare supervised by the Compensation Committee.

The following table sets out the amounts paid to Directors with respect to the yearsended 31 March 2001 and 31 March 2000.

YEAR ENDED YEAR ENDED31 MARCH 2001 31 MARCH 2000

S$ S$

Non-executive directors’ fees 413,750(1) 109,009Executive directors’ salaries and benefits 614,690 567,955Executive directors’ annual bonuses 465,000 312,950Compensation for loss of office – –(1) Subject to approval by SingTel Shareholders at the annual general meeting expected to be held in

August 2001.

The following table sets out the remuneration during the year ended 31 March 2001 ofall of the SingTel directors in office as at that date.

TOTAL Y/E TOTAL Y/E31 MARCH 31 MARCH

SALARY/FEES (1) BONUS BENEFITS 2001 (1) 2000DIRECTOR S$ S$ S$ S$ S$

Mr Koh Boon Hwee 70,000 – – 70,000 20,000Mr Lee Hsien Yang 612,710(2) 465,000 1,980 1,079,690 880,905Mr Paul Chan Kwai Wah 40,000 – – 40,000 3,671(3)

Dr Yogen K Dalal 14,583(3) – – 14,583 –MG Lim Chuan Poh 37,500 – – 37,500 10,000Mr Quek Poh Huat 45,000 – – 45,000 10,000Mr Seah Kian Peng 40,000 – – 40,000 3,671(3)

Mr Jaspal Singh 40,000 – – 40,000 10,000Mr Jackson Peter Tai 16,667(3) – – 16,667 –Mr Keith Tay Ah Kee 55,000 – – 55,000 15,000Total 971,460 465,000 1,980 1,438,440 953,247(1) Non-executive directors’ fees are subject to approval by SingTel Shareholders at the annual general meeting

expected to be held in August 2001, other than the salary and bonus of the President and CEO, Mr Lee HsienYang. Under a resolution of SingTel’s Shareholders passed at its annual general meeting on 25 September2000, the maximum aggregate amount payable to SingTel’s non-executive directors (as a group in relationto their directorship in SingTel only, excluding any directorship in any SingTel subsidiary) is S$109,009.All directors are non-executive directors, other than Mr Lee.

(2) Mr Lee’s salary is inclusive of monthly fixed allowances and employer’s CPF contributions.(3) Fees are pro-rated for part year service only.

The following table sets out amounts paid to SingTel directors who resigned during theyear ended 31 March 2001.

TOTAL Y/E TOTAL Y/E31 MARCH 31 MARCH

SALARY/FEES (1) BONUS BENEFITS 2001 (1) 2000DIRECTOR S$ S$ S$ S$ S$

Mr Wong Hung Khim 27,500 – – 27,500 15,000Mr Lim Ho Kee 27,500 – – 27,500 15,000Total 55,000 55,000 30,000(1) Subject to approval by SingTel Shareholders at the annual general meeting expected to be held in August

2001. Fees are pro-rated for part year service only.




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(b) Interests of directors and executive officers

The following table sets out information as at 31 March 2001 with respect to theinterests (as defined in the Singapore Companies Act) in SingTel Shares held by SingTeldirectors (as recorded in SingTel’s Register of Directors’ Shareholdings as at that date)and executive officers.

SINGTEL SHARES SINGTEL SHARES DIRECT DEEMED SUBJECT TO OPTIONS

DIRECTOR INTEREST INTEREST (DIRECT INTEREST)

Mr Koh Boon Hwee 31,820 1,690 –Mr Lee Hsien Yang 2,333 1,690 2,120,000Mr Paul Chan Kwai Wah 1,820 1,690 –Dr Yogen K Dalal – – –M G Lim Chuan Poh 1,490 – –Mr Quek Poh Huat 1,820 1,690 –Mr Seah Kian Peng 1,020 1,490 –Mr Jaspal Singh 1,700 – –Mr Jackson Peter Tai 30,000 – –Mr Keith Tay Ah Kee 31,700 – –Executive officersMr Chow Wing Keung 1,490 1,490 534,000Ms Chua Sock Koong 4,190 1,820 1,031,500Mr William Hope – – 555,000Mr Lee Shin Koi 76,690 6,690 1,019,000Mr Lim Chuan Poh 1,730 – 854,000Mr Lim Shyong 54,700 1,490 648,000Mr Lim Toon 64,640 1,690 1,426,000Mr Sin Hang Boon 25,190 1,690 685,500Mr William Tan Soo Hock 39,810 – 620,000Total 372,143 23,120 9,493,000

(c) Corporate governance

SingTel currently applies the principles set out in the Best Practices Guide issued by theSGX-ST.

The Best Practices Guide provides guidance on the principles and best practices incorporate governance and dealings by listed issuers and their directors and employeesin the securities of SGX-ST listed companies.

SingTel has established a formal system for financial monitoring and control. The systemdeals with delegation of authorities and the provision of business and financial reportsto senior management and the SingTel Board.

The Board has established five principal committees, each of which is empowered tomake decisions on matters within its terms of reference and applicable limits of authority.

The Executive Committee comprises the Chairman of the SingTel Board and fournon-executive directors. The Executive Committee considers and approves majorinvestment projects of certain values, determines investment policies and manages thegroup’s assets and liabilities in line with the SingTel Board’s policies and directives.It reviews and approves, before SingTel Board approval, annual operating and capitalexpenditure budgets.

The Audit Committee comprises four non-executive directors, the majority of whomare independent directors. The Audit Committee meets regularly to receive and reviewreports from the internal audit department, the external auditors and management.It has full access to and the co-operation of the management and the external auditors.

The internal audit department reports functionally to the Audit Committee. Thedepartment assists management in achieving and maintaining sound managerialcontrols over the assets of SingTel. It also works closely with operations in enhancingbusiness and work processes and reviews processes and systems.

The Nominations Committee comprises the Chairman of the SingTel Board and anon-executive director. The Nominations Committee reviews and assesses candidatesfor appointment as a director (including executive directors) before recommendation tothe SingTel Board for appointment. It ensures that the SingTel Board has an appropriatebalance of independent directors as well as directors with the right profile of expertise,skills, attributes and ability.




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The Compensation Committee comprises the Chairman of the SingTel Board andtwo non-executive directors. This Committee sets and reviews policies concerningthe compensation and promotion of top management officers of SingTel as well aspersonnel policies and human resource matters. The Compensation Committee alsoadministers the Singapore Telecom Executives’ Share Option Scheme and the SingaporeTelecom Share Option Scheme 1999.

The Management Committee comprises the President and Chief Executive Officer, theChief Operating Officer, the Chief Financial Officer, the Executive Vice-Presidents andcertain Vice-Presidents. The Management Committee directs management andoperational policies and activities.

11.5 BENEFITS TO CERTAIN PERSONS

(a) Benefits to directors

Other than as set out below or elsewhere in this Bidder’s Statement:

(i) no director or proposed director of SingTel, and no firm in which a director orproposed director is or was at a relevant time a partner, has or has had in the twoyears before the date of this Bidder’s Statement any interest in:

• the formation or promotion of SingTel;

• any property proposed to be acquired by SingTel in connection with itsformation or promotion, or in connection with the offer of securities formingpart of the consideration for the Offer; or

• the offer of securities forming part of the consideration for the Offer; and

(ii) no amounts have been paid or agreed to be paid, and no benefits have been givenor agreed to be given:

• to any director or proposed director of SingTel to induce them to become, or toqualify them as, a director; or

• for services rendered by them in connection with the formation or promotion ofSingTel or in connection with the offer of securities forming part of theconsideration for the Offer.

(b)Benefits to other persons

Other than as set out below or elsewhere in this Bidder’s Statement:

(i) no person named in this Bidder’s Statement as performing a function in aprofessional, advisory or other capacity in connection with the preparation ordistribution of this Bidder’s Statement, and no promoter of SingTel holds, or hasheld at any time during the last two years before the date of this Bidder’s Statement,any interest in:

• the formation or promotion of SingTel;

• any property acquired or proposed to be acquired by SingTel in connection withits formation and promotion or in connection with the offer of securities formingpart of the consideration for the Offer; or

• the offer of securities forming part of the consideration for the Offer; and

(ii) no amounts have been paid or agreed to be paid and no benefit has been given oragreed to be given to any of these persons for services rendered by them inconnection with the formation or promotion of SingTel or in connection with theoffer of securities forming part of the consideration for the Offer.

(c) Details of benefits

PricewaterhouseCoopers, whose independent accountant’s report is included in thisBidder’s Statement, will receive professional fees in the range of S$1.0 million andS$1.5 million in connection with the preparation of that report.




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11.6 COMPULSORY ACQUISITION

SingTel Australia has obtained a modification of section 661A of the Corporations Law tofacilitate SingTel Australia compulsorily acquiring all remaining Optus Shares. Themodification ensures that Optus Shares which are bought back and cancelled by Optusunder the Buy-Back Alternative are taken into account when determining whether SingTelAustralia is entitled to compulsorily acquire remaining Optus Shares during or at the end ofthe Offer Period.

SingTel Australia will become entitled to compulsorily acquire all remaining Optus Sharesfor the same consideration under the Offer in circumstances where SingTel Australia and itsassociates have, during or at the end of the Offer Period:

• relevant interests in at least 90% by number of Optus Shares (including relevantinterests in Optus Shares that are bought back and cancelled by Optus in thecalculation of the 90%); and

• acquired a relevant interest in at least 75% by number of the Optus Shares that SingTelAustralia offered to acquire under the Offer (including any Optus Shares acquired whichare subsequently bought back and cancelled by Optus).

SingTel Australia will also be entitled to compulsorily acquire all remaining Optus Shares if ithas voting power of at least 90% in Optus and holds full beneficial interests in at least 90%by value of all Optus Shares and Optus Options.

11.7 LITIGATION OF SINGTEL

Save as disclosed in this Bidder’s Statement neither SingTel nor any of its subsidiaries is, orhas been, involved in any legal or arbitration proceedings (including any such proceedingswhich are pending or threatened, of which SingTel is aware) which may have, or have had,in the 12 months preceding the day immediately prior to the date of this Bidder’sStatement, a material adverse effect on the financial position or business of SingTel taken asa whole.

(a) Compensation payments from the IDA

The IDA has made two payments to SingTel to compensate for the modifications to itsoriginal licence for the accelerated liberalisation of the telecommunications market. TheIDA paid SingTel S$1.5 billion in 1997 and S$859 million in 2000.

SingTel accounts for these payments as deferred income in the balance sheet, andrecognises them on a straight line basis over seven years from 1 April 2000, reflectingthe period by which SingTel’s original monopoly licence period was shortened.

The Inland Revenue Authority of Singapore has informed SingTel and the IDA that thecompensation payments are not subject to income tax. The IDA has claimed that thefirst compensation payment was calculated on the basis that it would be taxable andthat the assumed tax component was S$388 million. The IDA has asked SingTel torepay the amount of that assumed tax component. SingTel has sought appropriate legaladvice on the merits of the claim and disputes the IDA’s claim. Pending resolution ofthe dispute, SingTel has not made any provision in its financial statements regarding theIDA’s claim. The dispute does not affect the second payment of S$859 million.

(b)ThreeSixty pacific (Barbados) Inc.

C2C is currently in dispute with ThreeSixty pacific (Barbados) Inc. (“360 Pacific”), asubsidiary of 360 networks Inc. in relation to various issues relating to C2C’s agreementto supply fibre optic capacity on the C2C cable network to 360 Pacific for a purchaseprice of US$800 million. 360 Pacific has paid US$140 million to C2C but has failed topay instalment payments that are past due amounting to US$100 million. The partiesare in dispute about whether the instalments are due and payable and whether C2Chas performed certain obligations concerning provision of information and timelydelivery of the C2C cable network. If the matter cannot be resolved amicably, theparties may refer the dispute to arbitration.




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11.8 INTERRUPTIONS IN SINGTEL’S BUSINESS

There have been no significant interruptions in the business of SingTel which may have, orhave had, in the 12 months preceding the day immediately prior to the date of thisBidder’s Statement, a material adverse effect on the financial position or business of SingTeltaken as a whole.

11.9 MATERIAL CHANGES IN FINANCIAL POSITION OFSINGTEL AND OPTUS

Except as set out in this Bidder’s Statement, there has been no material change in thefinancial or trading position of the Optus Group, so far as is known to SingTel or SingTelAustralia, which has occurred since 31 March 2001, being the end of the last financialperiod for which audited financial statements of Optus were prepared.

Except as set out in this Bidder’s Statement, there has been no material change in thefinancial or trading position of SingTel taken as a whole which has occurred since 31 March2001, being the end of the last financial period for which audited statements of SingTelwere prepared.

11.10 REGULATORY AND OTHER APPROVALS

(a) Approvals obtained

As at the date of this Bidder’s Statement, the following regulatory and other approvalshave been obtained in respect of the Offer:

(i) IDA

The IDA has confirmed that it has no objections to the manner in which SingTel hasstructured its purchase payment for the acquisition of Optus and the correspondingchange in the shareholders of SingTel resulting from acceptance of the Offer.

(ii) SGX-ST

The SGX-ST has granted in principle approval for the listing and quotation of newSingTel Shares issued pursuant to acceptance of the Offer. Such approval should notbe taken as an indication of the merits of acceptance of the Offer, nor of the meritsof the SingTel Shares or the Optus Shares.

(b)Approvals required

The Offer is subject to various Australian and Singapore regulatory and other approvalswhich as at the date of this Bidder’s Statement have yet to be obtained.

(i) Foreign Investment Review Board

The Foreign Acquisitions and Takeovers Act 1975 regulates (among other matters) theacquisition of shares in certain Australian corporations where the acquisition resultsin a change in the identity of the foreign controllers of the corporation.

The Offer is subject to approval or non-objection by the Australian Treasurer underPart II of the Foreign Acquisitions and Takeovers Act 1975 regarding the acquisition ofthose shares by SingTel Australia (see Section 9.12(a)(i)).

SingTel lodged an application with the Foreign Investment Review Board (“FIRB”)on 15 May 2001. In connection with that application, SingTel has discussed itsproposed acquisition of Optus in meetings with the Commonwealth Department ofDefence and other interested Commonwealth Government departments andagencies. SingTel has also held discussions with relevant US Government agenciesabout issues relating to Optus’ satellites. These discussions have progressed well, andSingTel does not believe that there are any issues that cannot be resolved. However,no assurance can be given as to the outcome of the application to FIRB.

(ii) Financial Sector (Shareholdings) Act 1998

The Financial Sector (Shareholdings) Act 1998 regulates ownership and acquisitions ofprudentially regulated institutions in Australia.




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The Offer is subject to the Australian Treasurer or his representative issuing anyapproval required under the Financial Sector (Shareholdings) Act 1998 before the endof the Offer Period.

(iii) Insurance Acquisitions and Takeovers Act 1991

The Insurance Acquisitions and Takeovers Act 1991 regulates ownership and control ofAustralian-registered insurance companies.

The Offer is subject to the relevant Minister or his representative issuing any approvalrequired under the Insurance Acquisitions and Takeovers Act 1991 before the end ofthe Offer Period.

(iv)ASX

The Offer is subject to the ASX approving the listing and quotation of the newSingTel Shares issued pursuant to acceptance of the Offer. SingTel will apply forlisting on the ASX and for quotation on the ASX’s stock market of SingTel Shares(other than those now held by Temasek, for so long as those SingTel Shares are heldby Temasek).

(v) SingTel Shareholder approval

The Offer is subject to, before the end of the Offer Period, a resolution to approveperformance by SingTel or any of its subsidiaries of its obligations in connection withfunding the Buy-Back for the purpose of, and all procedures required under, section76 of the Singapore Companies Act (if it is required by law or by any GovernmentAgency or regulatory authority) being passed and complied with.

If the special resolution approving the financial assistance proposed to be given bySingTel to Optus in connection with the Buy-Back Alternative is passed by SingTelShareholders at the EGM on 29 May 2001, SingTel will be required by theSingapore Companies Act to publish a notice setting out the terms of the resolutionin a daily newspaper circulating generally in Singapore within 21 days after the dateof the EGM. SingTel intends to publish the required notice on 30 May 2001 orshortly thereafter if the special resolution is passed. The Singapore Companies Actprovides that certain specified persons (including SingTel Shareholders and SingTel’screditors) may apply to the Singapore courts to oppose the giving of such financialassistance within 21 days after publication of the notice. Accordingly, the procedurefor the approval of the financial assistance will be completed after the expiry of that21 day period if no court application is made to oppose the giving of financialassistance.

11.11 ASIC MODIFICATIONS AND EXEMPTIONS

SingTel Australia and Optus have obtained from ASIC certain modifications to, andexemptions from, the Corporations Law under sections 257D(2), 673(1), 655A, 669 and741 of the Corporations Law in relation to the Offer:

(a) to exempt Optus from the requirement to obtain shareholder approval in respect of theselective Buy-Back Agreements which arise upon Optus Shareholders accepting theOffers and electing the Buy-Back Alternative;

(b) to ensure that Optus Shares which are bought back under the Buy-Back Alternative aretreated as though they were purchased by SingTel Australia under the takeover bid forthe purposes of determining whether SingTel Australia may compulsorily acquire OptusShares;

(c) to exempt SingTel Australia from being required to offer the Share, Cash and BondAlternative, to any person holding ordinary shares in Optus who is a resident of, or aperson in, the United States;

(d) to exempt SingTel Australia from the disclosure requirements of Parts 6D.2 and 6D.3 foran offer of SingTel Shares in connection with the Buy-Back Alternative;




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(e) to provide that an acquisition by SingTel Australia of a relevant interest in Optus Sharesarising from acceptance of the Offer and election of the Buy-Back Alternative and theissue of Optus Shares to SingTel Australia equal to the maximum number of OptusShares bought back by Optus (i.e. the Placement) are within the exemptions to theprohibition against acquisition of certain relevant interests in voting shares of Optus;

(f) to amend the definition of “associate” in section 9 of the Corporations Law for thepurposes of its application in Chapter 6, 6A and 6C;

(g) to resolve certain ambiguities in the application of the Corporations Law resulting fromanomalies created by the Corporate Law Economic Reform Program Act 1999;

(h) to allow notices of variation of the Offer required under section 650D(3) to be signedby an agent of SingTel Australia;

(i) to allow technical information relating to the Offer required by section 636(1)(g) of theCorporations Law to be lodged with ASIC and incorporated by reference in the Bidder’sStatement;

(j) to allow SingTel Australia to extend the Offer to Optus Shares issued during the periodfrom the Register Date to the end of the Offer Period under the Employee Share Plans,where the proposal for issue was announced by Optus before 25 March 2001 or theissue is made under the Q1 2001 Plan or Q2 2001 Plan where SingTel Australia hasgiven its consent to the issue before the Instrument Date;

(k) to exempt SingTel Australia from the requirement in section 636(3) of the CorporationsLaw that it obtain the consent of a person before a statement made by that person isincluded in, or accompanies the Bidder’s Statement in respect of certain statementscontained in public documents or made by an official person;

(l) to exempt SingTel Australia from compliance with section 621(3) and 636(1)(h) of theCorporations Law (which relate to certain acquisitions of Optus securities by SingTelAustralia and its associates in the four month period prior to the date of the Offer) inrespect of any purchase or agreement by (each a “Foreign Associate”):

• a related body corporate of SingTel Australia which is operated and managedoutside Australia, is an associate of SingTel Australia only because of paragraph (2) ofthe definition of “associate” in section 9 of the Corporations Law and is not involvedin the planning or progress of the Offer (excluding SingTel and its subsidiaries); or

• a subsidiary of SingTel which is operated and managed outside Australia, is anassociate of SingTel Australia only because of paragraph (a) of the definition of“associate” in section 9 of the Corporations Law and is not involved in the planningor progress of the Offer (“Downstream Foreign Associates”),

by reason of a decision made and implemented by a Foreign Associate who actedindependently and without direction from SingTel or any SingTel subsidiary. Theexemption does not apply where the aggregate number of Optus Shares in whichrelated bodies corporate of SingTel Australia, during the four month period before thedate of the Offer, had a relevant interest (other than under the Pre-Bid Agreement)exceeding 5% of the issued Optus Shares or in respect of any relevant purchase oragreement by a Downstream Foreign Associate of which SingTel Australia had actualknowledge prior to lodgment of this Bidder’s Statement;

(m) to exempt SingTel Australia from section 636(1)(k) and 636(1)(l) of the CorporationsLaw in respect of any Optus securities in which SingTel Australia has a relevant interestbecause a Foreign Associate has, or commences to have, a relevant interest by means ofa decision made and implemented by a Foreign Associate which acted independentlyand without direction from SingTel or any SingTel subsidiary. The exemption does notapply where the aggregate number of Optus Shares in which related bodies corporateof SingTel Australia, during the four month period before the date of the Offer, had arelevant interest (other than under the Pre-Bid Agreement) exceeding 5% of the issuedOptus Shares or in respect of any relevant interest of a Downstream Foreign Associate ofwhich SingTel Australia had actual knowledge prior to lodgment of this Bidder’s Statement;

(n) to disregard for the purposes of the requirements contained in Part 6C.1 of theCorporations Law regarding substantial shareholding notices, relevant interests which




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related bodies corporate of SingTel, which are operated and managed outside Australia,are an associate of SingTel only because of paragraph (a) of the definition of “associate”in Section 9 and are not involved in the planning or progress of the Offer, have inOptus Shares; and

(o) to exclude from the prohibition contained in the Corporations Law on defeatingconditions the fulfilment of which are in the control of the SingTel Australia or itsassociates the condition of the Offer relating to shareholder approval required undersection 76 of the Singapore Companies Act.

11.12 ASX INFORMATION MEMORANDUM

In connection with the application for listing of SingTel on the ASX, SingTel has sought theagreement by the ASX to this Bidder’s Statement being an Information Memorandum forthe purposes of the ASX Listing Rules. Accordingly, the following additional information isincluded:

(a) all information that would be required under section 710 of the Corporations Law if theBidder’s Statement were a prospectus offering for subscription the SingTel Shares to beissued under the Offers is contained in this Bidder’s Statement;

(b) the interests of directors and proposed directors of SingTel now, and in the past twoyears, in the promotion of SingTel or in the property acquired or proposed to beacquired by SingTel are set out in Section 11.5(a);

(c) the interests of any expert in the promotion of SingTel or in the property acquired orproposed to be acquired by SingTel are set out in Section 11.5(b);

(d) the ASX does not take any responsibility for the contents of this Bidder’s Statement;

(e) the fact that the ASX may admit SingTel to its official list is not to be taken in any wayas an indication of the merits of SingTel; and

(f) a supplementary information memorandum will be issued if SingTel becomes aware ofany of the following between the date of this Bidder’s Statement and the date theSingTel Shares are quoted:

• a material statement in the Bidder’s Statement is false or misleading;

• there is a material omission from the Bidder’s Statement;

• there has been a significant change affecting a matter included in the Bidder’sStatement; and

• a significant new matter has arisen and would have been required to be included inthe Bidder’s Statement.

11.13 ASX WAIVERS

SingTel has obtained from ASX certain waivers of the ASX Listing Rules to allow thePlacement without the need for Optus Shareholder approval. SingTel has requested ASX togrant certain waivers to the ASX Listing Rules to facilitate the admission of SingTel to theofficial list and quotation on the ASX of SingTel Shares, other than those held by Temasek,including those listed in the table below.

LISTING RULE RATIONALE

1.1 condition 2 and 6.9 There are some respects in which the Articles of Associationof SingTel do not comply with the ASX Listing Rules. TheSingapore Companies Act requires all equity shares to have onevote on a poll regardless of the amount unpaid on the share.

1.1 condition 6 and 2.4 SingTel Shares held by Temasek will not be quoted nor willfuture issues of shares to Temasek.

3.8A, 3.9 and 7.36 SingTel will comply with the ASX Listing Rules for buy-backs itcarries out under the Singapore Companies Act as if it was acompany under the Corporations Law.

3.19 SingTel’s Articles of Association contain provisions imposing a15% shareholding limit which apply to all persons other thanTemasek.

15.7 SingTel will release information to SGX-ST immediately prior torelease to ASX.




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11.14 SINGTEL’S RELEVANT INTERESTS AND VOTINGPOWER IN OPTUS

ASIC has declared that SingTel Australia is not required to disclose in this Bidder’sStatement SingTel Australia’s relevant interest in each class of Optus securities and SingTelAustralia’s voting power in Optus in respect of relevant interests that SingTel Australia hasbecause certain related bodies corporate of SingTel Australia or subsidiaries of SingTel haverelevant interests in Optus securities that were acquired in certain circumstances. SeeSection 11.11 for further information about the declaration. The statements made in thisSection 11.14 are made in reliance on that declaration.

As far as SingTel and SingTel Australia are aware, as at the date of this Bidder’s Statementand as at the date of the Offer:

• there were 3,786,766,521 Optus Shares on issue and SingTel and SingTel Australia hada relevant interest in 19.8% of them (being 751,038,234 Optus Shares); and

• there were 9,652,417 Optus Options on issue. Neither SingTel nor SingTel Australia hada relevant interest in any Optus Options.

As at the date of this Bidder’s Statement, and as at the date the first Offer is sent, SingTelAustralia’s voting power in Optus was 19.8%.

11.15 DEALINGS IN OPTUS SHARES

ASIC has declared that SingTel Australia is not required to disclose in this Bidder’sStatement certain information about consideration that certain related bodies corporate ofSingTel Australia or subsidiaries of SingTel have provided or agreed to provide for OptusShares under a purchase or agreement in certain circumstances during the four monthsbefore the date of this Bidder’s Statement. See Section 11.11 for further information aboutthe declaration. The statements made in this Section 11.15 are made in reliance on thatdeclaration.

(a) Pre-Bid Agreement

On 25 March 2001, SingTel entered into the Pre-Bid Agreement with C&W plc andCWAP under which CWAP agreed that CWAP will (unless the agreement has beenterminated) accept the Offer in respect of 751,038,234 Optus Shares (representing19.8% of the issued Optus Shares) (the “CWAP Acceptance Shares”) held by CWAP.As the bidder making the Offer, SingTel Australia has agreed to be bound by the obligationsof SingTel under, and otherwise to act in accordance with, the Pre-Bid Agreement.

Under the Pre-Bid Agreement, SingTel Australia may require CWAP to make paymentsto it in relation to the CWAP Acceptance Shares as follows:

(i) If all the specified conditions are fulfilled (being essentially regulatory approvals) andcertain other matters are satisfied, and if CWAP does not accept the Offer in respectof all the CWAP Acceptance Shares and other Optus Shares held by CWAP otherthan the CWAP Acceptance Shares (“Free Shares”), SingTel Australia may, withinfour months after the specified conditions have been fulfilled, require CWAP to sellto SingTel Australia the CWAP Acceptance Shares for consideration of A$3.95 perShare or pay to SingTel Australia the sum of US$100 million or both.

(ii) In addition, CWAP must notify SingTel Australia in writing if it disposes of FreeShares to any person other than pursuant to the Offer (“Competing Offer”) withintwo business days of that disposal, if the disposal occurs within eight months afterthe date of the Pre-Bid Agreement. SingTel Australia may, within five business daysafter delivery of any such notice, require CWAP to do one or other or both of thethings in paragraphs (A) and (B) below.

(A) Unless SingTel Australia has already given a notice under paragraph (i) aboverequiring CWAP to sell the CWAP Acceptance Shares to SingTel Australia, SingTelAustralia may require CWAP:




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(I) to sell the CWAP Acceptance Shares to SingTel Australia for a consideration ofA$3.95 per share in accordance with paragraph (i) above; or

(II) to sell the CWAP Acceptance Shares into the Competing Offer and pay toSingTel Australia the difference (if positive) between:

• the price per Optus Share received by CWAP for the CWAP AcceptanceShares from the offeror under the Competing Offer (or where suchconsideration is not wholly comprised of cash, its A$ cash equivalent); and

• A$3.95,

multiplied by the number of CWAP Acceptance Shares as soon as practicableupon receipt of the consideration in respect of the disposal of the CWAPAcceptance Shares under the Competing Offer.

(B) SingTel Australia may require CWAP to pay to SingTel Australia the greater of:

(I) US$100 million; and

(II) 50% of the difference (if positive) between:

• the price per Optus Share received by CWAP for Free Shares disposed ofpursuant to the Competing Offer to the offeror under the CompetingOffer and where such consideration is not wholly comprised of A$ cash,its A$ cash equivalent; and

• A$3.95,

multiplied by the number of Free Shares disposed of pursuant to theCompeting Offer to the offeror of the Competing Offer as soon as practicableupon receipt of the consideration in respect of the disposal.

The Pre-Bid Agreement may be terminated in certain circumstances, including if SingTeldoes not comply in a material respect with certain of its obligations under the Pre-BidAgreement or the Implementation Agreement.

(b)Other dealings

Neither SingTel Australia nor any associate of SingTel Australia has provided, or agreedto provide consideration for an Optus Share in the four months before the date of thisBidder’s Statement, except pursuant to the Pre-Bid Agreement.

11.16 OTHER BENEFITS IN RELATION TO BID SECURITIES

Neither SingTel Australia nor any associate of SingTel Australia, during the period of fourmonths before the date of this Bidder’s Statement, gave, or offered to give or agreed togive a benefit to another person that is not available under the Offer and was likely toinduce the other person, or an associate of the other person, to accept the Offer or disposeof Optus Shares.

11.17 OTHER INFORMATION ABOUT SINGTEL

Material market announcements made by SingTel between 31 March 2000 and 13 May2001 are summarised in Annexure 5.

11.18 OTHER INFORMATION ABOUT OPTUS

Material market announcements made by Optus between 31 March 2000 and 13 May 2001are summarised in Annexure 6.




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11.19 CONSENTS AND LIABILITY

Each of PricewaterhouseCoopers Singapore and PricewaterhouseCoopers Securities Limitedhas given and, as at the date of this Bidder’s Statement, has not withdrawn its writtenconsent to the inclusion of their Independent Accountant’s Report in the form and contextin which it is included.

The Bidder’s Statement contains references to statements by the IDA (Sections 11.7,11.10 and Annexure 4), the Inland Revenue Authority of Singapore (Section 11.7 andAnnexure 1), SGX-ST (Section 11.10), the author of the Telecom Asia Annual ReadersChoice Survey (Section 3.1), the National University of Singapore Centre for TelemediaStrategy (Section 3.1), Paul Budde Communications Pty Limited (Section 4.1), Optus(Important Information, Sections 1.1, 5.2 and Annexure 6), C&W plc (Section 1.1),MobileOne (Section 3.4), Shareholders of MobileOne (Section 3.4), StarHub Mobile(Section 3.4), Singapore CableVision (Section 3.4), the publisher of the Computer WorldMagazine Annual Awards (Section 3.6) and the Bharti Group (Section 3.8) each of whichhave not provided their consent to the inclusion of the relevant statement in thisdocument. SingTel Australia will provide a copy of the document which contains therelevant statement free of charge upon request during the Offer Period. The documentmay be obtained at the registered office of SingTel in Singapore and also at Level 9,55 Hunter Street, Sydney NSW 2000 Australia.

Each of Morgan Stanley Dean Witter, Blake Dawson Waldron, and Allen & Gledhill doesnot make, or purport to make, any statement in the Bidder’s Statement or any statementupon which a statement in the Bidder’s Statement is based; and, to the maximum extentpermitted by law, expressly disclaims and takes no responsibility for any liability to anyperson which is based on, or arises out of, the statements, information or opinions in theBidder’s Statement.

SingTel Australia and SingTel are solely responsible for the preparation of this Bidder’sStatement.

11.20 MISCELLANEOUS

Copies of certain documents have been lodged by SingTel Australia with ASIC –Memorandum of Articles of Association of SingTel (see Section 8.3), Separation Deed (seeSection 11.3(a)), Implementation Agreement (see Section 11.3(b)), Pre-Bid Agreement (seeSection 11.5(a)), Trust Deed relating to the Bonds (see Section 10), and Trust Deed relatingto the Unsecured Notes (see Annexure 2) and the modifications and exemptions obtainedfrom ASIC (see Section 11.11).

SingTel Australia will provide a copy of those documents free of charge upon requestduring the Offer Period. The documents may be obtained at the registered office of SingTelin Singapore and also at Level 9, 55 Hunter Street, Sydney NSW 2000 Australia.




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SECTION 12DEFINITIONS AND INTERPRETATION



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12.1 DEFINITIONS

The following definitions apply in this Bidder’s Statement and each Acceptance Form,unless the context otherwise requires.

“Acceptance Form” means the acceptance form accompanying this Bidder’s Statement.

“Acceptance Shares” means those of your Optus Shares that are the subject of anacceptance of the Offer.

“acquisition of Optus” means the acquisition by SingTel Australia of a majorityshareholding in Optus as a result of acceptances of the Offer.

“Agency Agreement” means the agency agreement relating to the SingTel Bonds enteredinto between SingTel and the agents for the SingTel Bonds.

“Announcement Date” means 26 March 2001.

“Announcement Exchange Rate” means A$1 = US$0.4940.

“ASIC” means the Australian Securities & Investments Commission.

“Associated Company” refers to associated and joint venture companies of SingTel(as disclosed under note 31 of the financial statements in Annexure 1).

“ASX” means Australian Stock Exchange Limited.

“ASX Listing Rules” means the Listing Rules of ASX.

“Australian GAAP” means accounting principles generally accepted in Australia.

“A$” means Australian dollars.

“A$ Equivalent” means the amount of A$ calculated on a Settlement Date by converting(as the case may be):

(a) the US$ Cash Alternative;

(b) the US$ amount of the Bond Issue Price (calculated by applying the AnnouncementExchange Rate) of the SingTel Bond component of the Offer Consideration; or

(c) the Market Value of the SingTel Shares component of the Offer Consideration,

to A$ by applying the US$/A$ exchange rate expressed as the amount of A$ per US$1 asset on Reuters HSRA page at 9.47am Sydney time on the day prior to the relevantSettlement Date.

“Bef” means Belgian francs.

“Bidder” means SingTel Australia.

“Bond Issue Price” in respect of a SingTel Bond means the amount (expressed in A$ byapplying the Announcement Exchange Rate) of:

(a) where there is no rounding down of the interest rate on that SingTel Bond from theFormula Rate in accordance with bond market convention, the face value of thatSingTel Bond; and

(b) where there is a rounding down of the interest rate on the SingTel Bond from theFormula Rate in accordance with bond market convention (the “Rounded Rate”), theprincipal amount on which interest at the Formula Rate for the term of that SingTelBond will equal interest on the face value of that SingTel Bond for the term of thatSingTel Bond at the Rounded Rate.

“Broker” means a person who is a share broker and a participant in CHESS.

“Buy-Back” means a selective off market buy-back of Optus Shares to be implemented incompliance with Division 2 of Part 2J.1 of the Corporations Law.

“Buy-Back Agreement” means an agreement in the form set out in Schedule 4 to theImplementation Agreement between Optus and each Optus Shareholder who accepts theOffer and chooses the Buy-Back Alternative and which will be entered into and formedupon acceptance by Optus of that shareholder’s Buy-Back Offer.

“Buy-Back Alternative” is defined in clause 3.7(a)(ii) of the Implementation Agreement.

“Buy-Back Consideration” is defined in clause 4.5(a) of the Implementation Agreement.


D E F I N I T I O N S A N D I N T E R P R E T A T I O N


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“Buy-Back Offer” means an offer made by an Optus Shareholder to Optus to sell all or any ofits Optus Shares to Optus on the terms of the Buy-Back Agreement which offer is constitutedby that shareholder’s acceptance of the Offer and election of the Buy-Back Alternative.

“Buy-Back Provisions” is defined in Section 9.7(a).

“CDI” means CHESS Depository Instruments.

“CDN” means CHESS Depository Nominees Pty Limited.

“CDP” means The Central Depository (Pte) Limited, a company which operates thecomputerised central depository system for securities listed on the SGX-ST whereby:

(a) documents evidencing title in respect of the listed securities are deposited with the CDPand are registered in the name of CDP or its nominee;

(b) accounts are maintained by CDP in the names of the depositors so as to reflect the titleof the depositors to the book-entry securities; and

(c) transfers of the book-entry securities are effected electronically by CDP making anappropriate entry in the Depository Register of the book-entry securities that have beentransferred.

“CGT” means capital gains tax under Australian taxation laws.

“CHESS” means the ASX’s Clearing House Electronic Sub-Register System, the centralregister for electronic transfer of share ownership.

“CHESS Holding” means a holding of Optus Shares on CHESS.

“Cheque” means a cheque drawn on Optus’ Account.

“Compulsory Acquisition” means compulsory acquisition of Optus Shares under Part 6A.1of the Corporations Law as modified by ASIC.

“Controlling Participant” means the Broker or Non-Broker Participant who is designatedas the controlling participant for shares in a CHESS Holding in accordance with the SCHBusiness Rules.

“Corporations Law” means the Corporations Law as it applies in New South Wales.

“CPF” means the Singapore Government-administered Central Provident Fund, whichprovides social security and financial protection benefits mainly to employees in Singaporebusinesses. Individual employee benefits are funded by regular contributions of aprescribed percentage of the employee’s employment income.

“CWAP” means Cable & Wireless Australia & Pacific Holdings BV, a company incorporatedin the Netherlands.

“C&W Group” means C&W plc and its subsidiaries.

“C&W plc” means Cable and Wireless plc.

“Defeating Condition” is defined in Section 9.12(b).

“Depository Register” means a register maintained by CDP in respect of the book-entrysecurities.

“Dividend Record Date” means a date in September 2001.

“EBITDA” means earnings before interest, tax, depreciation and amortisation, but afterattribution of compensation from the IDA and after share of results of associated and jointventure companies.

“EGM” means the extraordinary general meeting of SingTel Shareholders to be held on29 May 2001.

“Employee Share Plans” means:

(a) the Q1 2001 Plan;

(b) the Q2 2001 Plan;

(c) Cable & Wireless Optus Special Incentive Scheme;

(d) Cable & Wireless Optus Employee Share Offer 2001; and

(e) Cable & Wireless Optus Global Senior Management Performance Share Plan.




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“EOP” means the Cable & Wireless Optus Executive Option Plan under which Optus hasgranted Optus Options to plan participants at an exercise price of A$4.11.

“First Settlement Date” is defined in Section 9.11(a)(i).

“Foreign Shareholder” means an Optus Shareholder who is resident outside Australia andits external territories.

“Formula Rate” of a Bond is the interest rate (expressed as a percent per annum)determined in accordance with Schedule 7 to the Implementation Agreement.

“GDP” means Gross Domestic Product.

“Government Agency” means:

(a) a government or government department or other body;

(b) a governmental, semi-governmental or judicial person; or

(c) a person (whether autonomous or not) who is charged with the administration of a law.

“HK$” means Hong Kong dollars.

“IDA” means the Info-communications Development Authority of Singapore.

“Implementation Agreement” means the agreement between SingTel and Optus dated25 March 2001 as amended, extracts from which are set out in Annexure 2.

“Instrument Date” means the date on which the instrument described in Section 11.11(j)was granted by ASIC.

“Interim Maturity Date” is defined in clause 3.6 of the Implementation Agreement.

“Issuer Sponsored Holding” means a holding of Optus Shares on Optus’ issuer sponsoredsub-register.

“Listing Condition” means the condition referred to in Section 9.12(a)(v).

“Market Day” means a day on which the SGX-ST is open for trading of securities.

“Market Value” means the US$ market value of a SingTel Share on a Settlement Datecalculated by reference to the S$ closing price of SingTel Shares on the SGX-ST on the dayprior to the relevant Settlement Date and converting S$ to US$ by applying the S$/US$exchange rate expressed as the amount of S$ per US$ as set on Reuters page ABSIRFIX1 at11.00 am Singapore time on the day prior to the relevant Settlement Date.

“Minimum Acceptance Condition” means SingTel Australia having at any time during orat the end of the Offer Period received acceptances in respect of more than 50% (bynumber) of all Optus Shares.

“MSCI Singapore Index” means the Morgan Stanley Capital International Singapore (Free)Index which consists primarily of stocks traded on the SGX-ST, and is the “free” version ofthe Singapore country index. Morgan Stanley Capital International “free” indices reflectactual investable opportunities by taking into account local market restrictions on shareownership by foreigners.

“MSCI World Diversified Telecom Services Index” means the Morgan Stanley CapitalInternational World Diversified Telecom Services Index which captures diversifiedtelecommunications services companies in 23 developed markets within thetelecommunications services industry group.

“Non-Broker Participant” means a Non-Broker Participant under the SCH Business Rules.

“Offer” means the offer constituted by Section 9 of this Bidder’s Statement which is madeto each and every eligible Optus Shareholder (or, if the context so requires, Section 9 ofthis Bidder’s Statement itself) and includes a reference to that offer as varied in accordancewith the Corporations Law).

“Offer Consideration” is defined in Section 9.2.

“Offer Period” means the period referred to in Section 9.9.

“Optus” means Cable & Wireless Optus Limited ACN 052 833 208 of 101 Miller Street,North Sydney NSW 2060.




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“Optus Financial Information” means the financial information of Optus prepared underAustralian GAAP based on the significant accounting policies disclosed in the Target’sStatement, and used in preparation of the Pro-forma Consolidated Financial Information.

“Optus Group” means Optus and its subsidiaries.

“Optus Options” means options to subscribe for Optus Shares, issued by Optus on orbefore the Register Date and, in relation to options issued under the EOP and SPP beforethe Register Date in the circumstances described in Section 4.4(a), means options to acceptSingTel Shares in satisfaction and discharge of the exercise of any option rights.

“Optus Share” means a fully paid ordinary share in Optus.

“Optus Shareholder” means a holder of Optus Shares.

“Partial Redemption Amount” means, in respect of any Unsecured Note, any amountpaid on the Interim Maturity Date under clause 3.5A(a) of the Implementation Agreementin respect of that Unsecured Note.

“Placement” means an issue of Optus Shares to SingTel Australia for each Optus Sharebought back under a Buy-Back Agreement, under the Implementation Agreement(see Section 11.3(b)(i)).

“PP” means Philippines pesos.

“Pre-Bid Agreement” means the agreement entered into by SingTel, C&W plc and CWAPon 25 March 2001.

“Pro-forma Consolidated Financial Information” means the unaudited pro-formaconsolidated financial information provided in Section 4.6.

“Q1 2001 Plan” means Cable & Wireless Optus Employee Share Acquisition Plan 2001/Q1.

“Q2 2001 Plan” means Cable & Wireless Optus Employee Share Acquisition Plan 2001/Q2.

“Redemption Amount” means, in respect of an Unsecured Note:

(a) if no Partial Redemption Amount has been paid in respect of that Unsecured Note, theInitial Redemption Amount; or

(b) otherwise, the difference between the Initial Redemption Amount and the PartialRedemption Amount.

“Register Date” means 19 May 2001 which is the date set by SingTel Australia undersection 633(2) of the Corporations Law.

“Restricted Foreign Shareholders” is described in Section 9.11(b).

“Rights” means all accretions and rights attaching to Optus Shares after the date of theOffer (including, but not limited to, all rights to receive dividends and other distributionsdeclared or paid and to receive or subscribe for shares, notes or options issued by Optus).

“Rp” means Indonesian rupiah.

“SBA” means the Singapore Broadcasting Authority.

“SCH Business Rules” means the business rules of the Securities Clearing House, the bodywhich administers the CHESS system in Australia.

“Second Settlement Date” is defined in Section 9.11(a)(ii).

“Settlement Date” means the First Settlement Date or any of the Second Settlement Dates.

“SGX-ST” means the Singapore Exchange Securities Trading Limited.

“SGX-ST Listing Manual” means the listing manual of SGX-ST.

“Share Alternative” is defined in Section 9.2(a)(i).

“Share and Cash Alternative” is defined in Section 9.2(a)(ii).

“Share, Cash and Bond Alternative” is defined in Section 9.2(a)(iii).

“Singapore Companies Act” means the Companies Act of Singapore (Chapter 50).




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“Singapore GAAP” means accounting principles generally accepted in Singapore.

“SingTel Board” means the board of directors of SingTel.

“SingTel Bonds” means the US$ denominated bonds to be issued by SingTel under theShare, Cash and Bond Alternative.

“SingTel Securities” is defined in Section 9.11(b).

“SingTel Shareholder” means a holder of SingTel ordinary shares.

“SingTel Shares” means fully paid ordinary shares in SingTel.

“Southern Cross” is a fibre optic cable venture in which Optus is a participant, whichprovides a link between Australia, New Zealand, Fiji, Hawaii and the west coast of theUnited States.

“Special Share” means the special share in the capital of SingTel with a par value of $0.50,held by the Singapore Minister for Finance (Incorporated), carrying certain special rightsand powers as described in Section 8.3(b) of this Bidder’s Statement.

“SPP” means the Cable & Wireless Optus Super Performance Plan under which Optus hasgranted Optus Options to plan participants at an exercise price of zero.

“Subscription Funds” is defined in clause 1.1 of the Implementation Agreement.

“S$” means Singapore dollars.

“S&P/ASX 200 Index” means the Standard & Poor’s/ASX 200 Index.

“Takeover Consideration Code” means in respect of each Offer Consideration alternative,the code specified for it on the Acceptance Form.

“TAS” means the former Telecommunication Authority of Singapore, the predecessorregulator to the IDA.

“TCNZ” means Telecom Corporation of New Zealand Limited.

“Temasek” means Temasek Holdings (Private) Limited, an investment holding company,wholly owned by the Government of Singapore.

“THB” means Thai baht.

“Tranche A Bond” means a Bond belonging to Tranche A referred to in Schedule 7 to theImplementation Agreement.

“Tranche B Bond” means a Bond belonging to Tranche B referred to in Schedule 7 to theImplementation Agreement.

“Transaction” has the meaning given to that term in the Implementation Agreement.

“Transfer Alternative” is defined in Section 9.6(a)(i).

“Unconditional Date” means the first day on which all of the defeating conditions of theOffer are fulfilled or the Offer is declared by SingTel Australia to be free of all suchconditions which have not been fulfilled.

“United States Shareholder” means a resident of or person in the United States thatbeneficially owns Optus Shares.

“Unsecured Note” means an unsecured note issued by SingTel (or a wholly ownedsubsidiary of SingTel which is fully guaranteed by SingTel) on the terms described inclauses 3.4, 3.5, 3.5A, 3.5B and 3.6 of the Implementation Agreement.

“Unsecured Note Provisions” is defined in Section 9.5(a).

“Unsecured Note Trust Deed” means the trust deed relating to the Unsecured Notes whichis made between SingTel and DBS Trustee Limited for the holders of Unsecured Notes.

“US$” means United States dollars.




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“US$ Cash Alternative” means the amount of US$ calculated by converting the A$ cashcomponent of the Offer Consideration to US$ by applying the Announcement Exchange Rate.

“Virgin Group” means Virgin Management Limited and Virgin (Asia) Management Limited,both members of the Virgin group of companies of the United Kingdom.

“Withholding Tax” means, in respect of a payment to an Optus Shareholder or its agent,amounts required to be paid to the Australian Taxation Office pursuant to Part 2-5 ofSchedule 1 of the Taxation Administration Act 1953 and other amounts required to bewithheld from any payment in accordance with a provision of the Taxation AdministrationAct 1953, the Income Tax Assessment Act 1997 or the Income Tax Assessment Act 1936.

“your Optus Shares” means Optus Shares:

(a) as to which you are registered on Optus’ register of members on the Register Date;

(b) issued to you during the period from the Register Date to the end of the Offer Period,as a result of the conversion of, or exercise of rights attached to Optus Options onOptus’ register of option holders on the Register Date;

(c) issued to you during the period between from the Register Date to the end of the OfferPeriod, under Optus Employee Share Plans in accordance with an announcement madeby Optus before 25 March 2001 or under the Q1 2001 Plan or Q2 2001 Plan whereSingTel Australia has given its consent to the issue before the Instrument Date; or

(d) as to which you are able to give good title, in accordance with section 653B of theCorporations Law, at the time you accept this Offer.

12.2 GLOSSARY

Terms referred to in this Bidder’s Statement and commonly used in the communicationsindustry are set out below.

“2G” means second generation mobile wireless technologies.

“3G” means third generation mobile wireless technologies.

“ADSL” means Asymmetric Digital Subscriber Line, a technology that allows combinationsof services including voice, data and one way full motion video to be delivered overexisting copper feeder distribution and subscriber lines.

“APCN” means the Asia Pacific Cable Network.

“APCN2” means the Asia Pacific Cable Network 2.

“ARPU” means average revenue per user.

“ATM” means Asynchronous Transfer Mode, a transfer mode in which the information(voice, data and video signals) are organised into cells for transmission.

“backbone” means the part of a communications network that connects main nodes,central offices, or LANs. The backbone usually has its own high-speed protocol, such asswitched token ring for LAN interconnections and SDH for central-office and main-nodeinterconnections.

“bandwidth” means the capacity of a communications link.

“CDMA” means Code Division Multiple Access.

“churn” means the transfer of a customer’s telecommunications service from one supplierto another.

“Direct Exchange Lines” means telephone lines connected directly to a telephone switch.

“domestic backhaul” means the domestic transmission links connecting frontier stations(submarine cable stations and satellite earthstations) to the domestic network or betweenthe frontier stations.

“DSL” means digital subscriber line.

“dual band” means the capability of mobile network infrastructure and handsets tooperate across two frequency bands.




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“FBO” means a person licensed by the IDA as a facilities-based operator to deploy one ormore forms of communications network, system or facility to offer communicationsswitching, transmission capacity or communications services to other licensedcommunications operators, corporates or consumers.

“fibre optic” means a cable made up of strands of extremely fine glass fibres throughwhich signals are transmitted as pulses of light.

“Gbps” means gigabits per second.

“GPRS” means General Packet Radio Service, a non-voice value-added service that allowsinformation to be sent and received across a mobile network.

“GSM900” means Global System for Mobile Communications 900, a mobile telephonesystem based on digital transmission, using a bandwidth of 900Hz.

“GSM1800” means Global System for Mobile Communications 1800, a mobile telephonesystem based on digital transmission, using a bandwidth of 1800Hz.

“HFC” means hybrid fibre coaxial cable, a system that has the potential to deliver voice,video and data via fibre optic cable for long haul transmission and via coaxial cable forshort haul transmission.

“hub” means a collection centre located in an area where telecommunications traffic canbe aggregated at a central point for transport and distribution.

“IDD” means international direct dial.

“INMARSAT” means International Maritime Satellite Organisation.

“INTELSAT” means International Telecommunications Satellite Consortium.An international cooperative of more than 135 member nations, it is the world’s largestsupplier of commercial satellite services with more than 20 satellites in orbit.

“Internet data centre” means a managed centre for customers to house their dataequipment. The data centre provider normally provides round the clock maintenance forthe housed equipment.

“IP” means Internet Protocol.

“ISDN” means Integrated Services Digital Networks, providing switched and dedicatedintegrated access to voice, data and video.

“ISP” means Internet Service Provider, a company that provides access to the Internet forcorporate and residential customers by providing the interface to the Internet backbone.

“JPIX” means Japan Internet Exchange.

“Kbps” means kilobits per second.

“LAN” means local area network.

“LINX” means London Internet Exchange.

“Mbps” means megabits per second.

“MDF” means Main Distribution Frames.

“MVNO” means mobile virtual network operator.

“NMT 900” means Nordic Mobile Telephone System using the 900MHz band.

“PAIX” means Palo Alto Internet Exchange.

“SBO” means a person licensed by the IDA as a services-based operator to leasecommunications network elements (such as transmission capacity, switching services, ductsand fibre) from FBOs to provide communications services to third parties or to resell thecommunications services by FBOs.

“SDH” means Synchronous Digital Hierarchy, a standard technology for synchronous datatransmission on optical media.

“SEA-ME-WE2” and “SEA-ME-WE3” are cable networks in which SingTel participates, andwhich provide connectivity between landing points in South East Asia, the Middle East andWestern Europe.




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“VPN” means Virtual Private Network, a “virtual” network constructed by connectingcomputers together over the Internet and encrypting their communications.

“VSAT” means Very Small Aperture Terminal.

“WAN” means wide area network.

“WAP” means Wireless Application Protocol, a proposed standard that allows for transfer ofdata securely between wireless devices such as mobile phones.

“Wideband CDMA” means wideband Code Division Multiple Access, a multi-channelmobile communications digital transmission technology.

12.3 SINGTEL SUBSIDIARIES, ASSOCIATED COMPANIES,PROJECTS AND SERVICES

The following definitions of SingTel and its subsidiaries, Associated Companies, projects andservices apply in this Bidder’s Statement.

“Aeradio” means SingTel Aeradio Pte Ltd, a wholly owned subsidiary of SingTel.

“AIS” means Advanced Info Service Public Company Limited, incorporated in Thailand.

“APT Satellite” means APT Satellite Holdings Limited, incorporated in Hong Kong.

“Belgacom” means Belgacom S.A, incorporated in Belgium.

“Bharti Group” means Bharti Telecom Limited and Bharti Tele-Ventures Limited,incorporated in India.

“BSI” means P.T. Bukaka SingTel International, incorporated in Indonesia.

“C2C” means C2C Pte Ltd, incorporated in Singapore.

“C2C cable network” means a proposed submarine optical fibre cable network linkingSingapore to other Asian countries such as China, Hong Kong, Japan, Korea, the Philippinesand Taiwan.

“DPC” means Digital Phone Company Limited, incorporated in Thailand.

“First Cube” means First Cube Pte Ltd, a subsidiary of SingTel incorporated in Singapore.

“Globe Telecom” means Globe Telecom, Inc., incorporated in the Philippines.

“ID.Safe” means ID.Safe Pte Ltd, incorporated in Singapore.

“i2i” means Network i2i Limited, incorporated in the Republic of Mauritius.

“i2i cable network” means a proposed submarine optical fibre cable network linkingSingapore and India.

“Lycos Asia” means Lycos Asia Limited, incorporated in Singapore.

“NCIC” means New Century InfoComm Tech Co., Ltd, incorporated in Taiwan.

“NCS” means National Computer Systems Pte Ltd, a wholly owned subsidiary of SingTel,incorporated in Singapore.

“SDT” means Shin Digital Company Limited, incorporated in Thailand.

“SESAMi.com” means SESAMi.com Pte Ltd, incorporated in Singapore.

“SingNet” means SingNet Pte Ltd, a wholly owned subsidiary of SingTel incorporatedin Singapore.

“SingPost” means Singapore Post Pte Ltd, a subsidiary of SingTel incorporated inSingapore.

“SingTel” means, as the context requires, Singapore Telecommunications Limited of31 Exeter Road, Comcentre, Singapore, 239732 (a company incorporated in the Republicof Singapore ARBN 096 701 567), or SingTel and its subsidiaries. In Section 8, a referenceto SingTel is a reference only to SingTel itself.

“SingTel Australia” means SingTel Australia Investment Ltd., a wholly owned subsidiaryof SingTel incorporated in The British Virgin Islands number 442 677 (to be registered asa foreign company in Australia).




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“SingTel International” means Singapore Telecom International Pte Ltd, a wholly ownedsubsidiary of SingTel incorporated in Singapore.

“SingTel IX” means SingTel Internet Exchange.

“SingTel Mobile” means Singapore Telecom Mobile Pte Ltd, a wholly owned subsidiary ofSingTel incorporated in Singapore.

“SingTel Paging” means Singapore Telecom Paging Pte Ltd, a wholly owned subsidiary ofSingTel incorporated in Singapore.

“SingTel Ventures” means SingTel Ventures (Singapore) Pte Ltd (which is incorporated inSingapore) or SingTel Ventures (Cayman) Pte Ltd (which is incorporated in The CaymanIslands). Both are wholly owned subsidiaries of SingTel.

“SingTel Yellow Pages” means SingTel Yellow Pages Pte Ltd, a wholly owned subsidiary ofSingTel incorporated in Singapore.

“Virgin Mobile Asia” means Virgin Mobile Asia Pte Ltd, incorporated in Singapore.

12.4 INTERPRETATION

The following interpretation rules apply in this Bidder’s Statement unless the contraryintention appears.

(a) Words and phrases which are defined by the Corporations Law as modified by ASIC forthe purposes of the Offer have the same meaning in this document and the AcceptanceForm and, if a special meaning is given for the purposes of Chapter 6 or 6A or aprovision of Chapter 6 or 6A of the Corporations Law, have that special meaning.

(b) Headings are for convenience only and do not affect interpretation.

(c) The following rules also apply in interpreting this Bidder’s Statement and eachAcceptance Form, except where the context makes it clear that a rule is not intended toapply.

(i) A singular word includes the plural, and vice versa.

(ii) A word which suggests one gender includes the other genders.

(iii) If a word is defined, another part of speech has a corresponding meaning.

(iv) References in this Bidder’s Statement to Sections are to Sections of this Bidder’sStatement.

(v) References in this Bidder’s Statement to annexures are to annexures to this Bidder’sStatement.

(vi) A reference to a person includes a reference to a corporation.

(vii) Annexures to this Bidder’s Statement form part of it.

DATED 18 May 2001

SIGNED for and on behalf of SingTel Australia Investment Ltd. following a resolution of thedirector of SingTel Australia Investment Ltd.

Sin Hang BoonDirector




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ANNEXURE 1CONSOLIDATED FINANCIAL STATEMENTS

Cli t L d With Di k PBV/AC/LW/M 01 T MOR105 SINGTEL SECT A3

MOR105 SINGTEL SECT A1 17/5/01 12:03 PM Page 177

C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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The following audited consolidated financial statements together with the report ofPricewaterhouseCoopers thereon are included in this Appendix.

Report of Independent Auditors

Audited financial statements for the years ended, and as of, 31 March 2001,31 March 2000 and 31 March 1999

Consolidated income statements

Consolidated balance sheets

Consolidated statements of changes in equity

Consolidated cash flow statements

Notes to the consolidated financial statements


R E P O R T O F I N D E P E N D E N T A U D I T O R S

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The Board of Directors

Singapore Telecommunications Limited

We have audited the consolidated financial statements of Singapore TelecommunicationsLimited and its subsidiaries (the “Group”) for the financial years ended 31 March 2001,2000 and 1999 set out on pages 180 to 221. These financial statements are theresponsibility of the Company’s directors. Our responsibility is to express an opinion onthese financial statements based on our audit.

We conducted our audit in accordance with Singapore Standards on Auditing. ThoseStandards require that we plan and perform our audit to obtain reasonable assurancewhether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significantestimates made by the directors, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the accompanying consolidated financial statements of the Group areproperly drawn up in accordance with the Singapore Statements of Accounting Standardand so as to give a true and fair view of the state of affairs of the Group at 31 March 2001,31 March 2000 and 31 March 1999 and the profit, changes in equity and cash flows ofthe Group for the financial years ended on those dates.

We have considered the financial statements and auditors’ report of the subsidiarycompanies of which we have not acted as auditors, being financial statements included inthe consolidated financial statements. The names of the subsidiary companies are stated inNote 31 to the consolidated financial statements.

PricewaterhouseCoopersCertified Public Accountants

Singapore10 May 2001


A U D I T E D F I N A N C I A L S T A T E M E N T S

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Consolidated Income Statements

For the financial years ended 31 March 2001, 31 March 2000 and 31 March 1999NOTES 2001 2000 1999

S$ MILLION S$ MILLION S$ MILLION

Operating revenue 3 4,925.5 4,865.8 4,883.5Operating expenses 4 (3,036.9) (3,013.1) (2,910.4)Operating profit 5 1,888.6 1,852.7 1,973.1Other income 6 93.2 35.2 31.8Compensation from IDA 7 337.0 – –

2,318.8 1,887.9 2,004.9Share of results of– associated companies 357.8 352.1 288.2– joint venture companies (8.9) 15.4 3.5Profit before interest and tax 2,667.7 2,255.4 2,296.6Interest and investment income 8 393.6 273.5 314.5Interest on borrowings 9 (9.1) (8.1) (8.8)

Profit on ordinary activities before tax 3,052.2 2,520.8 2,602.3Taxation 10 (715.1) (661.5) (670.3)Profit after tax 2,337.1 1,859.3 1,932.0Minority interests (12.9) (20.4) (19.2)Profit before extraordinary items 2,324.2 1,838.9 1,912.8Extraordinary items 11 (317.9) 701.0 87.0Profit attributable to shareholders 2,006.3 2,539.9 1,999.8

Basic earnings per share (cents) 12Before extraordinary items 15.06 12.00 12.54

After extraordinary items 13.00 16.58 13.11

Diluted earnings per share (cents) 12Before extraordinary items 15.06 12.00 12.54

After extraordinary items 13.00 16.58 13.11

EBITDA 13 3,290.2 3,037.1 2,817.9

EBITDA represents earnings before interest expense, interest and investment income, taxation,depreciation and amortisation, but after attribution of compensation from IDA and after the share ofresults of associated and joint venture companies.

The accompanying notes on pages 185 to 221 form an integral part of these financial statements.

Auditors’ Report – Page 179



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Consolidated Balance Sheets

As at 31 March 2001, 31 March 2000 and 31 March 1999NOTES 2001 2000 1999


Current assetsCash and cash equivalents 16 4,095.4 4,330.8 4,905.1Short term investments 17 2,533.3 1,578.8 1,475.5Trade and other debtors 18 1,228.7 890.1 859.5Inventories 19 105.0 96.3 110.0

7,962.4 6,896.0 7,350.1Non-current assetsProperty, plant and equipment (net) 20 5,475.8 4,435.6 4,549.1Associated companies 21 1,637.2 1,292.1 492.0Joint venture companies 22 231.0 58.1 28.6Long term investments 23 782.2 1,167.9 457.9Other non-current assets 24 64.0 67.1 58.8

8,190.2 7,020.8 5,586.4Total assets 16,152.6 13,916.8 12,936.5Current liabilitiesTrade and other creditors 25 2,570.6 1,662.1 1,738.3Borrowings (unsecured) 26 – 100.1 0.1Current income tax 10 596.5 635.3 552.3Proposed final dividend 27 640.0 633.1 620.7

3,807.1 3,030.6 2,911.4Non-current liabilitiesBorrowings (unsecured) 26 1,000.0 – 100.0Deferred income tax 10 778.1 768.2 798.4Deferred income 28 2,051.4 1,513.2 1,514.3

3,829.5 2,281.4 2,412.7Total liabilities 7,636.6 5,312.0 5,324.1Net assets 8,516.0 8,604.8 7,612.4

Share capital and reservesShare capital 29 2,312.0 2,321.0 2,287.5Reserves 5,753.7 6,248.7 5,285.6Interests of shareholders of the Company 8,065.7 8,569.7 7,573.1Minority interests 450.3 35.1 39.3

8,516.0 8,604.8 7,612.4





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Consolidated Statements of Changes in Equity

For the financial years ended 31 March 2001, 31 March 2000 and 31 March 1999RETAINED

CAPITAL CURRENCY EARNINGSREDEMP- TRANSLA- AND

SHARE SHARE TION TION OTHER NOTES CAPITAL PREMIUM RESERVE ACCOUNT RESERVES TOTAL

S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION

Balance at 1 April 2000 2,321.0 649.2 0.1 (47.5) 6,055.1 8,977.9Change in accounting policy 2 – – – – (408.2) (408.2)Restated balance 2,321.0 649.2 0.1 (47.5) 5,646.9 8,569.7Currency translation differences 30 – – – (61.8) – (61.8)Goodwill (net) 30 – – – – (807.2) (807.2)Net charges not recognised in income statement – – – (61.8) (807.2) (869.0)Net profit for the year – – – – 2,006.3 2,006.3Total recognised (charges)/gains for the financial year – – – (61.8) 1,199.1 1,137.3Dividends 27 – – – – (1,500.7) (1,500.7)Issue of share capital 29 0.1 1.6 – – – 1.7Repurchase of shares 29 (9.1) – 9.1 – (142.3) (142.3)Balance at 31 March 2001 2,312.0 650.8 9.2 (109.3) 5,203.0 8,065.7

Balance at 1 April 1999 2,287.5 1.4 – (24.9) 5,703.9 7,967.9Change in accounting policy 2 – – – – (394.8) (394.8)Restated balance 2,287.5 1.4 – (24.9) 5,309.1 7,573.1Currency translation differences 30 – – – (22.6) – (22.6)Goodwill (net) 30 – – – – (193.1) (193.1)Net charges not recognised in income statement – – – (22.6) (193.1) (215.7)Net profit for the year – restated (Note 2) – – – – 2,539.9 2,539.9Total recognised (charges)/gainsfor the financial year – – – (22.6) 2,346.8 2,324.2Dividends 27 – – – – (2,007.2) (2,007.2)Issue of share capital 29 33.6 647.8 – – – 681.4Repurchase of shares 29 (0.1) – 0.1 – (1.8) (1.8)Balance at 31 March 2000 2,321.0 649.2 0.1 (47.5) 5,646.9 8,569.7

Balance at 1 April 1998 2,287.5 1.1 – (52.7) 4,637.3 6,873.2Change in accounting policy 2 – – – – (352.2) (352.2)Restated balance 2,287.5 1.1 – (52.7) 4,285.1 6,521.0Currency translation differences 30 – – – 27.8 – 27.8Goodwill (net) 30 – – – – (355.1) (355.1)Net gains/(charges) not recognised in income statement – – – 27.8 (355.1) (327.3)Net profit for the year – restated (Note 2) – – – – 1,999.8 1,999.8Total recognised gains for the financial year – – – 27.8 1,644.7 1,672.5Dividends 27 – – – – (620.7) (620.7)Issue of share capital 29 * 0.3 – – – 0.3Balance at 31 March 1999 2,287.5 1.4 – (24.9) 5,309.1 7,573.1* denotes amount of less than S$50,000





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Consolidated Cash Flow Statements

For the financial years ended 31 March 2001, 31 March 2000 and 31 March 19992001 2000 1999


Cash Flows from Operating ActivitiesProfit before tax and extraordinary items 3,052.2 2,520.8 2,602.3Extraordinary items before tax (317.9) 777.1 87.0

2,734.3 3,297.9 2,689.3Adjustments for:Net amortisation income (1.6) (1.1) (0.4)Depreciation of property, plant and equipment 624.1 782.8 521.7(Gain) on dilution of interest in an associated company (28.7) – (25.3)(Gain)/loss on disposal of property, plant and equipment (30.6) 0.2 5.2(Gain) on sale of non-current investments (23.3) (781.9) (138.8)IDA compensation (337.0) – –Interest expense 9.1 8.1 8.8Interest and investment income (393.6) (273.5) (314.5)Net provision for diminution in value of non-current investments 389.4 4.8 77.1Property, plant and equipment written off 0.1 1.4 0.8Recovery of investment previously written off (22.0) – –Share of joint venture’s extraordinary items 2.5 – –Share of results of joint venture and associated companies (348.9) (367.5) (291.7)

(160.5) (626.7) (157.1)Operating cash flow before working capital changes 2,573.8 2,671.2 2,532.2Change in operating assets and liabilitiesTrade and other creditors 824.3 (91.3) (5.8)Trade and other debtors (209.0) (41.4) 44.8Inventories (7.8) 13.7 28.4Currency translation adjustments of subsidiary companies 24.2 (1.7) 12.1Cash generated from operations 3,205.5 2,550.5 2,611.7Dividend received from joint venture and associated companies 43.0 39.6 35.5Interest paid (8.1) (7.8) (10.3)Income tax paid (565.9) (463.6) (561.2)IDA compensation received 859.0 – –Net cash inflow from operating activities 3,533.5 2,118.7 2,075.7Cash Flows from Investing ActivitiesDividends received 33.2 8.7 18.9Funds/(acquisition of interest) from minority shareholders 367.1 (304.3) 170.5Interest received 214.6 235.7 300.3Investment in joint venture and associated companies (1,113.0) (736.5) (591.9)Investment in long term investments (126.4) (823.6) (12.1)(Extension)/repayment of long term loans from associated companies (32.3) 43.7 (43.9)Proceeds from disposal of subsidiary, net of cash disposed (35.4) – –(See Note (a) below)Payment for purchase of subsidiary, net of cash acquired (0.2) – –(See Note (a) below)Net investment in short term investments (782.5) (71.8) (3.2)Payment for purchases of property, plant and equipment (1,762.0) (786.5) (867.9)Proceeds from sale of non-current investments 87.3 1,014.8 344.9Proceeds from sale of property, plant and equipment 97.5 42.0 22.2Net cash outflow from investing activities (3,052.1) (1,377.8) (662.2)Cash Flows from Financing ActivitiesProceeds from issue of shares 1.7 681.4 0.3Proceeds from sale and leaseback of assets 17.8 – 9.8Repurchase of shares (142.3) (1.8) –Dividends paid to shareholders (1,493.8) (1,994.8) (564.2)Dividends paid to minority shareholders (0.1) – –Repayment of term loans (100.0) (0.1) (66.3)Proceeds from bond issue 1,000.0 – –Net cash outflow from financing activities (716.7) (1,315.3) (620.4)Net (decrease)/increase in Cash and Cash Equivalents Held (235.3) (574.4) 793.1Cash and Cash Equivalents Held at the Beginning of the Financial Year (Note 16) 4,330.7 4,905.1 4,112.0Cash and Cash Equivalents at the end of the Financial Year (Note 16) 4,095.4 4,330.7 4,905.1





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Consolidated Cash Flow Statements (continued)

For the financial years ended 31 March 2001, 31 March 2000 and 31 March 1999

(a) Acquisition and disposal of subsidiary companies

During the financial year ended 31 March 2001, the Group’s interest in First Cube Pte Ltd wasincreased from 50% to 72.92% for a cash consideration of S$4.6 million. Pursuant to a merger withAsia2B.com Holdings Limited during the financial year ended 31 March 2001 the Group exchangedits 89% equity interest in SESAMi.com Pte Ltd group for a 44.5% equity interest in SESAMi Inc.

The details of the acquisition and disposal were as follows:

ACQUISITION DISPOSALS$ MILLION S$ MILLION

Fair values of identifiable net assets of the subsidiary acquired/disposedNon-current assets – (6.1)Cash 4.4 (35.4)Current assets 1.8 (9.8)Current liabilities (0.7) 5.1

5.5 (46.2)Less:Minority interest (1.5) 10.4Share of net assets retained in Group – 44.3

4.0 8.5Goodwill 0.6 (8.5)Total consideration – paid in cash 4.6 –Less: Cash in subsidiary acquired/disposed (4.4) 35.4Outflow of cash 0.2 35.4





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Notes to the Financial Statements – 31 March 2001, 31 March 2000 and31 March 1999

These notes form an integral part of and should be read in conjunction with theaccompanying financial statements.

1 SIGNIFICANT ACCOUNTING POLICIESThe principal accounting policies adopted in the preparation of these financialstatements are set out below:

(a) Basis of preparation

The financial statements, expressed in Singapore dollars, have been prepared underthe historical cost convention, and are in accordance with Singapore Statements ofAccounting Standard.

In the financial year ended 31 March 2001, the Group adopted SAS 1 –Presentation of Financial Statements, SAS 15 – Leases and SAS 23 – SegmentReporting. The effect of adopting these standards has primarily been on thepresentation and disclosures contained in the financial statements. Accordingly, thecomparative figures have been reclassified to conform with the current financialyear’s presentation, except for SAS 23 in respect of information for the year ended31 March 1999 (Note 34).

(b)Basis of consolidation

(i) Subsidiary companies

A subsidiary is a company in which the Group, directly or indirectly, holds morethan half of the issued share capital, or controls more than half of the votingpower, or controls the composition of the board of directors.

The consolidated financial statements include the financial statements of theCompany and its subsidiary companies made up to the end of the financial year.Subsidiary companies are consolidated from the date of effective control and areno longer consolidated from the date that control ceases.

All intercompany transactions, balances and unrealised gains or losses ontransactions between group companies are eliminated. Where necessary,accounting policies for subsidiary companies have been changed to ensureconsistency with the policies adopted by the Group.

(ii) Associated companies

An associated company is a company in which the Group has significantinfluence, but not control or joint control, over its management, includingparticipation in the financial and operating policy decisions, or a company ofwhich the Group generally has between 20% and 50% of the voting rights.

Investments in associated companies are accounted for by the equity method ofaccounting. Unrealised gains or losses on transactions between the Group andits associated companies are eliminated to the extent of the Group’s interest inthe associated companies. Equity accounting is discontinued when the carryingamount of the investment including loans that are in fact extensions of theGroup’s investment, reaches zero, unless the Group has incurred obligations orguaranteed obligations in respect of the associated company. Where necessary,accounting policies for associated companies have been changed to ensureconsistency with the policies adopted by the Group.

(iii) Joint venture companies

A joint venture company is an entity which operates under a contractualarrangement between the Group and other parties, where the contractualarrangement establishes that the Group and one or more of the other partiesshare joint control over the economic activity of the entity.



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1 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(iii) Joint venture companies (continued)

The Group’s interest in jointly controlled entities is accounted for under theequity method of accounting as set out above. The Group’s share of operatingrevenue, net profit after taxation, assets and liabilities of the joint venturecompanies are disclosed in the notes to the financial statements.

(iv)Goodwill

Goodwill represents the excess of fair value of the consideration given over thefair value of the identifiable net assets of subsidiary, associated and joint venturecompanies when acquired. Goodwill is adjusted against shareholders’ equity.Upon disposal of the subsidiary, associated and joint venture companies, thecorresponding goodwill is transferred to the income statement and recognisedas part of the gain or loss on disposal.

(c) Foreign currency translation

(i) Foreign subsidiary, associated and joint venture companies(“Foreign Entities”)

For the purpose of consolidation of subsidiary companies and the equityaccounting of associated and joint venture companies, the balance sheets offoreign entities are translated into Singapore dollars at the exchange ratesprevailing at the balance sheet date, income statements of foreign entities aretranslated into Singapore dollars at the weighted average exchange rates for theyear. Exchange differences arising from the translation of the net investment inforeign entity is taken to currency translation account in the shareholders’equity. On disposal of a foreign entity, accumulated exchange differencesrelating to that entity are transferred to income statement and recognised aspart of the gain or loss on disposal.

Goodwill arising on acquisition of foreign entities is translated at exchange rateprevailing at the date of acquisition. Fair value adjustments made at the date ofacquisition are treated as adjustments to the assets of the foreign entity andtranslated on a basis consistent with these assets.

(ii) Foreign currency transactions

Foreign currency transactions are accounted for at the exchange rates prevailingat the date of the transactions. Foreign currency monetary assets and liabilitiesare translated into Singapore dollars at the rates of exchange prevailing at thebalance sheet date. Gains and losses resulting from the settlement of suchtransactions and from the translation of monetary assets and liabilitiesdenominated in foreign currencies are recognised in the income statement.

(iii) Foreign currency hedges

Exchange differences arising from translating foreign currencies purchased tohedge against specific capital or operating expenditure commitments at balancesheet date are deferred. They are subsequently included in the measurement ofthe related capital or operating expenditure transactions. Exchange differencesarising from translating foreign exchange forward contracts and options enteredinto as hedges for foreign currency assets and liabilities are accounted for in amanner consistent with the hedged item.

Long term loans to subsidiary, joint venture and associated companies that arein fact extensions of the Group’s net investment in these entities and theborrowings entered into as a specific hedge for such investments are translatedinto Singapore dollars at exchange rates prevailing at the balance sheet date.The resulting exchange differences are taken to the currency translation accountin the year that they arise, and are taken to the income statement upon disposalof the investments.



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(d)Revenue recognition

Revenue comprises the value of services rendered, sale of equipment and sale ofadvertising space in directories, net of goods and services tax. It takes into accountthe gross income received and receivable from revenue sharing arrangementsentered into with overseas telecommunications and postal companies in respect oftraffic exchanged.

Revenue from the rendering of services is recognised when the services arerendered.

Provision for unearned revenue is made for phone cards, prepaid cards and stampswhich have been sold, but for which services have not been rendered as at thebalance sheet date. Expenses directly attributable to the unearned revenue aredeferred until the revenue is recognised.

Revenue from the provision of information technology services is recognised basedon the percentage of completion, using cost-to-cost basis. Revenue frominformation technology services, where the services involve substantially theprocurement of computer equipment and third party software for installation, isrecognised upon full completion of the project.

Revenue from the sale of equipment is recognised upon delivery to customers.

Revenue from the sale of advertising space in directories is recognised in thefinancial year of publication. Prior to 1 April 2000, such revenue was recognised ona time basis over the lives of the directories. This change in accounting policy hasno material impact on the results of the Group for the current financial year.

Dividend income is recorded gross in the income statement in the accountingperiod in which a dividend is declared payable by the investee company or, in thecase of subsidiary companies, in respect of when it is proposed.

Rental and interest income are recognised on an accrual basis.

(e) Government grants

(i) Relating to operating expenditure

Government grants are recognised as income over the periods necessary tomatch them with the related costs which they are intended to compensate, on asystematic basis.

(ii) Relating to purchase of property, plant and equipment

Government grants relating to the purchase of property, plant and equipmentare included in non-current liabilities as deferred income and are credited to theincome statement on a straight line basis over the expected lives of the relatedassets.

(f) Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. For the purposesof the cash flow statement, cash and cash equivalents comprise cash on hand,balances with banks and fixed deposits, net of bank overdrafts.

(g)Trade debtors

Trade debtors are carried at anticipated realisable value.

Bad debts are written off and specific provisions are made for those debtsconsidered to be doubtful. General provisions are made on the balance of tradedebtors to cover unexpected losses which have not been specifically identified.



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(h) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost isdetermined by the weighted average basis. Provision for obsolescence is based on areview of the age and usage of inventories. Net realisable value is the estimatedselling price in the ordinary course of business, less the costs of completion andselling expenses.

Work-in-progress (directories) is stated at the cost incurred up to balance sheetdate.

Work-in-progress (information technology services) is stated at costs less progresspayments received and receivable on uncompleted information technology services.Costs include third party hardware and software costs, manpower, other directexpenses attributable to the project activity and recognised profit on incompleteprojects. When it is probable that total contract costs will exceed total contractrevenue, the expected loss is recognised as an expense immediately.

The production costs of stamps and stamped stationery inventory are expensed asincurred as the amounts involved are immaterial.

Spares are carried at the lower of cost and net realisable value, and are expensedwhen used.

(i) Property, plant and equipment

Property, plant and equipment is stated at historical cost less depreciation.

Depreciation is calculated on the straight-line method to write off the cost of eachasset to their residual values over their estimated useful lives as follows:

PROPERTY, PLANT AND EQUIPMENT NO. OF YEARS

Buildings 5 – 30Transmission plant and equipment 5 – 20Switching equipment 3 – 10Postal equipment 10Other fixed assets 3 – 12

No depreciation is provided on freehold land, long-term leasehold land withremaining lease period of more than 100 years and capital work-in-progress.Leasehold land with remaining lease period of 100 years or less is depreciated inequal instalments over its remaining lease period.

Where the carrying amount of an asset is greater than its estimated recoverableamount, it is written down to its recoverable amount.

Interest costs on borrowings to finance the construction of property, plant andequipment are capitalised during the period of time that is required to completeand prepare the asset for its intended use. All other borrowing costs are expensed.

(j) Intangible assets

(i) Research and development

Development expenditure attributable to major projects, whose future returnsare reasonably assured, is capitalised and amortised over the estimated useful lifeof the product. Expenditure on pure research is written off to the incomestatement in the year in which it is incurred, except for items of a capital naturewhich are capitalised as property, plant and equipment. The depreciation chargeof these assets are taken to the income statement. Depreciation rates ofproperty, plant and equipment utilised for research and development activitiesare reviewed annually to take into account technological obsolescence andpossible future benefits to the Group.



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(j) Intangible assets (continued)

(ii) Computer software development costs

Generally, costs associated with developing or maintaining computer softwareprogrammes are recognised as an expense as incurred. However, costs that aredirectly associated with identifiable and unique software products controlled bythe Group and have probable economic benefits exceeding one year andgreater than its cost are recognised as assets and included in property, plant andequipment.

(iii) Other intangible assets

Expenditure on licences is capitalised and amortised using the straight-linemethod over their useful lives.

(iv)Customer acquisition costs

Customer acquisition costs, including related sales and promotion expenses andactivation commissions, are expensed as incurred.

(v) Pre-incorporation expenses

Pre-incorporation expenses are expensed as incurred.

(k) Investments

Quoted and unquoted investments that are intended to be held for the long termare stated in the financial statements at cost less provision. Provision is made inrecognition of a diminution in value of the investments which is other thantemporary, determined on an individual investment basis.

Quoted investments held as current assets are stated at the lower of cost and marketvalue on a portfolio basis. Cost is determined using the weighted average method.

Gain or loss on disposals of and provision for non-current investments, includingsubsidiary, associated and joint venture companies, are taken to the incomestatement as extraordinary items.

(l) Leases

(i) Where a group company is the lessee

Leases of property, plant and equipment where the Group has substantially allthe risks and rewards of ownership are classified as finance leases. Finance leasesare capitalised at the inception of the lease at the lower of the fair value of theleased property or the present value of the minimum lease payments. Each leasepayment is allocated between the liability and finance charges so as to achieve aconstant rate on the finance balance outstanding. The interest element of thefinance cost is charged to the income statement over the lease period. Theproperty, plant and equipment acquired under finance leases is depreciated overthe shorter of the useful life of the asset or the lease term.

Leases under which a significant portion of the risks and rewards of ownership areretained by the lessor are classified as operating leases. Payments made underoperating leases (net of any incentives received from the lessor) are charged to theincome statement on a straight-line basis over the period of the lease.

If a sale and leaseback transaction results in a finance lease, any excess of salesproceeds over the carrying amount is deferred and amortised over the lease term.



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(l) Leases (continued)

(i) Where a group company is the lessee (continued)

If a sale and leaseback transaction results in an operating lease, and it is clearthat the transaction is established at fair value, any profit or loss is recognisedimmediately. If the sale price is below fair value, any gain or loss is alsorecognised immediately except that, if the loss is compensated by future leasepayments at below market price, it is deferred and amortised in proportion tothe lease payments over the period for which the asset is expected to be used.If the sale price is above fair value, the excess over fair value is deferred andamortised over the period for which the asset is expected to be used.

(ii) Where a group company is the lessor – Indefeasible rights of use (IRUs)

The Group has entered into certain indefeasible rights of use (“IRU”) agreements.An IRU is a right to use a specified amount of capacity for a specific time periodthat cannot be revoked or voided. Such agreements are accounted for either aslease or service transactions.

Those IRU agreements that provide the lessee with exclusive right to thepurchased capacity and limit the purchased capacity to a specified fibre, areaccounted for as lease transactions. Other IRUs are accounted for as servicecontracts.

IRU agreements that transfer substantially all the risks and rewards of ownershipto the lessee, and provide for the transfer of ownership of the asset to the lesseeby the end of the lease term at a nominal price, are classified as sales-typeleases. All other IRU leases are classified as operating leases.

Revenue from sales-type leases is recognised in the period that the IRUs aretransferred and capacity is available for service. The costs attributable tocapacity sold under sales type lease contract is accordingly recognised as costof goods sold.

Revenue from operating leases or service contracts are recognised over the termof the lease or the contracts. Costs of the network relating to operating leases orservice contracts are included as property, plant and equipment and depreciatedover the economic useful life of the network.

(m)Deferred tax

Tax expense is determined on the basis of tax effect accounting using the liabilitymethod. Deferred tax is provided on all significant timing differences arising fromthe different treatments in accounting and taxation of relevant items. Prior to 1April 2000, deferred tax was provided only when there was a reasonable probabilitythat a liability will arise in the foreseeable future. The financial statements for yearsended 31 March 2000 and 1999 have been restated to give effect to this change asif the current policy have always been applied in those years. The reason for thechange in the accounting policy and effects of the change on each financial yearare set out in Note 2 to the financial statements.

In accounting for timing differences, deferred tax assets are not recognised unlessthere is reasonable expectation of their realisation.

(n)Employee benefits

(i) Pension obligations

The group companies based in Singapore contribute to Central ProvidentFund (“CPF”), a defined contribution plan regulated and managed by theGovernment of Singapore, which applies to the majority of the Group’semployees. The Group’s contributions to CPF are charged to the incomestatement in the period to which the contributions relate.



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(n)Employee benefits (continued)

(ii) Equity compensation benefits

Share options are granted to certain directors and to employees under theSingapore Telecom Executives Share Option Schemes. No compensation cost isrecognised upon granting or the exercise of the options. When the options areexercised, the proceeds received net of any transaction costs are credited toshare capital (for the par value of the shares issued) and share premium.

(iii) Employee leave entitlement

Employee entitlements to annual leave are recognised when they accrue toemployees. A provision is made for the estimated liability for leave as a result ofservices rendered by employees up to the balance sheet date.

(o) Provision for liquidated damages and warranties

Provision for liquidated damages in respect of information technology projects forthe late completion of projects and warranties are made where a contractualobligation exists and is based on management’s best estimate of the anticipatedliability. The directors review the provision annually and where, in their opinion, theprovision is inadequate or excessive, due adjustment is made.

(p)Share capital

(i) Dividends on ordinary shares are recognised in shareholders’ equity in thefinancial year in which they are proposed or declared.

(ii) The cost of shares repurchased by the Company is credited against revenuereserves. An amount equivalent to the nominal value of the shares repurchasedis transferred to capital redemption reserve in accordance with Section 76G ofthe Singapore Companies Act.



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2 CHANGE IN ACCOUNTING POLICY AND PRIOR YEARADJUSTMENTSFrom 1 April 2000, the Group changed the accounting policy for deferred tax under Statement ofAccounting Standard 12, Accounting for Taxes on Income, whereby deferred tax is provided for allmaterial timing differences (“full liability” method). In prior years, provision for deferred tax was madeonly to the extent that it was probable that the liability would materialise (“partial liability” method).

The change in accounting policy is to align the financial impact of accounting for taxes on income forthe Group to the revised Statement of Accounting Standard 12, Income Taxes, which is effective forfinancial statements covering periods beginning on or after 1 April 2001.

The change in accounting policy has been accounted for retrospectively. The comparative figureshave been restated to conform to the changed policy.

The change in accounting policy has no material impact on the results of the Group for the currentfinancial year.

The additional deferred tax arising from the change in accounting policy has been dealt with asfollows:


Restatement of retained earnings at the beginning of the financial year 408.2 394.8 352.2Included as a restatement of the results for the financial year – 13.4 42.6Cumulative impact on retained earnings at the end of the financial year 408.2 408.2 394.8


3 OPERATING REVENUEOperating revenue comprised:International telephone 1,203.1 1,644.7 1,843.7Public data and private network 1,065.0 763.0 620.6Mobile communications 885.5 851.3 880.0National telephone 588.0 572.7 546.6Information technology and engineering services 480.1 383.5 340.9Postal services 341.0 322.6 307.9Sale of equipment 166.7 149.9 138.2Directory advertising 107.2 97.1 125.8Others 88.9 81.0 79.8

4,925.5 4,865.8 4,883.5


4 OPERATING EXPENSESOperating expenses comprised:Traffic expenses 665.4 700.8 813.1Staff costs 666.6 595.3 622.3Depreciation of property, plant and equipment 624.1 782.8 521.7Selling and administrative costs 591.5 525.8 556.7Cost of goods sold 461.8 352.6 358.5Repair and maintenance 83.9 87.5 66.6Recoveries (56.4) (31.7) (28.5)

3,036.9 3,013.1 2,910.4

NUMBER OF STAFF 2001 2000 1999

Number of staff employed as at 31 March 13,444 12,636 12,637



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5 OPERATING PROFITOperating profit is arrived at after charging/(crediting):Auditors’ remuneration:

– Auditors of the Company 0.8 0.6 0.5– Other auditors 0.2 0.2 0.1

Non-audit fees paid to:– Auditors of the Company 1.3 1.4 0.7– Other auditors 0.1 0.1 0.1

Bad trade debts written off 0.7 4.2 0.2Directors’ remuneration (Note 15)

– Paid by the Company 1.5 1.0 0.9– Paid by subsidiary companies 0.1 0.1 0.1

Provision/(Writeback of provision) for doubtful debts– third parties (trade) 40.1 57.6 87.2– third parties (non-trade) 0.3 (0.6) 19.4– associated and joint venture companies (0.3) 0.1 1.5

Provision/(Writeback of provision) for inventory obsolescence 0.8 (1.6) 10.5Research and development expenses written off * 0.9 0.2Inventories written off 0.9 2.2 6.3Rental expenses (for operating leases) 34.4 27.6 20.8* denotes amounts of less than S$50,000.


6 OTHER INCOME/(LOSS)Amortisation of gain on sale and leaseback arrangement 1.6 1.1 0.4Bad trade debts recovered 1.8 1.6 1.3Gain on disposal of property, plant and equipment 48.3 17.4 2.6Rental income 24.2 18.1 17.1Property, plant and equipment written off (0.1) (1.4) (0.8)Loss on disposal of property, plant and equipment (17.7) (17.6) (7.8)Net exchange (loss)/gain (trade related) (3.6) 10.2 (3.6)Others 38.7 5.8 22.6

93.2 35.2 31.8


7 COMPENSATION FROM IDA (INFOCOMMUNICATIONSDEVELOPMENT AUTHORITY OF SINGAPORE)Compensation payments

Balance as at 1 April 1,500.0 1,500.0 1,500.0Amount received during the year 859.0 – –Amount recognised as income (337.0) – –

Balance as at 31 March (Note 28) 2,022.0 1,500.0 1,500.0

The Infocommunications Development Authority of Singapore (“IDA”) has made two paymentsto SingTel to compensate for the modifications to its original licence for the accelerated liberalisationof the telecommunications market. The IDA paid SingTel S$1.5 billion in 1997 and S$859 millionin 2000.

SingTel accounts for these payments as deferred income in the Balance Sheet, and recognises themon a straight line basis over seven years from 1 April 2000, reflecting the period by which SingTel’soriginal monopoly licence period was shortened.

The Inland Revenue Authority of Singapore has informed SingTel and the IDA that the compensationpayments are not subject to income tax. The IDA has claimed that the first compensation paymentwas calculated on the basis that it would be taxable and that the assumed tax component wasS$388 million. The IDA has asked SingTel to repay the amount of that assumed tax component.SingTel has sought appropriate legal advice on the merits of the claim and disputes the IDA’s claim.Pending resolution of the dispute, SingTel has not made any provision in its financial statementsregarding the IDA’s claim. The dispute does not affect the second payment of S$859 million.



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8 INTEREST AND INVESTMENT INCOMEInterest income from

– associated and joint venture companies 0.3 1.1 1.4– fixed deposits, current accounts and bonds 151.0 174.1 229.3– others 57.8 53.3 54.2

209.1 228.5 284.9Amortisation of discounts/(premium) on bonds 3.3 8.8 (0.1)Gross dividends from

– quoted equity investments 26.6 13.4 18.1– unquoted equity investments 3.1 0.1 0.2

Net gain/(loss) on sale of short term investments 155.5 56.8 (38.8)(Provision)/writeback for diminution in value of short term investments (43.7) 20.6 57.7Related net exchange gain/(loss) 29.9 (64.3) (21.1)Others 9.8 9.6 13.6

393.6 273.5 314.5


9 INTEREST ON BORROWINGSInterest expense incurred

– bank loans – * 0.4– bonds 5.6 5.0 5.0– loan from a minority shareholder 3.5 3.1 3.0– others – – 0.4

9.1 8.1 8.8* denotes amounts of less than S$50,000.


10 TAXATION(a) Tax expense

Tax expense attributable to profit is made up of:Current income tax

– Singapore 523.9 545.2 492.1– Foreign 3.2 1.4 3.0

527.1 546.6 495.1Deferred income tax

– As reported 40.0 (19.8) 85.7– Prior year adjustment (Note 2) – 13.4 42.6

40.0 (6.4) 128.3567.1 540.2 623.4

Adjustment in respect of preceding financial yearCurrent income tax

– 10% corporate tax rebate – – (57.9)– others – – 0.6

Deferred income tax– change in corporate tax rate (30.1) (5.6) –– others – (18.2) –

537.0 516.4 566.1Share of taxes of associated companies 174.7 143.6 104.1Share of taxes of joint venture companies 3.4 1.5 0.1

715.1 661.5 670.3

The income tax expense on the results of the Group for the year differs from the amount ofincome tax determined by applying the Singapore standard tax rate of 24.5% (2000: 25.5%,1999: 26%) to profit before tax due to certain items not being taxable, offset by higher tax ratesin the jurisdiction of some of the companies in which the Group operates.

As at 31 March 2001, the Group has estimated unutilised tax losses of approximatelyS$31.8 million (2000: S$31.8 million, 1999: S$125.1 million) and unutilised wear and tearallowances of approximately S$15.6 million (2000 and 1999: Nil) available for set off againstfuture taxable income, subject to the provisions of the income tax regulations of the respectivecountries in which the Group operates.



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10 TAXATION (CONTINUED)The deferred tax benefit amounting to S$14.2 million (2000: S$8.1 million, 1999: S$32.5 million)of the unutilised tax losses and wear and tear allowances has not been recognised in the financialstatements.

During the financial year, certain carryforward tax losses of subsidiary companies not recognisedpreviously in the financial statements were utilised, resulting in tax savings of approximatelyS$4.4 million (2000: S$23.8 million, 1999: S$3 million).


(b)Movements in provision for current taxBalance as at 1 April 635.3 552.3 676.0Income tax paid (565.9) (463.6) (561.5)Current financial year’s tax expense on profit 527.1 546.6 495.1Overprovision in prior financial years – – (57.3)Balance as at 31 March 596.5 635.3 552.3

(c) Movements in provision for deferred taxBalance as at 1 April, as previously reported 360.0 403.6 317.9Prior year adjustments (Note 2) 408.2 394.8 352.2Balance as at 1 April, restated 768.2 798.4 670.1

Provision/(writeback) in respect of profit for the year 40.0 (6.4) 128.3Overprovision in prior year – (18.2) –Change in tax rate (30.1) (5.6) –Transfer from/(to) income statement 9.9 (30.2) 128.3Balance as at 31 March 778.1 768.2 798.4


11 EXTRAORDINARY ITEMSThe extraordinary items (“EI”) comprise:Profit on sale of non-current investments 23.3 781.9 138.8Provision for diminution in value of non-current investments (426.1) (112.0) (77.1)Writeback of provision for diminution in value of non-current investments 36.7 107.2 –Gain on deemed disposal of associated companies 28.7 – 25.3Recovery of investment in subsidiary previously written off 22.0 – –Share of joint venture’s EI (2.5) – –

(317.9) 777.1 87.0Less: Foreign tax on profit on sale of non-current investments – (76.1) –

(317.9) 701.0 87.0

Non-current investments referred to above comprise investments in associated and joint venturecompanies and long term investments.



196

l d h k / / d h / l


12 EARNINGS PER SHAREGroup’s profits after tax and minority interests

(before extraordinary items) 2,324.2 1,838.9 1,912.8

Group’s profits after tax and minority interests(after extraordinary items) 2,006.3 2,539.9 1,999.8

Weighted average number of ordinary shares in issue for calculation of Basic earnings per share (‘000) 15,429,615 15,322,260 15,249,877Adjustment for assumed conversion of share options (‘000) 5,398 2,111 950Weighted average number of ordinary shares for calculation of Diluted earnings per share (‘000) 15,435,013 15,324,371 15,250,827

Basic earnings per share (before extraordinary items) is calculated by dividing the Group’s profit aftertax and minority interests but before extraordinary items by the weighted average number of ordinaryshares in issue during the financial year.

Basic earnings per share (after extraordinary items) is calculated by dividing the Group’s profit afterextraordinary items by the weighted average number of ordinary shares in issue during the financial year.

For the diluted earnings per share, the weighted average number of ordinary shares in issue has beenadjusted to assume conversion of all dilutive potential ordinary shares from the share options grantedto employees.

In determining the diluted earnings per share, a calculation is performed to determine the number ofshares that could have been acquired at market price (determined as the average annual share priceof the Company’s shares) based on the exercise price of the outstanding share options. Thiscalculation serves to determine the “unpurchased” shares to be added to the ordinary sharesoutstanding for the purpose of computing the dilution. For the share options calculation, noadjustment is made to the Group’s profits.

As disclosed in Note 2, the Group had changed its accounting policy with respect to accounting fordeferred tax. For comparative purposes, the basic earnings per share and diluted earnings per sharefor the financial years ended 31 March 2000 and 1999 have been restated for the prior yearadjustment arising from this change in accounting policy.


13 EARNINGS BEFORE INTEREST, TAX, DEPRECIATION ANDAMORTISATION (“EBITDA”)

EBITDA is defined as follows:Profit before tax and extraordinary items 3,052.2 2,520.8 2,602.3Adjustments for:Depreciation of property, plant and equipment 624.1 782.8 521.7Interest expense 9.1 8.1 8.8Interest and investment income (393.6) (273.5) (314.5)Amortisation of gain on sale and leaseback (1.6) (1.1) (0.4)

238.0 516.3 215.6EBITDA 3,290.2 3,037.1 2,817.9



197

l d h k / / d h / l

14 RELATED PARTY TRANSACTIONSDuring the financial year, the Group has no significant transactions with related parties, consisting ofsubsidiary companies of the ultimate holding company or associated and joint venture companies ofthe Group except for the following transactions at terms agreed between the parties:


Information technology services rendered 6.8 11.2 4.8Postal services rendered 9.1 7.2 8.8Telecommunications services rendered 70.8 51.0 22.6Utilities charged incurred 47.8 35.6 35.8

15 REMUNERATION AND SHARE OPTIONS OF DIRECTORSFor the financial years ended 31 March 2001, 31 March 2000 and 31 March 1999, there was onedirector whose remuneration exceeded S$500,000 and nine directors whose remuneration werebetween S$0 and S$250,000. There was no director whose remuneration was between S$250,000and S$499,000.

The total remuneration of the directors is set out in Note 5.

The aggregate number of share options granted to the directors of the Group during the financialyear was 1,500,000 (2000: 500,000, 1999: 120,000). The share options were given on the sameterms and conditions as those offered to other employees of the Group. The outstanding number ofshare options granted to the directors of the Group at the end of the financial year was 2,120,000(2000: 620,000, 1999: 120,000).


16 CASH AND CASH EQUIVALENTSFixed deposits 3,888.9 4,162.1 4,756.6Cash and bank balances 206.5 168.7 148.5

4,095.4 4,330.8 4,905.1

For the purpose of the Consolidated Cash Flow Statements, the year-end consolidated cash and cashequivalents comprise the following:


Cash and bank balances (as above) 4,095.4 4,330.8 4,905.1Less: Bank overdraft (unsecured) – (0.1) –Cash and cash equivalents per Consolidated Cash Flow Statements 4,095.4 4,330.7 4,905.1



198

l d h k / / d h / l


17 SHORT TERM INVESTMENTS(a) Investments at cost:

Quoted equity investments 616.6 467.3 371.9Other quoted investments 1,586.9 1,096.0 624.8Total quoted investments at cost 2,203.5 1,563.3 996.7Other unquoted investments 373.5 15.5 499.4

2,577.0 1,578.8 1,496.1Less: Provision for diminution in value (43.7) – (20.6)Total short term investments 2,533.3 1,578.8 1,475.5

(b) Investments at market value:Quoted equity investments 559.5 656.1 379.7Other quoted investments 1,600.4 1,084.1 645.7Total quoted investments at market value 2,159.9 1,740.2 1,025.4

(c) Certain subsidiaries of the Group are participating lenders of a Securities Lending Programadministered by a financial institution acting as an agent. The agent collects cash and othersecurities from borrowers as collateral and this collateral will be at agreed percentage above themarket value of the securities lent out. Marking to market of collateral is performed every businessday and the borrower is required to deliver additional collateral when necessary. Income earnedfrom the investment of cash collateral and the loan fees for loans collateralised by non-cashcollateral are distributed to the participating lenders by the agent.


The amount of securities loaned to financial institutions included in the balances above is as follows:Quoted equity investments 16.3 11.2 –Other quoted investments 129.8 153.6 –

146.1 164.8 –

Share of the collateral in cash and other securities received by the agent in respect of securities loaned (at market value) 164.1 184.7 –

(d) The movements in the provision for diminution in value of short term investments during the year are as follows:Balance as at 1 April – 20.6 78.3Add: Provision/(writeback of provision) 43.7 (20.6) (57.7)Balance as at 31 March 43.7 – 20.6



199

l d h k / / d h / l


18 TRADE AND OTHER DEBTORS(a) Trade debtors 1,003.3 890.5 850.9

Less: Provision for doubtful trade debtors (199.5) (196.0) (166.6)803.8 694.5 684.3

Other debtors 299.8 87.4 58.2Less: Provision for doubtful debtors (23.2) (22.9) (24.6)

276.6 64.5 33.6Due from associated and joint venture companies(non-trade) 28.8 24.2 21.7Less: Provision for doubtful receivables (2.2) (2.8) (2.8)

26.6 21.4 18.9Interest receivable 38.7 47.5 54.4Loan receivable – – 39.2Deposits 19.6 9.1 14.5Prepayments 58.7 47.7 8.9Staff loans 4.7 5.4 5.7Total trade and other debtors 1,228.7 890.1 859.5

The non-trade balances with the associated and joint venture companies are unsecured,interest-free and repayable on demand.


(b) The movements in the provision for doubtful trade debtors during the financial year are as follows:Balance as at 1 April 196.0 166.6 100.3Provision for the year 40.1 57.6 87.2Less: Bad debts written off against provision (36.6) (28.2) (20.9)Balance as at 31 March 199.5 196.0 166.6

(c) The movements in the provision for doubtful other debtors during the financial year are as follows:Balance as at 1 April 22.9 24.6 5.2Provision/(Writeback of provision) for the year 0.3 (0.6) 19.4Less: Bad debts written off against provision * (1.1) –Balance as at 31 March 23.2 22.9 24.6

(d) The movements in the provision for doubtful receivables from associated and joint venture companies during the financial year are as follows:Balance as at 1 April 2.8 2.8 1.3(Writeback of)/provision for the year (0.3) 0.1 1.5Less: Bad debts written off against provision (0.3) (0.1) –Balance as at 31 March 2.2 2.8 2.8* denotes amounts of less than S$50,000


19 INVENTORIESInventories at cost:Consumable stores and raw materials 22.0 22.9 30.7Equipment held for resale 34.3 57.6 71.9Work-in-progress (information technology projects) 50.8 14.6 12.3Directories in process of publication 1.1 6.0 7.2Published directories 5.3 6.2 6.7

113.5 107.3 128.8Less: Provision for inventory obsolescence (8.5) (11.0) (18.8)

105.0 96.3 110.0

The movements in the provision for inventory obsolescence during the financial year are as follows:Balance as at 1 April 11.0 18.8 25.1Provision/(writeback of provision) for the year 0.8 (1.6) 10.5Less: Amount written off against provision (3.3) (6.2) (16.8)Balance as at 31 March 8.5 11.0 18.8



200

l d h k / / d h / l

TR

AN

SMISSIO

NC

AP

ITAL

FREEH

OLD

LEASEH

OLD

PLA

NT

AN

DSW

ITC

HIN

GP

OSTA

LO

TH

ERW

OR

K-IN

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ND

LAN

DB

UILD

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SEQ

UIP

MEN

TEQ

UIP

MEN

TEQ

UIP

MEN

TFIX

ED A

SSETS

PR

OG

RESS

TO

TAL

2001S$ M

ILLION

S$ MILLIO

NS$ M

ILLION

S$ MILLIO

NS$ M

ILLION

S$ MILLIO

NS$ M

ILLION

S$ MILLIO

NS$ M

ILLION

20

PR

OP

ERT

Y, PLA

NT

AN

D EQ

UIP

MEN

TC

ost

Balances as at 1 Ap

ril 20002.3

559.6 1,061.5

2,934.8 1,417.1

99.1 1,009.3

367.5 7,451.2

Translation adjustments

––

0.1(0.9)

(2.5)–

(0.1)(0.1)

(3.5)A

dditions–

45.637.8

182.6143.0

–138.1

1,185.71,732.8

Disp

osals–

–(35.9)

(148.9)(103.5)

(0.4)(79.6)

–(368.3)

Reclassifications/Adjustm

ents–

–8.9

134.090.2

1.140.1

(274.3)–

Total as at 31 M

arch 2001

2.3605.2

1,072.43,101.6

1,544.399.8

1,107.81,278.8

8,812.2A

ccumulated

Dep

reciation

Balances as at 1 Ap

ril 2000–

46.3 155.0

1,400.6 782.4

12.8 618.5

–3,015.6


––

–(0.4)

(1.5)–

(0.1)–

(2.0)C

harge for the year–

6.736.4

249.7173.4

10.2147.7

–624.1

Disp

osals–

–(6.7)

(130.3)(95.5)

(0.4)(68.4)

–(301.3)


ents–

–(0.4)

0.2(0.5)

0.30.4

––

Total as at 31 M

arch 2001

–53.0

184.31,519.8

858.322.9

698.1–

3,336.4N

et bo

ok value as at

31 March

20012.3

552.2888.1

1,581.8686.0

76.9409.7

1,278.85,475.8



201

l d h k / / d h / l

TR

AN

SMIS

SIO

NC

AP

ITA

LFR

EEH

OLD

LEA

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PLA

NT

AN

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-IN

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EQU

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ENT

EQU

IPM

ENT

EQU

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ENT

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SP

RO

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ESS

TO

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2000

S$ M

ILLI

ON

S$ M

ILLI

ON

S$ M

ILLI

ON

S$ M

ILLI

ON

S$ M

ILLI

ON

S$ M

ILLI

ON

S$ M

ILLI

ON

S$ M

ILLI

ON

S$ M

ILLI

ON

20

PR

OP

ERT

Y, P

LAN

T A

ND

EQ

UIP

MEN

T (

CO

NT

INU

ED)

Co

stBa

lanc

es a

s at

1 A

pril

199

92.

3 57

5.7

749.

72,

601.

11,

320.

090

.586

9.3

837.

37,

045.

9Tr

ansl

atio

n ad

just

men

ts–

–0.

2(1

.0)

(1.7

)–

(0.6

)(0

.5)

(3.6

)A

dditi

ons

–0.

1 5.

1 21

5.3

115.

7 –

89.9

28

8.3

714.

4D

isp

osal

s–

(20.

2)(2

0.4)

(99.

3)(1

11.8

)(0

.1)

(52.

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.3)

(304

.7)

Recl

assi

ficat

ions

/Adj

ustm

ents

–4.

0 32

6.9

218.

7 94

.9

8.7

103.

3 (7

57.3

)(0

.8)

Tota

l as

at 3

1 M

arch

200

02.

355

9.6

1,06

1.5

2,93

4.8

1,41

7.1

99.1

1,00

9.3

367.

57,

451.

2A

ccum

ulat

ed D

epre

ciat

ion

Bala

nces

as

at 1

Ap

ril 1

999

–41

.5

126.

5 1,

188.

1 60

8.7

2.8

529.

2 –

2,49

6.8

Tran

slat

ion

adju

stm

ents

––

–(0

.1)

(1.1

)–

(0.8

)–

(2.0

)C

harg

e fo

r th

e ye

ar–

6.2

35.3

31

0.2

283.

3 10

.1

137.

7 –

782.

8D

isp

osal

s–

(1.4

)(7

.2)

(98.

0)(1

08.8

)(0

.1)

(47.

0)–

(262

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Recl

assi

ficat

ions

/Adj

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ents

––

0.4

0.4

0.3

–(0

.6)

–0.

5To

tal a

s at

31

Mar

ch 2

000

–46

.315

5.0

1,40

0.6

782.

412

.861

8.5

–3,

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6N

et b

oo

k va

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as a

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Mar

ch 2

000

2.3

513.

390

6.5

1,53

4.2

634.

786

.339

0.8

367.

54,

435.

6



202

l d h k / / d h / l

TR

AN

SMISSIO

NC

AP

ITAL

FREEH

OLD

LEASEH

OLD

PLA

NT

AN

DSW

ITC

HIN

GP

OSTA

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K-IN

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ND

LAN

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SEQ

UIP

MEN

TEQ

UIP

MEN

TEQ

UIP

MEN

TFIX

ED A

SSETS

PR

OG

RESS

TO

TAL

1999S$ M

ILLION

S$ MILLIO

NS$ M

ILLION

S$ MILLIO

NS$ M

ILLION

S$ MILLIO

NS$ M

ILLION

S$ MILLIO

NS$ M

ILLION

20

PR

OP

ERT

Y, PLA

NT

AN

D EQ

UIP

MEN

T (C

ON

TIN

UED

)C

ost

Balances as at 1 Ap

ril 19982.3

572.6 709.0

2,109.7 1,003.7

5.4 746.5

946.5 6,095.7


––

––

0.1 –

0.1 –

0.2A

dditions–

8.0 35.4

151.7 225.0

87.4 103.6

482.7 1,093.8

Disp

osals–

(4.9)(0.3)

(28.6)(68.0)

(2.3)(29.3)

–(133.4)


ents–

–5.6

368.3 159.2

–48.4

(591.9)(10.4)

Total as at 31 M

arch 1999

2.3575.7

749.72,601.1

1,320.090.5

869.3837.3

7,045.9A

ccumulated

Dep

reciation

Balances as at 1 Ap

ril 1998–

35.6 100.9

991.4 526.5

3.3 432.7

–2,090.4


––

––

0.1 –

0.1 –

0.2C

harge for the year–

6.2 25.0

224.2 143.6

1.8 120.9

–521.7

Disp

osals–

(0.3)(0.1)

(27.2)(60.9)

(2.3)(23.7)

–(114.5)


ents–

–0.7

(0.3)(0.6)

–(0.8)

–(1.0)

Total as at 31 M

arch 1999

–41.5

126.51,188.1

608.72.8

529.2–

2,496.8N

et bo

ok value as at

31 March

19992.3

534.2623.2

1,413.0711.3

87.7340.1

837.34,549.1

Included in the prop

erty, plant and eq

uipm

ent of the Group

are certain telecomm

unications equip

ment w

ith net book value of S$344.5 million (2000: S$263.4 m

illion,1999:

S$318.7 million) w

hich were sold and leased back.

As p

art of its annual review p

rocess, the Group

assessed the recoverable amounts of certain transm

ission plant and eq

uipm

ent and switching eq

uipm

ent in the light oftechnological im

provem

ents and changing business trends. After taking into account the rep

lacement costs or the exp

ected future cash flows from

these assets discounted totheir p

resent values, a one-off accelerated depreciation charge of S$50.3 m

illion (2000: S$245.4 million, 1999: S$89.7 m

illion) for the Group

was m

ade and included in thedep

reciation expense for the year.



203

l d h k / / d h / l


21 ASSOCIATED COMPANIES(a) Investments:

Quoted equity shares, at cost 961.4 877.1 854.2Market value: S$1,639.5 million (2000: S$2,050.0 million, 1999: S$1,178.2 million)Unquoted equity shares, at cost 2,541.6 1,562.3 956.7Shareholder’s loans 39.8 – 43.7

3,542.8 2,439.4 1,854.6Goodwill on consolidation taken to shareholders’ equity (2,223.0) (1,381.3) (1,464.6)Currency translation adjustments (138.9) (53.1) (28.5)Share of post acquisition reserves(net of dividends received) 456.3 297.1 146.1

1,637.2 1,302.1 507.6Less: Provision for diminution in value – (10.0) (15.6)

1,637.2 1,292.1 492.0

The shareholder’s loans to associated companies are unsecured, interest free and include anamount of S$39.5 million (2000 and 1999: Nil) which will be converted to equity shares in anassociated company within the next 12 months upon completion of restructuring of theassociated company.


(b) Movements in the provision for diminution in value of investments in associated companies are as follows:Balance as at 1 April 10.0 15.6 15.6Less: Writeback of provision (10.0) – –Release upon disposal of investment – (5.6) –Balance as at 31 March – 10.0 15.6

The details of the associated companies are set out in Note 31.


22 JOINT VENTURE COMPANIES(a) Investments:

Unquoted equity shares, at cost 339.1 127.7 101.8Shareholders’ loans 28.9 20.6 18.3

368.0 148.3 120.1Goodwill on consolidation taken to shareholders’ equity (66.5) (18.6) (8.0)Currency translation adjustments 1.8 1.2 1.3Share of post acquisition reserves(net of dividends received) 15.1 29.6 15.8

318.4 160.5 129.2Less: Provision for diminution in value (87.4) (102.4) (100.6)

231.0 58.1 28.6

Included in the currency translation adjustments are amounts relating to certain joint venturecompanies, totalling S$44.5 million (2000 and 1999: S$44.5 million) which were reversed fromcurrency translation account. Provision for diminution in value of similar amounts was made inrespect of these investments.

The shareholders’ loans to joint venture companies are unsecured, interest-free and are notexpected to be repaid within the next 12 months.

The details regarding the joint venture companies are set out in Note 31.



204

l d h k / / d h / l


22 JOINT VENTURE COMPANIES (CONTINUED)(b) Movements in the provision for diminution in

value of investments in joint venture companies are as follows:Balance as at 1 April 102.4 100.6 99.6Provision for the year – 7.3 1.0

102.4 107.9 100.6Less: Writeback of provision (15.0) (4.3) –Amount written off against provision – (1.2) –Balance as at 31 March 87.4 102.4 100.6

(c) The Group’s share of the operating revenue, net profit after taxation, assets and liabilities of the joint venture companies are as follows:Operating revenue 96.6 72.7 27.4

Net (loss)/profit after taxation (12.3) 13.9 3.4

Non-current assets 313.6 194.4 190.6Current assets 176.4 105.7 69.9Current liabilities (152.6) (123.1) (92.6)Non-current liabilities (92.4) (81.6) (101.5)Net assets 245.0 95.4 66.4


23 LONG TERM INVESTMENTS(a) Investments at cost:

Quoted – equity 1,047.1 1,038.6 344.7Quoted – others 95.2 147.7 142.6

1,142.3 1,186.3 487.3Less: Provision for diminution in value (573.9) (175.3) (182.6)Total quoted investments 568.4 1,011.0 304.7Unquoted – equity 128.6 112.5 74.1Unquoted – others 101.0 44.4 80.4

229.6 156.9 154.5Less: Provision for diminution in value (15.8) – (1.3)Total unquoted investments 213.8 156.9 153.2Total long term investments 782.2 1,167.9 457.9

(b) Investments at market value:Quoted – equity 629.1 1,449.0 879.3Quoted – others 98.0 149.8 148.2Total quoted investments at market value 727.1 1,598.8 1,027.5

(c) Movements in the provision for diminution in value of long term investments are as follows:Balance as at 1 April 175.3 183.9 134.3Provision for the year 426.1 104.7 51.5

601.4 288.6 185.8Less: Writeback of provision (11.7) (102.9) –Amount written off against provision – (10.4) (1.9)Balance as at 31 March 589.7 175.3 183.9


24 OTHER NON-CURRENT ASSETSOther receivables 9.7 2.2 7.4Staff loans 38.1 45.2 40.6Prepayments 16.2 19.7 10.8

64.0 67.1 58.8

Staff loans are repayable with interest in equal monthly instalments over periods of up to 30 yearsfor housing loans and up to 8 years for other loans with an average interest rate ranging between4% and 5.5% (2000 and 1999: 4% to 5.5%) per annum.

Included in staff loans are loans to directors of subsidiary companies of S$3.4 million(2000: S$6.7 million, 1999: S$6.5 million) for the Group.



205

l d h k / / d h / l


25 TRADE AND OTHER CREDITORSTrade creditors 1,037.5 873.1 1,042.4Advance billings 992.2 319.8 332.4Accruals 223.6 325.9 211.6Other creditors 215.0 76.5 82.1Provision for liquidated damages and warranties 55.4 27.0 27.1Customers’ deposits 17.5 19.7 22.9Collections on behalf of third parties 22.6 14.8 13.2Tender deposits 5.5 5.3 5.3Due to an associated company (non-trade) – – 1.3Due to a joint venture company (non-trade) 1.3 – –

2,570.6 1,662.1 1,738.3

The non-trade balance due to a joint venture company at 31 March 2001 and the non-trade balancedue to associated company at 31 March 1999 are unsecured, interest-free and have no fixed termsof repayment.


26 BORROWINGS (UNSECURED)Current

Bonds – 100.0 –Long term bank loans due within one year – – 0.1Bank overdrafts – 0.1 –

– 100.1 0.1

Non-currentSingTel bonds 1,000.0 – –Bonds – – 100.0

1,000.0 – 100.0

On 15 March 2001, the Company issued a five-year fixed interest unsecured bond of S$1 billion(“SingTel bond”) due 2006, carrying interest at 3.21% per annum.

The unsecured bonds as at 31 March 2000 and 31 March 1999 carried interest at 4 31/32% perannum for both years and were redeemed on 1 February 2001.


27 DIVIDENDSOrdinary dividends proposedFinal proposed of 5.5 cents (2000 and 1999: 5.5 cents) per share, proposed net of tax at 24.5% (2000: 25.5%, 1999: 26%) 640.0 633.1 620.7AdjustmentWriteback of overprovision of final dividend proposed in the prior year as a result of share repurchase (1.1) – –

638.9 633.1 620.7Special dividends paidSpecial dividend of 7.5 cents (2000: 12 cents, 1999: Nil)per share, paid net of tax at 25.5% (2000: 26.0%) 861.8 1,374.1 –

1,500.7 2,007.2 620.7


28 DEFERRED INCOMEDeferred IDA compensation at 31 March (Note 7) 2,022.0 1,500.0 1,500.0Gain on sale and leaseback arrangement

Balance as at 1 April 13.2 14.3 4.9Amount deferred during the year 17.8 – 9.8Amount recognised as income during the year (1.6) (1.1) (0.4)Balance as at 31 March 29.4 13.2 14.3

Total deferred income 2,051.4 1,513.2 1,514.3

Gain on sale and leaseback of certain telecommunications equipment is recognised as income overlease periods of 11 to 16 years.



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29 SHARE CAPITALAuthorised:33,333,333,330 ordinary shares of S$0.15 each and1 Special Share of S$0.50 5,000.0 5,000.0 5,000.0

Issued and fully paid:Ordinary shares at S$0.15 each (“Shares”)Balance as at 1 April

15,473,154,226 (2000: 15,249,938,788, 1999: 15,249,816,788) Shares 2,321.0 2,287.5 2,287.5

Issue of 787,900 (2000: 223,932,438, 1999:122,000) Shares 0.1 33.6 *

Repurchase of 60,778,000 (2000: 717,000, 1999: Nil) Shares (9.1) (0.1) –

Balance as at 31 March 2,312.0 2,321.0 2,287.515,413,164,126 (2000: 15,473,154,226, 1999: 15,249,938,788) Shares

1 Special Share at S$0.50 * * *2,312.0 2,321.0 2,287.5

* denotes amount of less than S$50,000

Issue of new shares

During the financial year, the Company issued 787,900 (2000: 2,621,540, 1999: 122,000) Shares,fully paid in cash under the Singapore Telecom Executives’ Share Option Scheme (“1994 Scheme”)at premiums of between S$1.90 and S$2.15 per share. Total share premium arising from these shareissues is S$1.6 million (2000: S$6.0 million, 1999: S$0.3 million). In addition, 221,310,898 Shareswere issued at a premium of S$2.90 (total : S$641.8 million) per share for cash in the financial yearended 31 March 2000 in conjunction with the subscription of shares in KDDI Corporation (formerlyknown as KDD Corporation).

Outstanding share options

As at 31 March 2001, there were 54,456,931 (2000: 19,460,831, 1999: 12,768,691) unissuedordinary shares of S$0.15 each of the Company under options granted pursuant to both the 1994Scheme and the Singapore Telecom Share Option Scheme 1999 at exercise prices ranging fromS$2.05 to S$3.03 per share.

Share repurchase

On 29 September 1999, the shareholders at the Extraordinary General Meeting of the Companyapproved the mandate for the Company to purchase or acquire its issued ordinary shares, subject tocertain conditions as detailed in the Company’s circular to Members dated 13th August 1999 (the“Share Purchase Mandate”). The Group believes that share repurchase is an expedient, effective andcost-effective way for the Company to return surplus cash which is in excess of the financial andpossible investment needs of the Group to shareholders.

During the financial year, the Company repurchased 60,778,000 (2000: 717,000, 1999: NIL) of itsissued ordinary shares of S$0.15 each at average market price of S$2.34 (2000: S$2.44, 1999: NIL)per share from the open market. The repurchase transactions were financed by internally generatedfunds. The total cash paid for the ordinary shares of S$142.3 million (2000: S$1.8 million, 1999: NIL)was credited against revenue reserve (Note 30). These shares are deemed to be cancelled and anamount equivalent to their nominal value was transferred to the capital redemption reserve inaccordance with Section 76G of the Singapore Companies Act.

Special Share

The Special Share enjoys all the rights attached to ordinary shares. In addition, pursuant to Article 4 ofthe Articles of Association, no resolution may be passed on certain matters without the prior writtenapproval of the Special Member.

Subsequent to the financial year-end, the Special Member served a written notice to the Company ofits intention to surrender all its rights attached to the Special Share. The Special Share will beconverted at its nominal amount into one ordinary share of S$0.15 in the capital of the Companyonce the Articles of the Company are modified.



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30 RESERVESCurrency translation accountBalance as at 1 April (47.5) (24.9) (52.7)Net exchange (losses)/gains during the financial year (61.8) (21.4) 29.6Exchange differences realised upon sale ofnon-current investments – (1.2) (0.4)Exchange differences reversed on provision for diminution in value of non-current investments – – (1.4)Balance as at 31 March (109.3) (47.5) (24.9)

Retained earnings and other reservesBalance as at 1 April, as previously reported 6,055.1 5,703.9 4,637.3Prior year adjustments (Note 2) (408.2) (394.8) (352.2)Balance as at 1 April, restated 5,646.9 5,309.1 4,285.1Profit attributable to shareholders 2,006.3 2,539.9 1,999.8Dividends (Note 27) (1,500.7) (2,007.2) (620.7)Repurchase of shares (142.3) (1.8) –Capital reserve on consolidation 83.7 – –Goodwill on consolidation realised upon disposal of non-current investments 1.6 60.6 12.1Goodwill on acquisition of non-current investments during the financial year (892.5) (253.7) (367.2)

(807.2) (193.1) (355.1)Balance as at 31 March 5,203.0 5,646.9 5,309.1

Non-current investments referred to above comprise investments in joint venture and associatedcompanies.

31 COMPANIES IN THE GROUPThe Company, Singapore Telecommunications Limited, is domiciled and incorporated in Singaporeand is listed on the Singapore Exchange. The registered address is 31 Exeter Road, Comcentre,Singapore 239732. The principal activities of the Company consist of the operation and provisionof telecommunication systems and services and investment holding.

Under a licence granted by the Infocommunications Development Authority of Singapore (“IDA”),the Group has exclusive right to provide fixed-line national and international telecommunicationsservices through 31 March 2000 and public cellular mobile telephone services and public radiopaging services through 31 March 1997 (with limited exceptions). The Group’s licence continueson a non-exclusive basis through 31 March 2017.

Under another licence granted by the IDA, the Group is the exclusive provider through 31 March2007, and a non-exclusive provider through 31 March 2017, of basic mail services with respect toletters and postcards, except for express letters which is on a non-exclusive basis with effect from1 April 1995.

The Company’s immediate and ultimate holding company is Temasek Holdings (Private) Limited,incorporated in Singapore. The following are subsidiary, joint venture and associated companiesas at 31 March 2001, 31 March 2000 and 31 March 1999.



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COUNTRY OF PERCENTAGE OFINCORPORATION EFFECTIVE EQUITY

NAME OF AND PLACE OF HELD BY THE GROUPCOMPANIES PRINCIPAL ACTIVITIES BUSINESS %

2001 2000 1999

Subsidiary CompaniesHeld by the CompanyC2C Asiapac Pte Ltd Investment holding and Singapore 100 100 100(formerly known as provision of administrative, SingTel Global technical and advisory services.Multimedia Pte Ltd)

# GB21 (Hong Kong) Provision of telecommunications Hong Kong 100 100 –Limited services and products.ICO Investment (Singapore) Investment holding company. Singapore 100 100 100Private LimitedInnoVoice Services Dormant. Singapore 100 100 100Private Limited

## INS (Europe) Limited Dormant. United Kingdom 100 100 100INS Holdings Pte Ltd Investment holding Singapore 100 100 100

and provision of telecommunications services.

@ InfoCom Holding Investment holding company. Singapore 100 100 100Company Pte LtdKA Land Pte Ltd Investment holding company. Singapore 100 100 100

@ Mercurix Pte Ltd Provision of data Singapore 100 – –communication services.

National Computer Provision of information Singapore 100 100 100Systems Private Limited technology and consultancy

services.Sembawang Cable Provision of storage facilities for Singapore 60 60 60Depot Pte Ltd submarine telecommunications

cables and related equipment.Singapore Post Private Operation and provision of Singapore 100** 100** 100**Limited postal services.Singapore Telecom Investment holding company. USA 100 100 100America, Inc.Singapore Telecom ADSB Investment holding company. Netherlands 90 90 90(Netherlands Antilles) N.V. Antilles

## Singapore Telecom Provision of administrative, United Kingdom 100 100 100Europe Ltd technical and advisory services.

# Singapore Telecom Investment holding Hong Kong 100 100 100Hong Kong Limited and provision of

telecommunications services.# Singapore Telecom Provision of telecommunications India 100 100 –

India Private Limited services and all related activities.Singapore Telecom Holding of strategic investments Singapore 100 100 100International Pte Ltd in companies engaged in the

field of telecommunications, and provision of technical and management consultancy services in the field of telecommunications.

# Singapore Telecom Provision of telecommunications Japan 100 100 100Japan Co Ltd services and all related activities.

# Singapore Telecom Provision of telecommunications Korea 100 100 –Korea Limited services and all related activities.Singapore Telecom Provision of mobile phone Singapore 100 100 100Mobile Pte Ltd services.Singapore Telecom Provision of paging, public Singapore 100 100 100Paging Pte Ltd mobile data and radio trunk

repeater services.# Singapore Telecom Provision of customer services Taiwan 100++ 100++ 100

Taiwan Limited for telecommunications related activities.

Singapore Telecom Provision of administrative, USA 100 100 100USA, Inc. technical and advisory services

in the USA.SingaSat Pte Ltd Investment holding company. Singapore 100 100 100SingNet Pte Ltd Provision of value-added Singapore 100 100 100

services and internet-related services.

SingTel Aeradio Pte Ltd Provision of facilities Singapore 100 100 100management and consultancy services and distributor of specialised telecommunications and data communication products.



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2001 2000 1999

Subsidiary CompaniesHeld by the CompanySingTel Asian Investments Investment holding company. Singapore 100 100 100Pte LtdSingTel Australia Holding Investment holding company. Singapore 100 100 100Pte Ltd

# SingTel (Europe) Limited Telecommunication business United Kingdom 100 100 100in United Kingdom.

SingTel Global Services Dormant. Singapore 100 100 100Private LimitedSingTel Investments Portfolio investment holding Singapore 100 100 100Private Limited company.

# SingTel i2i Private Limited Investment holding company. Mauritius 100 – –# SingTel Japan Co., Ltd Engaged in telecommunications Japan 100 100 –

services business and all other related businesses.

SingTel (Jersey) Private Portfolio investment holding Jersey 100 100 100Limited company.SingTel Mobile Satellite Investment holding company. Singapore 100 100 100Pte LtdSingTel (Netherlands Liquidated. Netherlands – 100 100Antilles) Pte N.V.

# SingTel (Philippines), Inc. Provision of customer services Philippines 100 100 100for telecommunications related activities.

SingTel Ventures Venture capital investments in Cayman Islands 100 100 100(Cayman) Pte Ltd start-up technology and

telecommunications companies.SingTel Ventures Venture capital investments in Singapore 100 100 100(Singapore) Pte Ltd start-up technology and

telecommunications companies.SingTel Yellow Pages Provision of directory Singapore 100 100 100Pte Ltd advertising and publishing.SingTelSat Pte Ltd Provision of satellite capacity Singapore 100 100 100

for telecommunication and video broadcasting services.

+##STEL Information Provision of data processing People’s 100 100 100Technology and programming services for Republic(Shanghai) Co Ltd holding company and technical of China

services related to telecommunications information services.

# Sudong Sdn Bhd The management, provision Malaysia 100 100 100and operations of a call centre for telecommunication services.

Telecom Equipment Engaged in the sale Singapore 100 100 100Pte Ltd and maintenance of

telecommunications equipment.Held by Subsidiary CompaniesC2C Marine Pte Ltd Owning, operating and Singapore 59.5 – –

managing of maintenance-cum-laying cableships.

# C2C Pte Ltd Operation and provision of Bermuda 59.5 – –telecommunications facilities and services utilising a network of submarine cable systems and associated terrestrial capacity.

C2C Singapore Pte Ltd Operation and provision of Singapore 59.5 – –telecommunications facilities and services utilising a network of submarine cable systems and associated terrestrial capacity.

Chapter-e.com Pte Ltd Engaged in e-commerce services. Singapore 51 51 –DataPost Pte Ltd Provision of electronic printing Singapore 70 70 70

and despatching services.^##First Cube Pte Ltd Provider of internet-enabled Singapore 72.9 50 –

storage units.Global Page Pte Ltd Marketing, implementing and Singapore 100 100 100

operating radio paging systems and investment holdings.

+##Guangzhou Zhong Approved training centre for People’s Republic 70 – –Sheng Information Microsoft and Cisco products. of ChinaTechnology Co Ltd



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2001 2000 1999

Subsidiary CompaniesHeld by Subsidiary Companies

## Information Network Provision of data Malaysia 100 100 100Services Sdn Bhd communication and value

added network services.## Integrated Data Services Engaged in the business of Myanmar 90 90 90

Limited printing, publishing and advertising.

# Integrated Information Publication of directories and Hong Kong 100 100 100(Hong Kong) Limited sale of advertising space in

directories.# Integrated Information (M) Engaged in the sale of Malaysia 100 100 100

Sdn Bhd advertising space in overseas telephone and telex directories, magazines and periodicals.

# Integrated Media Services Under voluntary liquidation. Taiwan 100 100 100(Taiwan) Co LtdInfo Ad Publishing Provision of consultancy and Singapore 100 100 100Consultants Private market research in informationLimited technology, directory

advertising and publishing.## Lanka Communication Provision of data Sri Lanka 82.9 82.9 82.9

Services (Private) Limited communication services.## NCS Information Engaged in information People’s Republic 100 100 100

Technology (Suzhou) system software development of ChinaCo. Ltd services.

# NCSI (Australia) Pty Ltd Provision of information Australia 100 100 –technology services.

NCSI Holdings Pte Ltd Investment holding company. Singapore 100 100 100# NCSI Holdings (Malaysia) Investment holding company. Malaysia 100 100 –

Sdn Bhd# NCSI (Malaysia) Sdn Bhd Provision of information Malaysia 100 100 –

technology services.# NCSI (HK) Limited Provision of information Hong Kong 100 100 100

technology services.# NCSI (India) Private Limited Provision of information India 100 100 100

technology services.^^^Print and Mail Printing and distribution of Singapore ^^^ ^^^ 70

Intercontinental (Asia) international mail.Pte Ltd

# Pastel Limited Investment holding company. Mauritius 100 – –^^ SESAMi.com Pte Ltd Engaged in e-commerce Singapore ^^ 100 –

services.^^#SESAMi.com (Australia) Engaged in e-commerce Australia ^^ 100 –

Pty Limited services.^^#SESAMi.com (HK) Limited Engaged in e-commerce Hong Kong ^^ 100 –

services.+##Shanghai Zhong Sheng Provision of product reselling, People’s Republic 70 – –

Information Technology training and software of ChinaCo. Ltd development, consultancy

and representation.Singapore Post Enterprise Investment holding company. Singapore 100 100 100Private Limited

## Singapore Telecom Provision of consultancy United Kingdom 100 100 100International Europe Ltd services in telecommunications

to related companies.# Singapore Telecom Provision of managed facsimile Australia 100 100 100

Australia Pty Limited services.SingTel ADSB Investment holding company. Netherlands 90 90 90(Netherlands) B.V.

## SingTel (Cambodia) Under voluntary liquidation. Cambodia 100 100 100Private LimitedSingTel Mobile Sales Sale of telecommunications Singapore 100 100 100Pte Ltd equipment and provision of

related services.# SingTel Services Australia Provision of customer services Australia 100 100 100

Pty Limited for telecommunications related activities.

SingTel Strategic Investment holding company. Singapore 100 100 70Investments Pte LtdSingTel USA, Inc. Investment holding company. USA 100 100 100



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2001 2000 1999

Subsidiary CompaniesHeld by Subsidiary CompaniesST Paging Pte Ltd Sale of telecommunications Singapore 100 100 100

equipment and provision of related services.

STI (Australia) Holding Investment holding company. Singapore 100 100 100Pte Ltd

+# Suzhou ZhongXing Under voluntary liquidation. People’s 70 70 70Telecommunication RepublicEngineering Development of ChinaCo. LtdTE International (S) Engaged in the business of Singapore 100 100 100Pte Ltd investment holding, sales and

maintenance of telecommunications equipment.

Thai Page Pte Ltd Investment holding company. Singapore 100 100 100# Tourism Publications Provision of directory Malaysia 100 100 100

Corporation Sdn Bhd advertising and publishing.## Viva Bahagia Sdn Bhd To acquire property for Malaysia 100 100 100

investment and to carry out general trading.

ZapSurf Private Limited Provision of value-added Singapore 100 – –services and internet-related services.

Zeus Digital Asset Services To provide digital asset Singapore 100 – –Pte Ltd services to content owners

and to be a wholesale distributor of protected music content.

Notes:* Denotes amounts of less than S$50,000.** Excluding the Special Share issued to the Minister for Finance (Incorporated) in pursuant to section 47 of the TAS Act 1992 and

Article 6 of the Articles of Association.+ Subsidiary company’s financial year is 31 December.++ Includes 97.77% deemed interest held by a wholly owned subsidiary.^ During the financial year ended 31 March 2001, the Group increased its interest in First Cube Pte Ltd from 50% to 72.92%.

Accordingly, it is reclassified from a joint venture to a subsidiary company as at 31 March 2001.^^ Pursuant to a merger with Asia2B.com Holdings Limited during the financial year ended 31 March 2001, the Group exchanged its

89% equity interest in SESAMi.com Pte Ltd group for an equity interest of 44.5% in SESAMi Inc., a joint venture company.^^^ During the financial year ended 31 March 2000, interest was diluted to 50% and reclassified from a subsidiary to a joint venture

company accordingly.@ Shareholding was transferred from a subsidiary company to the Company during the year ended 31 March 2001.

All companies are audited by PricewaterhouseCoopers, Singapore except for the following:# Audited by associate firms of PricewaterhouseCoopers, Singapore.## Audited by other firms.



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COUNTRY OF PERCENTAGE OFINCORPORATION EFFECTIVE EQUITY COST OF

NAME OF PRINCIPAL AND PLACE OF HELD BY THE GROUP INVESTMENTCOMPANIES ACTIVITIES BUSINESS % S$ MILLION

2001 2000 1999 2001 2000 1999

Joint Venture CompaniesHeld by the Company

# Acasia Communications Provision of Malaysia 18.8 18.8 18.8 0.5 0.5 0.5Sdn Bhd services relating to

telecommunications, computer, data and information within and outside Malaysia.

ACPL Marine Pte Ltd Owning, operating and Singapore 41.7 – – 0.1 – –managing of maintenance-cum-laying cableships.

ASEAN Cableship An operator of a cable Singapore 16.7 16.7 16.7 0.1 0.1 0.1Pte Ltd repair vessel for repair

and maintenance of submarine telecommunication cables.

# ASEAN Telecom Investment holding Malaysia 17.6 17.6 17.6 0.1 0.1 0.1Holding Sdn Bhd company.

## Digital Network Access Provision of analogue Singapore 50 – – 22.7 – –Communications Pte Ltd and digital public

trunk radio services.Failsafe Corporation Provision of IT Singapore 50 50 – 17.2 5.1 –(Singapore) Pte Ltd outsourcing and

hosting services. Indian Ocean Cableship Ownership and Singapore 50 50 – 0.1 0.1 –Pte Ltd chartering of ships,

barges and remotely operated vehicles for repair, maintenance and protection of submarine cable and plant.

International Cableship Ownership and Singapore 45 45 45 0.4 0.4 0.4Pte Ltd chartering of cableships.Lycos Asia Limited To provide local portal Singapore 50 50 – 54.1 8.4 –(formerly known as sites in its target markets Lycos Asia Pte Ltd) with services such as

World Wide Web navigation, search and community features.

# Network i2i Limited Operation and provision Mauritius 50 – – * – –of telecommunications facilities and services utilising a network of submarine cable systems and associated terrestrial capacity.

## Radiance The sale, distribution, Singapore 50 50 – 13.3 13.3 –Communications Pte Ltd installation and

maintenance of telecommunications equipment in Singapore.

TeleTech Park Pte Ltd Engaged in the business Singapore 40 40 40 10.0 10.0 10.0of development, construction, operation and management of TeleTech Park.

@ Virgin Mobile Holdings Investment holding Singapore 50.6 – – 9.1 – –Pte Ltd company.



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2001 2000 1999 2001 2000 1999

Joint Venture CompaniesHeld by Subsidiary Companies

## APT Satellite Provision of Hong Kong 45.0 – – 6.8 – –Telecommunications telecommunications Limited services.

## Beijing Asia Pacific First To construct a People’s Republic 35 35 35 21.2 21.2 21.2Star Communications nation-wide radio of ChinaTechnology Co. Ltd paging network.Distribution Centre International mail Singapore 40 40 40 0.3 0.3 0.3(Asia) Pte Ltd distribution.

^ First Cube Pte Ltd Provider of internet- Singapore ^ 50 – ^ 1.2 –enabled storage units.

# Forward Media Sdn Bhd To publish Borneo Brunei 50 50 50 0.1 0.1 0.1Bulletin Brunei Yearbook and other publications.

## ID.Safe Pte Ltd To provide certifying, Singapore 50 50 – 1.0 1.0 –authenticating, verifying of electronic transactions and other corporate security related transactions.

InfoGrid Pte Ltd Under voluntary Singapore 50 50 50 * * *liquidation.

# Integrated Databases Provision of directory India 49 49 49 0.8 0.8 0.8India Ltd advertising and publishing.Mail Boxes Exchange Provision of document Singapore 50 50 50 0.4 0.4 0.4(MBE) Pte Ltd exchange, business and

communication services.# PT Bukaka SingTel Operation of fixed public Indonesia 40 40 40 47.1 47.1 47.1

International switch telephone network services in eastern Indonesia.

## PT SkyTelindo Services Provision of paging Indonesia 30 30 30 4.6 4.6 4.6services.

Print and Mail Printing and distribution Singapore 50 50 – 0.2 0.2 –Intercontinental of international mail.(Asia) Pte Ltd

^^ SESAMi Inc. Engaged in investment Cayman Islands 44.5 ^^ – 36.8 ^^ –holding, provision of b2b e-commerce services, e-commerce software solutions and related services.

# Shin Digital Investment holding Thailand 30 – – 82.9 – –Company Limited company.Virgin Mobile Provision of Singapore 44.7 – – * – –(Asia) Pte Ltd telecommunications

services and products.# Virgin Mobile Provision of Hong Kong 44.7 – – * – –

(Hong Kong) Limited telecommunication services and products.

Virgin Mobile Provision of Singapore 44.7 – – * – –(Singapore) Pte Ltd telecommunications

services and products.# WorldPartners Company To create and support USA 20 20 20 9.2 12.8 16.2

commonly branded telecommunications services under the brand name of Worldsource.

Joint Venture Companies held by the Group – at cost 339.1 127.7 101.8Notes:* Denotes amounts of less than S$50,000.^ During the financial year ended 31 March 2001, the Group increased its interest in First Cube Pte Ltd from 50% to 72.92%.

Accordingly, it is reclassified from a joint venture to a subsidiary company as at 31 March 2001.^^ Pursuant to a merger with Asia2B.com Holdings Limited during the financial year ended 31 March 2001, the Group exchanged its

89% equity interest in SESAMi.com Pte Ltd group for an equity interest of 44.5% in SESAMi Inc., a joint venture company.@ The Group regards Virgin Mobile Holdings Pte Ltd as a joint venture, notwithstanding that it holds 50.6% of the company’s issued

share capital, because it exercises joint control.




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2001 2000 1999 2001 2000 1999

Associated CompaniesHeld by the Company

## Abacus Travel Systems Marketing and Singapore 30 30 30 0.9 0.9 0.9Pte Ltd distributing certain

travel-related services through on-line airline computerised reservations systems.

## 1-Net Singapore Pte Ltd Provision of broadband Singapore – 30 30 – 0.5 0.5multimedia services in Singapore.

## Point Asia Dot Com Thai internet and Thailand 31.1 – – 38.7 – –(Thailand) Limited e-commerce service

provider.Associated CompaniesHeld by Subsidiary Companies

## AAPT Limited Provision of switched Australia – – 17.6 – – 55.6and lease line value added communications services.

## Advanced Data Network Provision of data Thailand – – 40 – – 23.5Communications Co., Ltd communication services.

# Advanced Info Service Provision of cellular Thailand 21 20 13 608.5 572.6 534.6Public Co., Ltd and paging

telecommunications services.

# ADSB Investment holding Netherlands 24.3 24.3 24.3 930.5 930.5 930.5Telecommunications B.V. company.

## APT Satellite Investment holding Bermuda 20.4 – – 13.4 – –Holdings Ltd company.

## APT Satellite To establish, conduct British 28.6 – – 62.6 – –International Company and carry on satellite Virgin IslandsLimited communications,

telecommunications and related services including management and operation.

## Bharti Telecom Ltd Provision of cellular, fixed India 20 – – 360.2 – –line telecommunications and internet services.

# Bharti Televentures Ltd Provision of cellular fixed India 28.5 – – 413.7 – –line telecommunications services.

# Data Network Solutions Provision of information Thailand – – 49 – – *Company Limited services and related

networking equipment.## Globe Telecom, Inc. Provision of cellular Philippines 23.6 39 39 339.5 304.6 264.1** mobile telephone,

international and fixed line telecommunications services.

## Globe Telecom To trade, issue and hold Philippines 40.7 – – * – –Holding, Inc. financial securities.

## InfoLink Co., Ltd Provision of value Thailand 49 49 49 * * *added paging services.

## InfoServe Technology Provision of Cayman Islands 30.5 – – 78.9 – –Corp. (Cayman Islands) communications, internet,

VPN and solution services.# Integrated Marketing and servicing Brunei – – 25 – – 0.3

Communications of telecommunications Sdn Bhd and information

technology equipment.## Multi-media Sales and maintenance Malaysia 49 49 49 0.5 0.5 0.5

Communications of telecommunications Sdn Bhd equipment.



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2001 2000 1999 2001 2000 1999

Associated CompaniesHeld by Subsidiary Companies

## New Century Infocomm Provision of Taiwan 24.3 29 – 635.4 629.4 –Tech Co. Ltd (formerly telecommunication known as New Century services.Infocomm Co. Ltd)

## Pager Sales Co Ltd Engaged in marketing Thailand 40 40 40 * * *of pagers.

# Teleinfo Media Co., Ltd Publishing and Thailand 25 – – 19.7 – –distribution of telephone directory.

# VA Dynamics Sdn Bhd Distribution of Malaysia 49 49 49 0.5 0.4 0.4telecommunication and related products.

Associated companies held by the Group – at cost 3,503.0 2,439.4 1,810.9COUNTRY OF PERCENTAGE OF

INCORPORATION EFFECTIVE EQUITYNAME OF AND PLACE OF HELD BY THE GROUPCOMPANIES PRINCIPAL ACTIVITIES BUSINESS %

2001 2000 1999

Associated CompaniesHeld by Associated Companies

## Belgacom S.A. Provision of cellular mobile telephone, Belgium 12.15 12.15 12.15international and fixed linetelecommunications services.

Notes:* Denotes amounts of less than S$50,000.** During the financial year ended 31 March 2001, Globe Telecom (“Globe”) acquired 100% of Islacom Communications Inc

(“Islacom”) via share swap. The dilution of interest in Globe during FY2001 is mainly attributed to this. In addition, the effectiveequity held by the Group is inclusive of new shares to be issued to SingTel via the conversion of the promissory notes and warrants.




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32 CAPITAL, INVESTMENTS AND OTHER COMMITMENTS(a) The commitments for capital expenditure and

investments which have not been provided for in the financial statements are as follows:Authorised and contracted for 3,479.7 1,213.5 685.6Authorised but not contracted for 1,437.5 365.0 772.8

Outstanding commitments relate mainly to the purchase of telecommunications and postal fixedassets and investments, and construction of cable networks.


(b)The outstanding forward foreign currency contracts are as follows:For hedging purposes 1,947.7 1,695.4 1,628.7As part of trading portfolio 16.8 421.8 118.0

1,964.5 2,117.2 1,746.7

(c) Proposed acquisition of Cable & Wireless Optus Limited

On 26 March 2001, the Company (“SingTel”) announced the proposed acquisition of all theoutstanding shares in Cable & Wireless Optus Limited (“Optus”). As at 10 May 2001, there were3,786.8 million issued Optus Shares, 9.7 million outstanding Optus Options and 7.2 millionadditional Optus Shares that may be issued during the offer period pursuant to Optus employeeshare schemes. The acquisition will be made through a wholly owned subsidiary, SingTel AustraliaInvestment Ltd (“SingTel Australia”), a subsidiary incorporated in the British Virgin Islands on1 May 2001. SingTel Australia will fund the cash component of the Offer using cash providedby SingTel.

Optus shareholders are offered three alternatives for each Optus share:

(i) 1.66 new SingTel shares

(ii) A$2.25 in cash plus 0.8 new SingTel shares

(iii) A$2.00 in cash plus A$0.45 in SingTel US$ denominated bonds (based on a fixed exchangerate of US$0.4940/A$1) plus one Unsecured Note. The Unsecured Note may be redeemed for0.54 new SingTel shares, with the possibility of additional cash and bonds in lieu of shares,depending on the offer consideration alternatives chosen by all accepting Optus shareholders.

SingTel intends to fund the cash portion of the offer consideration through a combination ofinternal cash resources and new debt facilities. A total cash and bond amount of A$9.25 billion,of which the face value of the bond amount will not exceed A$2.0 billion, has been madeavailable under the offer. Depending on the level of acceptance and the offer considerationalternative chosen by the accepting Optus shareholders, the number of new SingTel shares to beissued as purchase consideration may range from nil to 2.98 billion shares (16.2% of the enlargedpost-acquisition share capital). The shares to be issued under the offer will rank equally in allrespects with the existing SingTel shares on the date of their issue.

The offer is conditional upon, among other things, acceptances being received in respect ofmore than 50% of outstanding Optus shareholders, SingTel shareholder approval and relevantregulatory approvals.

Temasek Holdings (Private) Limited, SingTel’s largest shareholder, which owns approximately 78%of SingTel as at 31 March 2001, has agreed to vote in favour of the shareholder resolutionsrequired to be passed in connection with this acquisition.

In addition, SingTel has entered into a Pre-Bid Agreement with Cable & Wireless plc (“C&W plc”)under which, among other things, C&W plc has agreed to accept the SingTel’s offer in respect of19.8% of Optus share capital.

The final purchase consideration cannot presently be determined as it is dependent on the level ofacceptances received at the conclusion of the offer, the offer consideration alternatives chosen bythe accepting Optus shareholders, the SingTel share price and the US$/S$ and A$/S$ exchangerates prevailing at the date of the acquisition.



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33 OPERATING LEASE COMMITMENTSCommitments in relation to non-cancellable operating leases contracted for at the reporting date but not recognised as liabilities, are payable as follows:Not later than one financial year 72.2 36.0 29.0Later than one financial year but not later than five financial years 167.1 60.6 43.0Later than five financial years 120.6 30.5 37.6

34 SEGMENT INFORMATIONWith effect from the financial year beginning 1 April 2000, the Group adopted the revised StatementOf Accounting Standard 23 (1999), Segment Reporting, which came into effect for accounting periodsbeginning on that date. SAS 23 (revised) requires that information be reported for business segmentsand geographical segments. It provides more detailed guidance than the original SAS 23 foridentifying business segments and geographical segments. It requires that an enterprise look to itsinternal organisational structure and internal reporting system for the purpose of identifying thosesegments. As a result, reporting for the business and geographical segments have been redefined toconform with the new requirements.

Data for the financial year ended 31 March 1999 had not been collected in a way that allowsreclassification and it is not practicable to present the information in this format for the business andgeographical segments. Accordingly the segment report for the year ended 31 March 1999 has notbeen presented.

Primary Reporting Format – Business Segments

Under the revised SAS 23, the Group is organised into the following business segments:

Wireline – represents fixed network telecommunications services such as domestic and IDD services,leased lines, data communications, cable networks and internet services.

Wireless – represents mobile telecommunications services such as cellular, paging and Inmarsatservices. It also includes satellite telecommunications services such as lease of transponders.

Postal – represents postal services.

Information technology and engineering – represents information technology consultancy, systemsintegration and engineering services.

Others – represents the balance of the Group’s operations and comprise sale of telecommunicationsequipment, directory advertising and publishing, storage of cables and investment activities.

The accounting policies used to derive reportable segment results are consistent with those describedunder the “Significant Accounting Policies” note to the financial statements. Inter-segment pricing isdetermined on an arm’s length basis.

Segment results represent operating revenue less expenses.

The asset totals disclosed for each segment represent assets directly managed by each segment, andprimarily include receivables, property, plant and equipment, inventories, operating cash and bankbalances. Corporate-held assets managed at the corporate level not allocated to the segments includefixed deposits and investments.

Segment liabilities comprise operating liabilities and exclude borrowings, provisions for taxes, deferredtaxation and dividends.

Segment capital expenditure comprises additions to property, plant and equipment.



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34 SEGMENT INFORMATION (CONTINUED)IT&

YEAR ENDED 31 MARCH WIRELINE WIRELESS POSTAL ENGINEERING OTHERS ELIMINATIONS TOTAL2001 S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION

Primary Reporting Format – Business Segments (Continued)

Total revenue from external customers 2,887.6 938.8 341.0 472.8 285.3 – 4,925.5Inter-segment revenue 167.1 174.8 29.2 124.1 63.8 (559.0) –Total revenue 3,054.7 1,113.6 370.2 596.9 349.1 (559.0) 4,925.5

Segment results 1,259.2 362.8 126.5 40.2 24.2 75.7 1,888.6Other income 138.6 (0.6) 23.8 8.0 (5.6) (71.0) 93.2Compensation from IDA 337.0 – – – – – 337.0Share of profits and losses of joint venture and associated companies 123.5 228.3 0.3 – (3.2) – 348.9

1,858.3 590.5 150.6 48.2 15.4 4.7 2,667.7Interest and investment income 393.6Interest on borrowings (9.1)Profit before tax 3,052.2Tax (715.1)Profit after tax 2,337.1Minority interests (12.9)Profit before extraordinary items 2,324.2Extraordinary items (317.9)Profit attributable to shareholders 2,006.3

Segment assets 4,832.6 770.3 729.0 299.3 220.3 – 6,851.5Investment in net assets of joint venture and associated companies 1,174.0 505.0 1.0 – 188.2 – 1,868.2

6,006.6 1,275.3 730.0 299.3 408.5 – 8,719.7Unallocated assets 7,432.9Consolidated total assets 16,152.6

Segment liabilities 3,874.4 370.9 119.3 156.7 99.4 – 4,620.7Unallocated liabilities 3,015.9Consolidated total liabilities 7,636.6

Capital expenditure 1,527.6 110.8 20.3 66.6 7.5 – 1,732.8

Depreciation 391.7 164.3 42.3 13.9 11.9 – 624.1



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34 SEGMENT INFORMATION (CONTINUED)IT&

YEAR ENDED 31 MARCH WIRELINE WIRELESS POSTAL ENGINEERING OTHERS ELIMINATIONS TOTAL2000 S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION S$ MILLION

Primary Reporting Format – Business Segments (Continued)

Total revenue from external customers 2,992.9 910.5 322.6 379.7 260.1 – 4,865.8Inter-segment revenue 94.2 197.0 26.9 105.5 48.1 (471.7) –Total revenue 3,087.1 1,107.5 349.5 485.2 308.2 (471.7) 4,865.8

Segment results 1,442.2 133.1 128.0 49.6 25.6 74.2 1,852.7Other income 75.7 8.4 10.8 12.6 (2.5) (69.8) 35.2Share of profits and losses of joint venture and associated companies 209.9 141.5 0.3 – 15.8 – 367.5

1,727.8 283.0 139.1 62.2 38.9 4.4 2,255.4Interest and investment income 273.5Interest on borrowings (8.1)Profit before tax 2,520.8Tax (661.5)Profit after tax 1,859.3Minority interests (20.4)Profit before extraordinary items 1,838.9Extraordinary items 701.0Profit attributable to shareholders 2,539.9

Segment assets 3,471.7 855.9 724.3 212.7 251.8 – 5,516.4Investment in net assets of joint venture and associated companies 1,048.7 230.6 0.8 3.5 66.6 – 1,350.2

4,520.4 1,086.5 725.1 216.2 318.4 – 6,866.6Unallocated assets 7,050.2Consolidated total assets 13,916.8

Segment liabilities 2,406.1 300.8 120.1 159.2 189.1 – 3,175.3Unallocated liabilities 2,136.7Consolidated total liabilities 5,312.0

Capital expenditure 477.8 142.0 60.2 22.0 12.4 – 714.4

Depreciation 412.7 303.7 40.5 16.2 9.7 – 782.8

Secondary Reporting Format – Geographical Segments

The Group’s business segments operate mainly in Singapore, the home country of the Company, whichis also an operating company. No other individual country contributed more than 10% of consolidatedrevenue and assets.

In presenting information on the basis of geographical segments, segment revenue is based on where theservice is rendered and where the customer is located. Total assets and capital expenditure are shown bygeographical areas in which the assets are located.



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34 SEGMENT INFORMATION (CONTINUED)

Primary Reporting Format – Geographical Segments (Continued)

YEAR ENDED 31 MARCH SINGAPORE OTHERS TOTAL2001 S$ MILLION S$ MILLION S$ MILLION

Revenue from external customers 4,911.1 14.4 4,925.5

Segment results 1,948.6 (60.0) 1,888.6Other income 98.3 (5.1) 93.2Compensation from IDA 337.0 – 337.0Share of results of joint venture and associated companies (6.8) 355.7 348.9

2,377.1 290.6 2,667.7Interest and investment income 393.6Interest on borrowings (9.1)Profit before tax 3,052.2

Segment assets 5,481.1 1,370.4 6,851.5Investment in net assets of joint venture and associated companies 199.7 1,668.5 1,868.2

5,680.8 3,038.9 8,719.7Unallocated assets 7,432.9Total assets 16,152.6

Capital expenditure 751.0 981.8 1,732.8

YEAR ENDED 31 MARCH SINGAPORE OTHERS TOTAL2000 S$ MILLION S$ MILLION S$ MILLION

Revenue from external customers 4,849.7 16.1 4,865.8

Segment results 1,895.3 (42.6) 1,852.7Other income 39.0 (3.8) 35.2Share of results of joint venture and associated companies 15.5 352.0 367.5

1,949.8 305.6 2,255.4Interest and investment income 273.5Interest on borrowings (8.1)Profit before tax 2,520.8

Segment assets 5,376.2 140.2 5,516.4Investment in net assets of joint venture andassociated companies 69.7 1,280.5 1,350.2

5,445.9 1,420.7 6,866.6Unallocated assets 7,050.2Total assets 13,916.8

Capital expenditure 692.4 22.0 714.4

35 CONTINGENT LIABILITIESAs at 31 March 2001, the Company provided a guarantee to a third party for due performance by itssubsidiary of its obligations and liabilities under a contract to provide information technology servicesin the ordinary course of business.

In addition, a subsidiary company provided performance guarantees amounting to S$115.2 million(2000: S$110.0 million, 1999: S$110.9 million) to a third party in respect of a joint venture company.

36 SUBSEQUENT EVENTSOn 23 April 2001, a subsidiary company was granted a facilities-based operator licence for theprovision of third generation (3G) mobile communications systems and services and the 3G spectrumright by the IDA at the price of S$100 million.



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37 ACCOUNTING POLICIESThe Group will be adopting the new or revised Statements of Accounting Standard (“SAS”) thatbecome applicable and effective in Singapore from the following relevant dates:

For the financial year ending 31 March 2002

SAS 8 : Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting PoliciesSAS 10: Events after Balance Sheet DateSAS 12: Income TaxesSAS 17: Employee BenefitsSAS 22: Business CombinationsSAS 31: Provisions, Contingent Liabilities and Contingent AssetsSAS 32: Financial Instruments: Disclosure and PresentationSAS 34: Intangible AssetsSAS 35: Discontinuing Operations, andSAS 36: Impairment of Assets

For the financial year ending 31 March 2003

SAS 33: Financial Instruments: Recognition and Measurement


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ANNEXURE 2IMPLEMENTATION AGREEMENT

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IMPLEMENTATION AGREEMENT – EXTRACTS

PARTIES

SINGAPORE TELECOMMUNICATIONS LIMITED of 31 Exeter Road, Comcentre,Singapore, 239732 (“SingTel”), and

CABLE & WIRELESS OPTUS LIMITED ACN 052 833 208 of 101 Miller Street, NorthSydney NSW 2060 (“Optus”)

RECITALS

A. Cable and Wireless plc together with Optus invited SingTel and a number of otherparties to make proposals to acquire all or part of Optus or its principal operatingbusinesses. SingTel has proposed the Transaction described in this Agreement. Thestructure of the Transaction has been formulated by SingTel to meet its commercialobjectives.

B. SingTel and Optus have agreed on the terms of this agreement to implement theTransaction under which Optus Shareholders will be invited by Bidder to dispose oftheir Optus Shares and Bidder will acquire Optus Shares.

OPERATIVE PROVISIONS

1. INTERPRETATION

1.1 Definitions

The definitions below relate to the terms used in the Unsecured Note Provisions andthe Buy-Back Provisions which are not defined in Section 12 of this Bidder’s Statementin the same or substantially similar terms.

The following definitions apply in this agreement, unless the context otherwise requires.

“Additional Allocated Bond Amount” is defined in clause 3.4.

“Additional Allocated Cash” is defined in clause 3.4.

“Additional Cash” is defined in clause 3.4.

“Bank Account” means an A$ bank account to be established at the Nominated Bank inthe name of Bidder as agent for the Optus Shareholders in connection with the Buy-Back.

“Bidder” means [SingTel Australia].

“Bonds” are described in clause 3.3.

“Business Day” means a weekday on which trading banks are open for general bankingbusiness in Sydney and Singapore.

“Cheque” means a cheque drawn on Optus’ Account.

“Final Maturity Date” is defined in clause 3.6.

“Formula Rate” of a Bond is the interest rate (expressed as a percent per annum)determined in accordance with Schedule 7.

“Initial Redemption Amount” means A$1.48.

“Insolvency Event” means in respect of a corporation:

(a) an order is made, or the corporation passes a resolution, for its winding up;

(b) an administrator is appointed to the corporation; or

(c) the corporation is unable to pay its debts.

“Interim Maturity Date” is defined in clause 3.6.

“Late Maturity Date” is defined in clause 3.5B.

“Lender” means:

(a) if SingTel has not nominated a subsidiary as Lender in accordance with clause 3.17,SingTel; or

I M P L E M E N T A T I O N A G R E E M E N T

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(b) otherwise, a nominated subsidiary of SingTel (which nominated subsidiary may not alsobe the Bidder).

“Maximum Bond Amount” means the sum of the Bond Issue Prices (expressed in A$ byreference to the Announcement Exchange Rate) of Tranche A Bonds and Tranche B Bondswhere:

(a) the aggregate Bond Issue Price of all Tranche A Bonds equals the aggregate Bond IssuePrice of all Tranche B Bonds; and

(b) the sum of the face values of both tranches of Bonds (expressed in A$ by reference tothe Announcement Exchange Rate) is A$2 billion.

“Nominated Bank” means an Australian bank and branch (in Australia) nominated bySingTel and approved by Optus (such approval not to be unreasonably withheld). Theremay be more than one Nominated Bank.

“Optus’ Account” means an A$ account of Optus, in the name of Optus, to be styled“Buy-Back Account” with the Nominated Bank to be opened by Lender as agent for Optusand the authorised signatories on which from time to time are representatives of SingTelwho have been approved by Optus (such approval not to be unreasonably withheld).

“Remaining Share” means each Optus Share not accepted into the Offer by the end ofthe Offer Period.

“Takeover Bid” means an off-market takeover bid for all of the Optus Shares to beimplemented in compliance with Chapter 6 of the Corporations Law (which at the electionof Bidder may extend to Optus Shares that come to be in the bid class during the OfferPeriod because of the conversion of Optus Options).

“Total Cash Pool” is defined in clause 3.4.

“Tranche A Bond” means a Bond belonging to Tranche A referred to in Schedule 7.

“Tranche B Bond” means a Bond belonging to Tranche B referred to in Schedule 7.

“Transaction” means the implementation of the Takeover Bid, the Buy-Back and thePlacement on the terms of this agreement.

1.2 Rules for interpreting this agreement

Headings are for convenience only, and do not affect interpretation. The following rulesalso apply in interpreting this agreement, except where the context makes it clear that arule is not intended to apply.

(a) A reference to:

(i) legislation (including subordinate legislation) is to that legislation as amended,re-enacted or replaced, and includes any subordinate legislation issued under it;

(ii) a document or agreement, or a provision of a document or agreement, is to thatdocument, agreement or provision as amended, supplemented, replaced ornovated;

(iii) a party to this agreement or to any other document or agreement includes apermitted substitute or a permitted assign of that party;

(iv) a person includes any type of entity or body of persons, whether or not it isincorporated or has a separate legal identity, and any executor, administrator orsuccessor in law of the person; and

(v) anything (including a right, obligation or concept) includes each part of it.

(b) A singular word includes the plural, and vice versa.

(c) A word which suggests one gender includes the other genders.

(d) If a word is defined, another part of speech has a corresponding meaning.

(e) If a party to this document is made up of more than one person, or a term is used inthis document to refer to more than one party:

(i) an obligation of those persons is joint and several;


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(ii) a right of those persons is held by each of them severally; and

(iii) any other reference to that party or term is a reference to each of those personsseparately, so that (for example) a representation, warranty or undertaking is givenby each of them separately.

(f) The Schedules form part of this agreement.

(g) If there is more than one Nominated Bank, the provisions of this agreement relating toaccounts at the Nominated Bank apply to all the Nominated Banks.

1.3 Business Days

If the day on or by which a person must do something under this agreement is not aBusiness Day:

(a) if the act involves a payment that is due on demand, the person must do it on or bythe next Business Day; and

(b) in any other case, the person must do it on or by the previous Business Day.

2. [NOT EXTRACTED]

3. TRANSACTION MECHANISM

3.1 Offer by Bidder

Bidder shall make Offers to all Optus Shareholders in respect of all of their Optus Shareson the terms set out in this agreement and in compliance with the Corporations Law(as modified or exempted).

3.2 Consideration

(a) Pursuant to the Offer, Optus Shareholders will be invited to dispose of their OptusShares for one of the following forms of consideration (the “Offer Consideration”) asthe shareholder elects from the following menu:

(i) 1.66 SingTel Shares for each Optus Share;

(ii) A$2.25 cash (or the US$ Cash Alternative) and 0.8 SingTel Shares for each OptusShare; or

(iii) A$2.00 cash (or the US$ Cash Alternative) and A$0.45 worth of Bonds (determinedby reference to the Bond Issue Price) and 1 Unsecured Note for each Optus Share.

(b) If an Optus Shareholder does not make an election regarding the Offer Consideration itwishes to receive, or if it makes conflicting elections, the shareholder will be deemed tohave elected the Offer Consideration described in clause 3.2(a)(ii).

(c) If the number of SingTel Shares to be issued to an Optus Shareholder as a result ofacceptance of an Offer by that shareholder is not a whole number, the number ofSingTel Shares issued to that shareholder will be rounded up to the nearest wholenumber.

3.3 Bonds

(a) The principal terms and other features of the Bonds are as described in Schedule 7.

(b) If an Optus Shareholder has elected the alternative outlined in clause 3.2(a)(iii), thatshareholder will be issued Bonds from each of the 2 tranches identified in Schedule 7(that is, Tranche A and Tranche B) having (subject to clause 3.3(c)) an equal aggregateBond Issue Price so the aggregate of the Bond Issue Prices of those Bonds satisfies theBond component of the Offer Consideration.

(c) The Bonds may be denominated in amounts of US$1,000 or US$1 to the extentrequired to accommodate individual accepting Optus Shareholders. Amounts of lessthan US$1 will be rounded up to the nearest whole US$1 amount – that is, if the facevalue of a Bond to be issued to an Optus Shareholder as a result of acceptance of anOffer by that shareholder is not a multiple of US$1, the shareholder will be issued witha Bond with a face value of US$1 in respect of that amount of less than US$1.


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(d) (i) All Bonds of a Tranche will be issued at the Bond Issue Price, and accrue interest atthe same rate, as the Bonds of that Tranche which are issued on the First SettlementDate.

(ii) Any Bond issued after the First Settlement Date will accrue interest from (andincluding) the First Settlement Date.

(iii) Accrued interest will be disregarded in satisfying the Bond component of the OfferConsideration due to any Optus Shareholder.

3.4 Additional Cash for Unsecured Notes

The maximum amount of cash and Bonds available to all Optus Shareholders is A$9.25billion, of which the maximum face value of Bonds which are available to all OptusShareholders (expressed in A$ by reference to the Announcement Exchange Rate) is A$2billion. A potentially lesser amount equal to the sum of A$7.25 billion and the MaximumBond Amount (“Total Cash Pool”) is used for the purposes of calculation to reflect the factthat the Bonds will be issued at the Bond Issue Prices and not face value. At the FinalMaturity Date, Bidder will calculate:

(a) the total amount of cash paid or payable to all Optus Shareholders under clause 3.2(excluding the Redemption Amount of the Unsecured Notes), including the amount ofany Withholding Tax paid or payable to the Australian Tax Office on behalf of OptusShareholders under clause 4.5(b)(i); and

(b) the aggregate Bond Issue Prices of all Bonds issued or to be issued to all OptusShareholders under clause 3.2,

excluding in both cases, any cash or Bonds which may be paid or issued under clause 3.5,3.5A or 3.5B. If the aggregate of (a) and (b) is less than the Total Cash Pool, the difference(the “Additional Cash”) will be allocated in respect of each Unsecured Note as the lesser of:

(c) the Initial Redemption Amount; and

(d) the Additional Cash divided by the total number of issued Unsecured Notes,

(the “Additional Allocated Cash”). Of such Additional Allocated Cash, each UnsecuredNote is allocated an additional amount of Bonds (“Additional Allocated Bond Amount”),which shall be calculated as the lesser of:

(e) the Additional Allocated Cash; and

(f) the difference of the Maximum Bond Amount and the amount in paragraph (b) of thisclause, if any, divided by the total number of issued Unsecured Notes.

3.5 Redemption of Unsecured Notes on Final Maturity Date

SingTel must, on the Final Maturity Date, redeem each Unsecured Note by paying toBidder as agent for each holder of an Unsecured Note, for each Unsecured Note, theRedemption Amount in cash, which must be used as follows:

(a) the difference between:

(i) the Redemption Amount; and

(ii) the Additional Allocated Cash,

must be used, in aggregate, to subscribe for SingTel Shares at an issue price of A$2.74provided, however, that where the aggregate amount that would otherwise be receivedby a holder is not a whole multiple of A$2.74, the number of SingTel Shares issued tothat holder will be rounded up to the nearest whole number of SingTel Shares (at noadditional cost to the holder);

(b) the Additional Allocated Bond Amount must be used, in aggregate, to subscribe forBonds at the Bond Issue Price provided that if the face value of the Bonds so subscribedis not a whole number then rounded down to the nearest US$1 amount; and

(c) the difference between the Additional Allocated Cash (in aggregate) and the AdditionalAllocated Bond Amount (in aggregate) can be either retained in A$ or exchanged forUS$ at the Announcement Exchange Rate (at the option of the holder of the UnsecuredNote) rounded down to the nearest smallest unit of the relevant currency.


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3.5A Partial Redemption of Unsecured Notes on Interim Maturity Date

If, at the end of the Offer Period, Bidder is entitled to proceed with CompulsoryAcquisition, the Unsecured Notes will be partially redeemed as follows:

(a) on the Interim Maturity Date, SingTel must pay to Bidder as agent for each holder ofUnsecured Notes, for each Unsecured Note, an amount in cash which is the differencebetween:

(i) the Initial Redemption Amount; and

(ii) an amount which is calculated as the Additional Allocated Cash under clause 3.4, onthe assumptions that:

(A) the Final Maturity Date is assumed for this purpose to be the date on which theOffer Period ends; and

(B) the Offer is accepted and the Offer Consideration described in clause 3.2(a)(i) iselected in respect of each Remaining Share,

provided, however, that where the aggregate amount that would otherwise be receivedby a holder is not a whole multiple of A$2.74, the amount paid per Unsecured Noteheld by that holder will be reduced so that the aggregate amount received will be thenearest whole multiple of A$2.74; and

(b) the holder of each Unsecured Note must use the Partial Redemption Amount, inaggregate, to subscribe for SingTel Shares at an issue price of A$2.74.

3.5B Redemption of Certain Unsecured Notes after Final Maturity Date

If any Unsecured Notes are issued after the Final Maturity Date, SingTel must, on the day ofissue (“Late Maturity Date”), immediately redeem each such Unsecured Note by paying,to Bidder as agent for each such holder of Unsecured Notes, for each Unsecured Note, theRedemption Amount in cash which must be used as follows:

(a) the difference between:

(i) the Redemption Amount; and

(ii) the Additional Allocated Cash which was calculated on the Final Maturity Date,

must be used, in aggregate, to subscribe for SingTel Shares at an issue price of A$2.74provided, however, that where the aggregate amount that would otherwise be receivedby a holder is not a whole multiple of A$2.74, the number of SingTel Shares issued tothat holder will be rounded up to the nearest whole number of SingTel Shares (at noadditional cost to the holder);

(b) the Additional Allocated Bond Amount which was calculated on the Final Maturity Datemust be used, in aggregate, to subscribe for Bonds at the Bond Issue Price providedthat if the face value of the Bonds so subscribed is not a whole number then roundeddown to the nearest US$1 amount; and

(c) the difference between the Additional Allocated Cash (in aggregate) which wascalculated on the Final Maturity Date and the Additional Allocated Bond Amount (inaggregate) which was calculated on the Final Maturity Date can be either retained inA$ or exchanged for US$ at the Announcement Exchange Rate (at the option of theholder of the Unsecured Note) rounded down to the nearest smallest unit of therelevant currency.

3.6 Other terms of Unsecured Note

(a) Each Unsecured Note initially has a face value equal to the Initial Redemption Amount.

(b) The “Final Maturity Date” of the Unsecured Notes is the date which is 7 days after theend of the Offer Period unless paragraph (c) provides otherwise.

(c) If, at the end of the Offer Period, Bidder is entitled to proceed with CompulsoryAcquisition:

(i) the “Interim Maturity Date” is the date which is 7 days after the end of the OfferPeriod; and


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(ii) the “Final Maturity Date” is the date which is 7 days after the date on which theform of consideration payable in respect of each Remaining Share is ascertainedunder section 661C of the Corporations Law (other than those, if any, which are thesubject of an objection under section 661E).

(d) By accepting the Offer and subscribing for an Unsecured Note, the holder has agreedto appoint the Bidder as their agent as described in clauses 3.5, 3.5A, 3.5B and thisclause and has agreed to apply the Redemption Amount on the Final Maturity Date(or the Late Maturity Date, as the case may be), and any Partial Redemption Amount onthe Interim Maturity Date, in accordance with clauses 3.5, 3.5A and 3.5B. SingTel willhold the certificate for the Unsecured Note on behalf of the Optus Shareholder until theFinal Maturity Date (or the Late Maturity Date, as the case may be), and will pay orprovide as directed by the Bidder as agent for the holder the Redemption Amount andany Partial Redemption Amount and the Bidder will apply the Redemption Amount andany Partial Redemption Amount on behalf of the holder in accordance with clauses 3.5,3.5A and 3.5B.

(e) SingTel may require a lien or other security over the Unsecured Note and theRedemption Amount or any Partial Redemption Amount, to secure the performance bythe holder of its obligation under paragraph (d).

(f) No interest is payable on an Unsecured Note.

(g) The Unsecured Notes are non-transferable and will not be listed.

[Clauses 3.7 to 3.18 are Not Extracted]

4. PROVISION OF CONSIDERATION

4.1 Pre-conditions to Offer Funding

The operation of this clause 4 in relation to SingTel, Bidder, Lender and Optus is subject toall of the defeating conditions of the Offer being fulfilled or, subject to clause 3.10(c), theOffer being declared by Bidder to be free of all such conditions which have not beenfulfilled and no Insolvency Event occurring in relation to Optus.

4.2 Settlement Dates

SingTel and Bidder must ensure that each Optus Shareholder who accepts the Offer,whether the Optus Shareholder chooses the Transfer Alternative or the Buy-Back Alternative,will receive the Offer Consideration due to be paid to that shareholder (in the latter case, netof Withholding Tax pursuant to the mechanism described in clause 4.5), as follows:

(a) for each Optus Shareholder who accepts the Offer prior to the Unconditional Date, onthe day which is 7 days after the Unconditional Date (the “First Settlement Date”);

(b) for each Optus Shareholder who accepts the Offer after the Unconditional Date, on adate nominated by Bidder to Optus (“Second Settlement Date”) which is no later thanthe earlier of:

(i) one month after the later of acceptance of the Offer by the Optus Shareholder andthe Unconditional Date; and

(ii) 21 days after the end of the Offer Period.

Bidder may nominate more than one Second Settlement Date under this clause 4.2(b).The Settlement Date for a particular acceptance by an Optus Shareholder must notoccur until at least 5 Business Days after the date of acceptance by that shareholder.

4.3 The Buy-Back Alternative

(a) Bidder, as agent for each Optus Shareholder, must prepare a Buy-Back Agreement foreach Optus Shareholder who elects the Buy-Back Alternative in respect of eachSettlement Date on which Optus is required to accept Buy-Back Offers, completing allrelevant details of those agreements in accordance with this agreement and in a formsuitable for execution by Optus.


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(b) In relation to each Optus Shareholder who accepts the Offer and elects the Buy-BackAlternative, and who therefore makes a Buy-Back Offer, Optus must, on the firstapplicable Settlement Date following the later of the day on which an OptusShareholder makes a Buy-Back Offer and the Unconditional Date:

(i) enter into a Buy-Back Agreement with that Optus Shareholder in respect of all OptusShares in respect of which the Buy-Back Alternative has been chosen by the OptusShareholder (and, as contemplated by clause 3.8, Bidder will act as agent for theOptus Shareholder) by executing the draft agreements referred to in paragraph (a);and

(ii) pay the Buy-Back Consideration payable to each Optus Shareholder who enters intoa Buy-Back Agreement in accordance with clause 4.5; and

(iii) accept a transfer of the relevant Optus Shares.

(c) Optus must use all reasonable endeavours to register the transfer of the relevant OptusShares to Optus on the relevant Settlement Date or, if that is not reasonably practicable,as soon as reasonably possible after the relevant Settlement Date. In accordance withsection 257H(3) of the Corporations Law, the Optus Shares are cancelled immediatelyafter registration of the transfer to Optus.

4.4 Withholding Tax

On each Settlement Date, before Optus draws a Cheque, Lender must lend to Optus anamount equal to the sum of:

(a) amounts which are required to discharge Optus’ obligation to pay Withholding Tax (ifany) in relation to the completion of any Buy-Back Agreement which Optus enters intoas part of the Transaction; and

(b) any fees, duties, levies, taxes or charges which are or will be incurred by Optus inconnection with the existence or operation of the bank account described below as itrelates to the Transaction,

by crediting a bank account of Optus at the Nominated Bank on that date in immediatelyavailable funds.

4.5 Buy-Back Consideration

(a) The consideration payable by Optus to each Optus Shareholder who enters into aBuy-Back Agreement will be an amount equal to the sum of the following (the“Buy-Back Consideration”):

(i) the cash component of the Offer Consideration due to be paid to the OptusShareholder (if any) calculated as:

(A) the A$ amount; or

(B) the A$ Equivalent of the US$ Cash Alternative; and

(ii) the A$ Equivalent of the aggregate US$ amount of the Bond Issue Prices (calculatedby applying the Announcement Exchange Rate) of the Bond component of theOffer Consideration due to be issued to the Optus Shareholder (if any);

(iii) the A$ Equivalent of the Market Value of the SingTel Shares component of the OfferConsideration due to be issued to the Optus Shareholder (if any); and

(iv) the Initial Redemption Amount of the Unsecured Notes component of the OfferConsideration due to be issued to the Optus Shareholders (if any).

(b) Optus will pay the Buy-Back Consideration to each Optus Shareholder who enters into aBuy-Back Agreement by:

(i) firstly, paying the amount of any Withholding Tax to the Australian Tax Office; and

(ii) secondly, delivering a Cheque in favour of the Optus Shareholder or order for an A$face amount equal to the Buy-Back Consideration less the amount of anyWithholding Tax to the Optus Shareholder’s agent, Bidder.


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4.6 Lender to advance monies to Optus

(a) On each Settlement Date, before Optus draws a Cheque, Lender must lend to Optus anamount equal to the sum of:

(i) the amounts which are required by Optus to pay in full the Cheques to be issued inaccordance with clause 4.5(b)(ii); and

(ii) any fees, duties, levies, taxes or charges which are or will be incurred by Optus inconnection with the existence or operation of Optus’ Account as it relates to theTransaction,

by crediting Optus’ Account on that date in immediately available funds.

(b) In its role as agent, Lender agrees it will not take any action which is not contemplatedby this agreement and its role as agent is limited accordingly.

4.7 Presentation of Cheques

(a) Bidder, as agent for each Optus Shareholder in whose favour a Cheque has been drawnpursuant to clause 4.5(b), will, immediately after that Cheque has been receivedendorse that Cheque in favour of Optus or order and present that Cheque to Lender asOptus’ agent for purchase at a purchase price equal to the face value of the Cheque.

(b) Optus appoints Lender as Optus’ agent for purchase and directs Lender as Optus’agent, upon presentation of a Cheque to Lender as Optus’ agent for purchase pursuantto clause 4.7(a), to purchase that Cheque by drawing on Optus’ Account for an amountequal to the face value of the Cheque (but so that there will be one aggregate drawingon Optus’ Account for the Cheques purchased for each Settlement Date) and creditingthe amount so drawn to the Bank Account in immediately available funds.

(c) Lender must comply with the directions contained in this clause 4.7.

4.8 Subscription for SingTel Shares, Bonds and Unsecured Notes

(a) Bidder will, as agent for each Optus Shareholder in whose favour a Cheque has beendrawn pursuant to clause 4.5(b):

(i) pay from the Subscription Funds the cash component of the Offer Consideration lessthe amount of any Withholding Tax to the Optus Shareholder as follows:

(A) in the case of a shareholder who elected to receive $A, by cheque in $A; or

(B) in the case of a shareholder who elected to receive US$, by purchasing US$ onbehalf of that Optus Shareholder (at the rate referred to in the definition of A$Equivalent on the relevant Settlement Date) and sending a cheque in US$ forthat amount;

(ii) apply the balance of the Subscription Funds on behalf of the Optus Shareholder insubscribing for the relevant number of SingTel Shares, Bonds and Unsecured Notes(as the case may be) due to be issued to the shareholder as contemplated byclause 3.2.

However, where an Optus Shareholder chose the Offer Consideration referred to inclause 3.2(a)(i), Bidder (as agent for that Optus Shareholder) will only subscribe for thatnumber of SingTel Shares calculated by dividing the Subscription Funds by the A$Equivalent of the Market Value of one SingTel Share, rounded up to the nearest wholenumber of SingTel Shares.

(b) SingTel must issue or cause the issue of the SingTel Shares, Bonds and Unsecured Notesreferred to in paragraph (a), and must do all things necessary to enable Bidder to givefull effect to the arrangements set out in paragraph (a).

(c) SingTel must issue the SingTel Shares and Bonds subscribed from time to time pursuantto clauses 3.5, 3.5A and 3.5B by Bidder as agent for a holder of Unsecured Notes.

[Clauses 4.9 to 4.13 are Not Extracted]


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5. [NOT EXTRACTED]

6. ACCOUNTING FOR THE BUY-BACK

Subject to the Corporations Law, Optus must account for the Buy-Back, including all thetransactions referred to in clauses 4 and 5 required to be undertaken by Optus, inaccordance with the pro-forma accounting entries set out in Schedule B of the Buy-BackAgreement.

[Clauses 7 to 16 are not extracted]

SCHEDULE 1

[Not Extracted]

SCHEDULE 2

[Not extracted – see Section 9.12]

SCHEDULE 3

[Not Extracted]

SCHEDULE 4

TERMS OF BUY-BACK AGREEMENT

This agreement is dated [•].

PARTIES

The Optus Shareholders referred to in Schedule A (“Relevant Shareholders”), actingthrough their agent, Bidder (“Bidder”)

Cable & Wireless Optus Limited ACN 052 833 208 (“Optus”)

RECITALS

A. Each Relevant Shareholder has accepted the Offer and has chosen the Buy-BackAlternative in respect of the parcel of Optus Shares set out beside that shareholder’sname in Schedule A (the “Relevant Shares”).

B. Pursuant to the terms of the Offer, each Relevant Shareholder has appointed Bidder asits agent to enter into this agreement and to perform all other actions necessary to giveeffect to this agreement.

C. By choosing the Buy-Back Alternative, each Relevant Shareholder has made a Buy-BackOffer to Optus whereby that Relevant Shareholder has offered to sell to Optus itsRelevant Shares on the terms of this agreement.

D. Optus accepts the Buy-Back Offer from each Relevant Shareholder and agrees to Buy-Back the Relevant Shares on the terms of this agreement.


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OPERATIVE PROVISIONS

1. Definitions and interpretationIn this agreement, unless the context otherwise requires:

Terms which are defined in the Implementation Agreement have the same meaning inthis agreement, unless specifically defined in this agreement.

“Bidder’s Statement” means the document issued by Bidder to Optus Shareholders inrespect of the Offer incorporating the bidder’s statement for the Takeover Bid (includingany supplementary bidder’s statements).

“Implementation Agreement” means the agreement so titled between SingTel andOptus executed on 25 March 2001, as amended from time to time.

Clause 1.2 of the Implementation Agreement applies as if set out in full in thisagreement with references in that clause to “this agreement” being references to thisagreement.

2. Sale and purchaseEach Relevant Shareholder hereby sells to Optus, and Optus hereby purchases from thatRelevant Shareholder, its Relevant Shares for the consideration set out in Clause 3.

3. Buy-Back Consideration(a) The consideration payable by Optus to each Relevant Shareholder is an amount

equal to the A$ Buy-Back Consideration for that Relevant Shareholder determinedunder clause 4.5(a) of the Implementation Agreement.

(b) Optus will pay the Buy-Back Consideration to each Relevant Shareholder by:

(i) firstly, paying the amount of any Withholding Tax to the Australian TaxationOffice; and

(ii) secondly, delivering a Cheque in A$ equal to the Buy-Back Consideration less theamount of any Withholding Tax.

4. ChequesEach Relevant Shareholder directs Optus to deliver the Cheque to which it is entitledpursuant to clause 3 to Bidder, as agent for that Relevant Shareholder. Each RelevantShareholder acknowledges that this will discharge Optus’ obligation to that shareholderto provide the Buy-Back Consideration.

5. Withholding TaxEach Relevant Shareholder acknowledges and agrees that Optus may withhold from theBuy-Back Consideration due to be paid to that shareholder the amount of anyWithholding Tax.

6. AccountingSubject to the Corporations Law, Optus must account for the Buy-Back in accordancewith the pro-forma accounting entries set out in Schedule B.

7. WarrantiesEach Relevant Shareholder warrants to Optus that:

(a) Bidder has been duly authorised by the Relevant Shareholder to enter into thisagreement on behalf of the Relevant Shareholder;

(b) its Relevant Shares are free from encumbrances;

(c) the Relevant Shareholder is not, and is not acting on behalf of or for the account of,a Restricted Foreign Shareholder (as defined in the Bidder’s Statement), unlessotherwise indicated on the Acceptance Form (as defined in the Bidder’s Statement);and

(d) the consideration set out in the Schedule in respect of each parcel of Optus Shares:

(i) conforms with the terms of clause 4.5 of the Implementation Agreement; and

(ii) is in accordance with the election made by the Relevant Shareholder when theRelevant Shareholder accepted the Offer.


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8. Future Dealings with SecuritiesEach Relevant Shareholder agrees that the Relevant Shareholder will not offer or resellin, or to a person in, any country other than Australia any securities which the RelevantShareholder acquires as a result of the Offer in circumstances which may or wouldresult in:

(a) the Offer;

(b) Optus’ involvement in the Buy-Back Alternative;

(c) Optus’ acceptance of any Buy-Back Offer; or

(d) Optus’ conduct in relation to any Buy-Back Agreement,

being illegal in any country.

Executed as an Agreement

[Execution clauses – Bidder on behalf of Optus Shareholders

– Optus]

SCHEDULE A OF BUY-BACK AGREEMENT

NAME AND OTHER NUMBER OFINFORMATION OPTUS SHARESIDENTIFYING TO BE BOUGHT “BUY-BACK CONSIDERATION”“RELEVANT BACK (”RELEVANT A$ FACE VALUE A$ WITHHOLDING SHAREHOLDER” SHARES”) OF CHEQUE TAX

SCHEDULE B OF BUY-BACK AGREEMENT

Accounting Treatment of Buy-Back

Based on the assumptions that:

(a) total consideration is $18 for all Optus Shares;

(b) the Buy-Back Alternative is elected in respect of 10% of the Optus Shares;

(c) the Withholding Tax rate applicable is 15%;

(d) Bidder acquires less than 100% of the Optus Shares on issue;

(e) Optus’ share capital is $5.20; and

(f) all Optus Shareholders accepting the Buy-Back Alternative are non-residents,

the accounting entries to be made by Optus for the Buy-Back are as follows.

Settlement Date entries:

Dr Cash at Bank 1.8

Cr Subordinated Debt 1.8

(To recognise the receipt of the Subordinated Debt from the Lender)

Dr Share capital 0.52

Dr Buy-Back reserve 1.28

Cr Debt due to Optus Shareholders 1.8

(To recognise the debt due on transfer of the Optus Shares by way of Buy-Back.)

Dr Debt due to Optus Shareholders 0.19

Cr Cash at Bank 0.19

(To recognise payment of withholding tax to Australian Tax Office.)

Dr Debt due to Optus Shareholders 1.61

Cr Cash at Bank 1.61

(To recognise the satisfaction of the remainder of the Buy-Back Consideration by theCheque payment to Optus Shareholders.)


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On final Settlement Date:

Dr Cash 1.8

Cr Share capital 1.8

(To recognise subscription for Optus Shares to be issued to Bidder under the Placementand payment of subscription price by cheque.)

Dr Subordinated Debt 1.8

Cr Cash 1.8

(To recognise endorsement of Bidder’s cheque in favour of Lender in satisfaction of theSubordinated Debt.)

SCHEDULE 5

Worked example for 2-Stage Redemption of Unsecured Notes

A. Partial Redemption on the Interim Maturity Date1. Assumed Optus shareholder elections

AS AT CLOSE OF OFFER OPTUS % OF ALL SHARES (M) OPTUS SHARES

All Scrip 377 10%Scrip and Cash 944 25%Cash, Bonds and Unsecured Notes 2,264 60%Total 3,585 95%

2. Consideration payable to Optus shareholders pursuant to clause 3.2 ( prior toredemptions of Unsecured Notes)

BONDS(BONDS

UNSECURED SINGTEL CASH ISSUE PRICENOTES (M) SHARES (M) (A$M) IN A$M)

All Scrip 0 626 0 0Scrip and Cash 0 755 2,123 0Cash, Bonds and Unsecured Notes 2,264 0 4,529 1,019Total 2,264 1,381 6,652 1,019

3. Partial Redemption: Calculation of minimum possible share consideration toOptus shareholders– Assume that the remaining 5% of Optus Shareholders elect for the all Scrip

alternative

– As a consequence, no additional cash consideration is payable

– Hence, the additional cash available and consequent incremental shareconsideration is calculated as follows:

Additional Cash (cl 3.4) Total Cash Pool (A$m) 9,250+less: Cash and the Bond Issue Price of Bonds payable under clause 3.2 from (A.2) above (A$m) –7,671Additional Cash (A$m) 1,579

Additional Allocated Cash Lesser of: Redemption Amount of(cl 3.4) Unsecured Note (A$); and 1.48

Additional Cash/Total Unsecured Notes (A$)(A$1,579m/2,264 Unsecured Notes) 0.70Additional Allocated Cash (A$) 0.70

Share subscription Initial Redemption Amount (A$) 1.48required per UnsecuredNote (cl 3.5A(b)): Less: Additional Allocated Cash (A$) 0.70

Partial Redemption Amount (A$) 0.78No. of SingTel shares subscribed for at an issue price of A$2.74 per Unsecured Note(A$0.78/A$2.74) 0.29

Total SingTel Shares required to be subscribed for by electors of Cash, Bonds and Unsecured Notes Offer: (0.29 x 2,264 shares electing the Cash, Bonds and Unsecured Notes offer) 647


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4. Partial Redemption PaymentBONDS

(BOND ISSUESINGTEL CASH PRICE IN

SHARES (M) (A$M) A$M)

All Scrip 0 0 0Scrip and Cash 0 0 0Cash, Bonds and Unsecured Notes 647* 0 0Total 647 0 0

B. Redemption on the Final Maturity Date

1. Actual elections of Optus shareholdersRemaining 5.0% of Optus shareholders (following close of offer)

OPTUS % OF ALL SHARES (M) % OPTUS SHARES

All Scrip 189 100% 5.0%Scrip and Cash 0 0% 0%Cash, Bonds and Unsecured Notes 0 0% 0%Total 189 100% 5.0%

Total elections of 100% of Optus shareholders

OPTUS SHARES (M) % OF ALL OPTUS SHARES

All Scrip 566 15%Scrip and Cash 944 25%Cash, Bonds and Unsecured Notes 2,264 60%Total 3,774 100%

2. Consideration payable to Optus shareholders pursuant to clause 3.2 (prior toredemptions of Unsecured Notes)

Remaining 5.0% of Optus shareholdersBONDS

UNSECURED SINGTEL (BOND ISSUE NOTES (M) SHARES (M) CASH (A$M) PRICE IN A$M)

All Scrip 0 313 0 0Scrip and Cash 0 0 0 0Cash, Bonds and Unsecured Notes 0 0 0 0Total 0 313 0 0

Total Elections of 100% of Optus ShareholdersBONDS

UNSECURED SINGTEL (BOND ISSUE NOTES (M) SHARES (M) CASH (A$M) PRICE IN A$M)

All Scrip 0 940 0 0Scrip and Cash 0 755 2,123 0Cash, Bonds and Unsecured Notes 2,264 0 4,529 1,019Total 2,264 1,695 6,652 1,019

3.(A) Final Redemption for Remaining 5% of Optus shareholders (No PartialRedemption)Additional Cash (cl 3.4) Total Cash Pool (A$m) 9,250+

less: Cash and Bond Issue Price of Bonds payable under clause 3.2 from (A.2) above (A$m) –7,671Additional Cash (A$m) 1,579

Additional AllocatedCash (cl 3.4) Lesser of: Initial Redemption Amount

of Unsecured Note (A$); and 1.48Additional Cash/Total Unsecured Notes (A$) (1,579/2,264 Unsecured Notes) 0.70

Additional Allocated Cash (A$) 0.70Share subscription Redemption Amountrequired per Unsecured Initial Redemption Amount (A$) 1.48Note (cl 3.5(a)) Less: Partial Redemption Amount (A$) 0

Less: Additional Allocated Cash (A$) 0.70(A$) 0.78No. of SingTel shares subscribed for at an issue price of A$2.74 per Unsecured Note(A$.78/A$2.74) 0.29


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SingTel Shares required to be subscribed for by electors of Cash, Bonds andUnsecured Notes offer:

(0.29 x 0 shares electing the Cash, Bonds andUnsecured Notes offer) 0

Additional Allocated Lesser of: Additional Allocated Cash (A$) 0.70Bond Amount Max Bond Amount less the (cl3.4(e)(f)) Bond Issue Price of all Bonds/Total

Unsecured Notes (A$2,000+-A$1,019)/2,264 Unsecured Notes 0.43

Additional Allocated Bond Amount (A$) 0.43Amount payable in additional bonds to electors of Cash, Bonds and Unsecured Notes offer (Bond Issue Price in A$m): (0.43 x 0 Unsecured Notes) 0Remaining additional cash payable per Unsecured Note (A$): 0.26Total amount payable in additional cash (A$m): 0

3.(B) Final Redemption for Unsecured Notes Where Partial Redemption Has Been MadeAdditional Cash (cl 3.4) Total Cash Pool (A$m) 9,250+

less: Cash and Bond Issue Price of Bonds payable under clause 3.2 from (A.2) above (A$m) –7,671Additional Cash (A$m) 1,579

Additional Allocated Lesser of: Initial Redemption Amount ofCash (cl 3.4) Unsecured Note (A$); and 1.48

Additional Cash/Total Unsecured Notes (A$) (1,579/2,264 Unsecured Notes) 0.70

Additional Allocated Cash (A$) 0.70Share subscription Redemption Amountrequired per Unsecured Initial Redemption Amount (A$) 1.48Note (cl 3.5(a)) Less: Partial Redemption Amount (A$) 0.78

Less: Additional Allocated Cash (A$) 0.70(A$) 0No. of SingTel shares subscribed for at an issue price of A$2.74 per Unsecured Note(A$0.00/A$2.74) 0

SingTel Shares required to be subscribed for by electors of Cash, Bonds andUnsecured Notes offer:

(0 x 2,264 shares electing the Cash, Bonds and Unsecured Notes offer) 0

Additional Allocated Lesser of: Additional Allocated Cash (A$) 0.70Bond Amount Max Bond Amount less the Bond(cl3.4(e)(f)) Issue Price of all Bonds/Total

Unsecured Notes(A$2,000+-A$1,019)/2,264 Unsecured Notes 0.43

Additional Allocated Bond Amount (A$) 0.43Amount payable in additional bonds to electors of Cash, Bonds and Unsecured Notes offer (Bond Issue Price in A$m): (0.43 x 2,264 Unsecured Notes) 981Remaining additional cash payable per Unsecured Note (A$): 0.26Total amount payable in additional cash (A$m): 598

4. Final Redemption PaymentBONDS



All Scrip 0 0 0Scrip and Cash 0 0 0Cash, Bonds and Unsecured Notes 0* 598 981Total 0 598 981


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5. Total Final ConsiderationBONDS



All Scrip 940 0 0Scrip and Cash 755 2,123 0Cash, Bonds and Unsecured Notes 647* 5,127 2,000Total 2,342 7,250 2,000+

* Required to be subscribed for+ Assumes that there is no rounding down of the interest rate on the Bonds from the Formula Rate and therefore

that the Bond Issue Price equals the face value of the Bonds.

SCHEDULE 6

[Not Extracted]

SCHEDULE 7

[Not Extracted – the terms of the SingTel Bonds are now reflected in Section 10]

SCHEDULE 8

[Not Extracted]


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ANNEXURE 3TERMS AND CONDITIONS OF

THE SINGTEL BONDS

240

The Bonds will be constituted by and subject to the Trust Deed, the provisions of which willapply to both the Tranche A Bonds and the Tranche B Bonds. Except as described in theConditions, the Tranche A Bonds and the Tranche B Bonds will have the same interest paymentdates and will contain, inter alia, the same covenants and events of default.

The following (except for paragraphs in italics) is the text of the terms and conditions which willbe endorsed on the Bonds in definitive form issued in exchange for the relevant Global Bond. Allcapitalised terms that are not defined in these Conditions will have the meanings given to themin the Trust Deed, which is available for inspection during usual business hours at the principaloffice of the Trustee (presently at P.O. Box 200, Cottons Centre, Hay’s Lane, London SE1 2QT)and at the specified offices of the principal paying agent, the registrar and the transfer agentsfor the time being.

The Tranche A Bonds and Tranche B Bonds will initially be represented by interests in a TrancheA global bond and Tranche B global bond (each a “Global Bond”) which will be deposited onthe Issue Date (as defined below) with a common depositary for, and registered in the name ofa nominee of, Euroclear Bank S.A./N.V., as operator of the Euroclear System (“Euroclear”) andClearstream Banking, société anonyme (“Clearstream, Luxembourg”). Each Global Bondcontains provisions which apply to the relevant Bonds while they are in global form, some ofwhich modify the effect of the terms and conditions of the Bonds set out below. Schedule 1contains a summary of certain of those provisions.

The exemption from tax described in the section “Singapore Taxation Considerations – SingTelBonds” shall not apply to any interest derived by a permanent establishment in Singapore.Where interest is derived from any Bonds issued during the period from 27 February 1999 to27 February 2003 by any person who is not resident in Singapore for taxation purposes andwho carries on any operation in Singapore through a permanent establishment in Singapore,the tax exemption shall not apply if such person acquires such Bonds using funds fromSingapore operations. Funds from Singapore operations means, in relation to a person, thefunds and profits of that person’s operations through a permanent establishment in Singapore.

Any person whose interest derived from the Bonds is not exempt from tax shall include suchinterest in a return of income made under the Income Tax Act, Chapter 134 of Singapore.

The issue of up to US$494,000,000 [•]%. Bonds due 2006 (the “Tranche A Bonds”) and ofup to US$494,000,000 [•]%. Bonds due 2008 (the “Tranche B Bonds”, and together withthe Tranche A Bonds, the “Bonds”) was authorised by a resolution of the Board of Directorsof Singapore Telecommunications Limited (the “Issuer”) passed on [•] 2001. The Bonds areconstituted by a Trust Deed (the “Trust Deed”) dated [•] 2001 (the “Issue Date”) madebetween (1) the Issuer and (2) Citicorp Trustee Company Limited (the “Trustee”, whichexpression shall include all persons for the time being the trustee or trustees under theTrust Deed), as trustee for the holders of the Bonds (the “Bondholders”). These Conditionsinclude summaries of, and are subject to, the detailed provisions of the Trust Deed, whichincludes the forms of the Bonds. Copies of the Trust Deed, and of the Agency Agreement(as amended from time to time, the “Agency Agreement”) dated [•] 2001 relating to theBonds between the Issuer, the Trustee and the Agents (as defined below), are available forinspection during usual business hours at the principal office of the Trustee (presently atP.O. Box 200, Cottons Centre, Hay’s Lane, London SE1 2QT) and at the specified offices ofthe principal paying agent, the registrar and the transfer agents for the time being. Suchpersons are referred to below respectively as the “Principal Paying Agent”, the “Registrar”and the “Transfer Agents” and together as the “Agents”. The Bondholders are entitled tothe benefit of, are bound by, and are deemed to have notice of, all the provisions ofthe Trust Deed and are deemed to have notice of those applicable to them of theAgency Agreement.

T E R M S A N D C O N D I T I O N S O F T H E S I N G T E L B O N D S

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1 FORM, DENOMINATION AND TITLE

(a) Form and Denomination: The Bonds are in registered form in the denomination ofUS$1,000 and US$1 and integral multiples thereof. A definitive Bond (each a “DefinitiveBond”) will be issued to each Bondholder in respect of its registered holding orholdings of Bonds. Certificates for each Definitive Bond will be numbered serially withan identifying number which will be recorded in the register (the “Register”) which theIssuer shall procure to be kept by the Registrar.

(b) Title: Title to the Bonds passes by and upon registration in the Register. In theseConditions, “Bondholder” and “holder” mean the person in whose name a Bond isregistered in the Register. The holder of any Bond will (except as otherwise required bylaw) be treated as its absolute owner for all purposes (whether or not it is overdue andregardless of any notice of ownership, trust or any interest in it or any writing on, ortheft or loss of, the Definitive Bond issued in respect of it) and no person will be liablefor so treating the holder.

2 TRANSFERS OF BONDS AND ISSUE OFDEFINITIVE BONDS

(a) Transfer, Issue and Delivery: A Bond may be transferred in whole or in part in anauthorised denomination upon the surrender of the Definitive Bond issued in respectof that Bond, together with the form of transfer endorsed on it duly completed andexecuted, at the specified office of any Transfer Agent. In the case of a transfer of partonly of a Bond, a new Definitive Bond in respect of the balance not transferred will beissued to the transferor within three business days of receipt of such form of transfer, byuninsured post at the risk of the holder to the address of the holder appearing in theRegister. Each new Definitive Bond to be issued upon a transfer of Bonds will, withinthree business days of receipt of such form of transfer, be sent by uninsured post at therisk of the holder entitled to the Bond in respect of which the relevant Definitive Bondis issued to such address as may be specified in such form of transfer. Bonds may betransferred in accordance with this Condition 2 and the Agency Agreement.

(b) Formalities Free of Charge: Registration of transfer of Bonds will be effected withoutcharge by or on behalf of the Issuer, the Registrar or any Transfer Agent, but uponpayment (or the giving of such indemnity as the Registrar or the relevant Transfer Agentmay require) in respect of any tax or other governmental charges which may beimposed in relation to it.

(c) Closed Periods: No Bondholder may require the transfer of a Bond to be registeredduring the period of 10 business days ending on the due date for any payment ofprincipal on that Bond.

(d) Regulations Concerning Transfer and Registration: All transfers of Bonds and entries on theRegister will be made subject to the detailed regulations concerning transfer of Bondsscheduled to the Agency Agreement. The regulations may be changed by the Issuerwith the prior written approval of the Registrar and the Trustee. A copy of the currentregulations will be mailed by the Registrar to any Bondholder who asks for one.

3 STATUS

The Bonds constitute (subject to Condition 4) direct, unconditional and unsecuredobligations of the Issuer and shall at all times rank pari passu and rateably without anypreference or priority among themselves and pari passu with all other present and futureunsecured obligations (other than subordinated obligations and priorities created by law)of the Issuer.


242

4 NEGATIVE PLEDGE

(a) Restriction: So long as any of the Bonds remains outstanding (as defined in the TrustDeed), the Issuer shall not create or permit to subsist any mortgage, charge, pledge,lien or other form of encumbrance or security interest upon the whole or any part ofthe undertaking, assets, property or revenues present or future of the Issuer to secureany Relevant Debt, or any guarantee or indemnity in respect of any Relevant Debt;unless, at the same time or prior thereto, the Issuer’s obligations under the Bonds andthe Trust Deed (i) are secured equally and rateably therewith or (ii) have the benefit ofsuch other security, guarantee, indemnity or other arrangement as shall be approved byan Extraordinary Resolution (as defined in the Trust Deed) of the Bondholders.

(b) Relevant Debt: For the purposes of this Condition, “Relevant Debt” means any presentor future indebtedness of the Issuer in the form of, or represented by, bonds, notes,debentures, loan stock or other similar securities that are for the time being, or arecapable of being, quoted, listed or ordinarily dealt in on any stock exchange,over-the-counter or other securities market, having an original maturity of more than365 days from its date of issue and denominated, payable or optionally payable in acurrency other than Singapore dollars.

5 INTEREST

Each Tranche A Bond bears interest from [•] at the rate of [•]% per annum, payablesemi-annually in arrear on [•] and [•], in each year, commencing on [•]. Each Tranche BBond bears interest from the Issue Date at the rate of [•]% per annum, payable semi-annually in arrears on [•] and [•], in each year, commencing on [•].

Each Bond will cease to bear interest from the due date for redemption unless, aftersurrender of the Definitive Bond, payment of principal is improperly withheld or refused. Insuch event, it shall continue to bear interest at such rate (both before and after judgment)until whichever is the earlier of (a) the day on which all sums due in respect of such Bondup to that day are received by or on behalf of the relevant Bondholder, and (b) the dayseven days after the Trustee or the Principal Paying Agent has notified Bondholders ofreceipt of all sums due in respect of all the Bonds up to that seventh day (except to theextent that there is failure in the subsequent payment to the relevant Bondholders underthese Conditions). If interest is required to be calculated for a period of less than one year,it will be calculated on the basis of a 360-day year consisting of 12 months of 30 days eachand, in the case of an incomplete month, the number of days elapsed.

6 REDEMPTION AND PURCHASE

(a) Final Redemption: Unless previously redeemed, or purchased and cancelled, the TrancheA Bonds will be redeemed at their principal amount on [•] 2006 and the Tranche BBonds will be redeemed at their principal amount on [•] 2008. The Bonds may not beredeemed, in whole or in part, at the option of the Issuer other than in accordance withthis Condition.

(b) Optional Tax Redemption: The Issuer may redeem all (but not some only) of the Bonds atany time on giving not less than 30 nor more than 60 days’ notice to the Bondholders(which notice shall be irrevocable), at their principal amount (together with interestaccrued to the date fixed for redemption), if (i) the Issuer has or will become obliged topay additional amounts as provided or referred to in Condition 8 as a result of anychange in, or amendment to, the laws (or any regulations, rulings or otheradministrative pronouncements promulgated thereunder) of Singapore or any politicalsubdivision or any authority thereof or therein having power to tax, or any change inthe application or official interpretation of such laws or regulations, which change oramendment becomes effective on or after the Issue Date and (ii) such obligation cannotbe avoided by the Issuer taking reasonable measures available to it, provided that nosuch notice of redemption shall be given earlier than 90 days prior to the earliest dateon which the Issuer would be obliged to pay such additional amounts were a payment


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in respect of the Bonds then due. Prior to the publication of any notice of redemptionpursuant to this Condition 6(b), the Issuer shall deliver to the Trustee a certificate signedby a duly authorised officer of the Issuer stating that the conditions precedent to theright of the Issuer to so redeem have occurred, and an opinion of independent legal ortax advisers of recognised standing to the effect that the Issuer has or is likely tobecome obliged to pay such additional amounts as a result of such change oramendment, in which event it shall be conclusive and binding on the Bondholders.

(c) Notice of Redemption: All Bonds in respect of which any notice of redemption is givenunder this Condition shall be redeemed on the date specified in such notice inaccordance with this Condition.

(d) Purchase: The Issuer or any of its Subsidiaries may at any time and from time to timepurchase Bonds at any price in the open market or otherwise. The Issuer or any suchSubsidiary may, at its option, retain such purchased Bonds for its own account and/orresell or cancel or otherwise deal with them at its discretion.

(e) Cancellation: All Bonds redeemed in accordance with this Condition shall be cancelled.Any Bonds purchased in accordance with this Condition may at the option of the Issuerbe cancelled or may be resold.

7 PAYMENTS

(a) Method of Payment: Payments in respect of each Bond will be made or procured to bemade by the Principal Paying Agent by US dollar cheque drawn on, or by transfer to aUS dollar account maintained by the payee with, a bank in New York City. Payments ofprincipal will be made conditional upon surrender of the relevant Definitive Bond at thespecified office of any of the Transfer Agents. Interest on Bonds will be paid to thepersons shown on the relevant Register at the close of business on the tenth businessday before the due date for the payment of interest (the “Record Date”). Payments willbe made by US dollar cheque drawn on a bank in New York City and mailed to theholder (or to the first-named of joint holders) of such Bond at his address appearing inthe relevant Register. Upon application by the holder to the specified office of anyTransfer Agent not less than 10 business days before the due date for any payment inrespect of a Bond, such payment may be made by transfer to a US dollar accountmaintained by the payee with a bank in New York City.

(b) Payments Subject to Fiscal Laws: All payments are subject in all cases to any applicablefiscal or other laws and regulations, but without prejudice to the provisions ofCondition 8. No commissions or expenses shall be charged to the Bondholders inrespect of such payments.

(c) Payment Initiation: Where payment is to be made by transfer to a US dollar account,payment instructions (for value on the due date, or if that is not a business day, forvalue the first following day which is a business day) will be initiated, and, wherepayment is to be made by cheque, the cheque will be mailed on the business daypreceding the due date for payment or, in the case of payments of principal, if later, onthe business day on which the relevant Definitive Bond is surrendered at the specifiedoffice of any Transfer Agent. For the purposes of this Condition 7, “business day” meansa day on which commercial banks in New York City and in the case of a surrender of aDefinitive Bond, in the place where the Definitive Bond is surrendered, are open or notauthorised to close.

(d) Delay in Payment: Bondholders will not be entitled to any interest or other payment forany delay after the due date in receiving the amount due as a result of the due date notbeing a business day, if the Bondholder is late in surrendering its Definitive Bond (ifrequired to do so) or if a cheque mailed in accordance with this Condition 7 arrivesafter the due date for payment.

(e) Payment Not Made in Full: If the amount of principal or interest which is due on theBonds is not paid in full, the Registrar will annotate the relevant Register with a recordof the amount of principal or interest, if any, in fact paid.


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(f) Agents: The initial Agents and their initial specified offices are listed below. The Issuerreserves the right at any time with the approval of the Trustee (such approval not to beunreasonably withheld or delayed) to vary or terminate the appointment of any Agentand appoint additional or other Agents, provided that it will maintain (i) a PrincipalPaying Agent, (ii) a Registrar maintaining a Register in Singapore and London for eachof the Tranche A Bonds and the Tranche B Bonds, (iii) a Transfer Agent having aspecified office in London, and (iv) a Transfer Agent having a specified office inLuxembourg. Notice of any change in the Agents or their specified offices will promptlybe given to the Bondholders in accordance with Condition 13.

8 TAXATION

All payments of principal and interest in respect of the Bonds shall be made free and clearof, and without withholding or deduction for, any taxes, duties, assessments orgovernmental charges of whatever nature imposed, levied, collected, withheld or assessedby or within Singapore or any authority therein or thereof having power to tax, unless suchwithholding or deduction is required by law. In that event the Issuer shall pay suchadditional amounts as will result in receipt by the Bondholders of such amounts as wouldhave been received by them had no such withholding or deduction been required, exceptthat no such additional amounts shall be payable in respect of any Bond:

(a) to a holder (or to a third party on behalf of a holder) who is liable to such taxes, duties,assessments or governmental charges in respect of such Bond by reason of his havingsome connection with Singapore other than the mere holding of the Bond or thereceipt of any sums due in respect of such Bond (including, without limitation, theholder being a resident of, or having a permanent establishment in, Singapore); or

(b) the Definitive Bond in respect of which is surrendered (where required to besurrendered) more than 30 days after the Relevant Date, except to the extent that theholder of it would have been entitled to such additional amounts on surrender of suchDefinitive Bond for payment on the last day of such period of 30 days.

“Relevant Date” means whichever is the later of (i) the date on which such payment firstbecomes due and (ii) if the full amount payable has not been received in New York City bythe Principal Paying Agent or the Trustee on or prior to such due date, the date on which,the full amount having been so received, notice to that effect shall have been given to theBondholders in accordance with Condition 13. Any reference in these Conditions toprincipal and/or interest shall be deemed to include any additional amounts which may bepayable under this Condition 8.

9 EVENTS OF DEFAULT

If any of the following events occurs and is continuing, the Trustee at its discretion may,and if so requested by holders of at least 25% in nominal amount of the Bonds thenoutstanding or if so directed by an Extraordinary Resolution of the Bondholders shall, givenotice to the Issuer that the Bonds are, and they shall immediately become, due andpayable at their principal amount together with accrued interest:

(a) Non-Payment: the Issuer fails to pay the principal of or any interest on any of the Bondswhen due and such failure continues for a period of more than seven days in the caseof principal or more than 14 days in the case of interest; or

(b) Breach of Other Obligations: the Issuer does not perform or comply with any one ormore of its other obligations in the Bonds or the Trust Deed which default is incapableof remedy or, if in the opinion of the Trustee capable of remedy, is not in the opinion ofthe Trustee remedied within 60 days after notice of such default shall have been givento the Issuer by the Trustee; or

(c) Cross-Default: (i) any other present or future indebtedness of the Issuer for or in respectof moneys borrowed or raised becomes due and payable prior to its stated maturity byreason of any default, event of default or the like (howsoever described), or (ii) any suchindebtedness is not paid when due or, as the case may be, within any applicable grace


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period, or (iii) the Issuer fails to pay when due any amount payable by it under anypresent or future guarantee for, or indemnity in respect of, any moneys borrowed orraised, provided that the aggregate amount of the relevant indebtedness, guaranteesand indemnities in respect of which one or more of the events mentioned above in thisparagraph (c) have occurred equals or exceeds S$40,000,000 or its equivalent (asreasonably determined by the Trustee); or

(d) Enforcement Proceedings: a distress, attachment, execution or other legal process islevied, enforced or sued out on or against any material part of the property, assets orrevenues of the Issuer and is not discharged or stayed within 60 days; or

(e) Security Enforced: any mortgage, charge, pledge, lien or other encumbrance, presentor future, created or assumed by the Issuer on or over all or any material part of theproperty, assets or revenues of the Issuer becomes enforceable and any step is taken toenforce it (including the taking of possession or the appointment of a receiver, judicialmanager or other similar person); or

(f) Insolvency: the Issuer is (or is deemed by law or a court to be) insolvent or bankrupt orunable to pay its debts as they fall due, stops, suspends or threatens to stop or suspendpayment of all or a material part of (or of a particular type of) its debts, or proposes ormakes a general assignment or an arrangement or composition with or for the benefitof the relevant creditors in respect of all or a material part of (or of a particular type of)its debts or a moratorium is agreed or declared in respect of or affecting all or amaterial part of (or of a particular type of) the debts of the Issuer; or

(g) Winding up: an order is made or an effective resolution passed for the winding-up ordissolution of the Issuer, or the Issuer ceases or threatens to cease to carry on all ora material part of its business or operations, except for the purpose of and followed bya reconstruction, amalgamation, reorganisation, merger or consolidation on termsapproved by the Trustee (such approval not to be unreasonably withheld) or by anExtraordinary Resolution of the Bondholders; or

(h) Nationalisation: any governmental authority or agency seizes, compulsorily acquires,expropriates or nationalises all or a material part of the assets of the Issuer; or

(i) Authorisation and Consents: any action, condition or thing (including the obtaining oreffecting of any necessary consent, approval, authorisation, exemption, filing, licence,order, recording or registration) at any time required to be taken, fulfilled or done inorder (i) to enable the Issuer lawfully to enter into, exercise its rights and perform andcomply with its obligations under the Bonds and the Trust Deed, (ii) to ensure thatthose obligations are legally binding and enforceable and (iii) to make the Bonds andthe Trust Deed admissible in evidence in the courts of Singapore or England is nottaken, fulfilled or done, or any such consent or condition ceases to be in full force andeffect (unless that consent or condition is no longer required or applicable); or

(j) Illegality: it is or will become unlawful for the Issuer to perform or comply with any oneor more of its obligations under any of the Bonds or the Trust Deed; or

(k) Analogous Events: any event occurs that under the laws of any relevant jurisdiction hasan analogous effect to any of the events referred to in any of the foregoing paragraphs,

provided that in the case of paragraphs (b), (c), (d), (e), (h), (i), (j) and, to the extent thatany event has an analogous effect to these paragraphs, (k) above, the Trustee shall havecertified that in its opinion such event is materially prejudicial to the interests of theBondholders.

10 PRESCRIPTION

Claims in respect of principal and interest shall be prescribed unless made within a periodof 10 years in the case of principal and five years in the case of interest from theappropriate Relevant Date.


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11 ENFORCEMENT

At any time after the Bonds become due and payable, the Trustee may, at its discretion andwithout further notice, institute such proceedings against the Issuer as it may think fit toenforce the terms of the Trust Deed and the Bonds, but it need not take any suchproceedings unless (a) it shall have been so directed by an Extraordinary Resolution or sorequested in writing by Bondholders holding at least 25% in principal amount of the Bondsoutstanding, and (b) it shall have been indemnified to its satisfaction. No Bondholder mayinstitute proceedings directly against the Issuer unless the Trustee, having become boundso to proceed, fails or neglects to do so within a reasonable time and such failure orneglect is continuing.

12 REPLACEMENT OF DEFINITIVE BONDS

If any Definitive Bond is lost, stolen, mutilated, defaced or destroyed it may be replaced atthe specified office of any Transfer Agent, subject to all applicable laws, upon payment bythe claimant of the expenses incurred in connection with such replacement and on suchterms as to evidence, security, indemnity and otherwise as the Issuer may require.Mutilated or defaced Definitive Bonds must be surrendered before replacements will beissued.

13 NOTICES

Notices to Bondholders will be mailed to them at their respective addresses in the relevantRegister and shall be published in a leading daily newspaper having general circulation inLondon (which is expected to be the Financial Times). Any such notice shall be deemed tohave been given on the later of the date of such publication and the fourth day after beingso mailed.

14 MEETINGS OF BONDHOLDERS, MODIFICATION,WAIVER AND SUBSTITUTION

(a) Meetings of Bondholders: The Trust Deed contains provisions for convening meetings ofBondholders to consider matters affecting their interests, including the sanctioning byExtraordinary Resolution of a modification of any of these Conditions or any provisionsof the Trust Deed. Such a meeting may be convened by Bondholders holding not lessthan 10% in principal amount of the Bonds for the time being outstanding. Thequorum for any meeting to consider an Extraordinary Resolution will be two or morepersons holding or representing a clear majority in principal amount of the Bonds forthe time being outstanding, or at any adjourned meeting two or more persons holdingBonds or representing Bondholders whatever the principal amount of the Bonds held orrepresented, unless the business of such meeting includes consideration of proposals,inter alia, (i) to modify the maturity of the Bonds or the dates on which interest ispayable in respect of the Bonds, (ii) to reduce or cancel the principal amount of, orinterest on, the Bonds, (iii) to change the currency of payment of the Bonds, or (iv) tomodify the provisions concerning the quorum required at any meeting of Bondholdersor the majority required to pass an Extraordinary Resolution, in which case thenecessary quorum will be two or more persons holding or representing not less than75% or at any adjourned meeting not less than 25%, in principal amount of the Bondsfor the time being outstanding. Any Extraordinary Resolution duly passed shall bebinding on all Bondholders (whether or not they were present or represented at themeeting at which such resolution was passed). A resolution in writing signed by or onbehalf of the holders of not less than 90% in principal amount of Bonds will for allpurposes be valid and effectual as an Extraordinary Resolution passed at a meeting ofthe Bondholders.

(b) Voting: Each holder of the Bonds is entitled to one vote in respect of each US$1.00 ofaggregate principal amount of Bonds held.


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Subject to Condition 14(e) and certain provisions of the Trust Deed, which requires theTrustee to have regard to the Tranche A Bonds and Tranche B Bonds as separate classes incertain circumstances, the Tranche A Bonds and the Tranche B Bonds shall be regarded bythe Trustee as a single class for the purpose of considering the Bondholders’ interests.

(c) Modification and Waiver: The Trustee may agree, without the consent of theBondholders, to (i) any modification of any of the provisions of the Trust Deed whichis of a formal, minor or technical nature or is made to correct a manifest error, (ii) anymodification necessary to enable the listing of the Bonds, and (iii) any othermodification (except as mentioned in the Trust Deed), and any waiver or authorisationof any breach or proposed breach, of any of the provisions of the Trust Deed which is inthe opinion of the Trustee not materially prejudicial to the interests of the Bondholders.Any such modification, authorisation or waiver shall be binding on the Bondholdersand, if the Trustee so requires, such modification shall be notified to the Bondholders inaccordance with Condition 13 as soon as practicable.

(d) Substitution: The Trust Deed contains provisions permitting the Trustee to agree, subjectto such amendment of the Trust Deed and such other conditions as the Trustee mayrequire, but without the consent of the Bondholders, to the substitution of the Issuer’ssuccessor in business or any Subsidiary of the Issuer or its successor in business in placeof the Issuer or any previous substituted company, as principal debtor under the TrustDeed and the Bonds. In the case of such a substitution, the Trustee may agree, withoutthe consent of the Bondholders, subject to the provisions of the Trust Deed, to achange of the law governing the Bonds and/or the Trust Deed provided that suchchange would not in the opinion of the Trustee be materially prejudicial to the interestsof the Bondholders.

(e) Entitlement of the Trustee: In connection with the exercise of its functions (including butnot limited to those referred to in this Condition 14) the Trustee shall have regard tothe interests of the Bondholders as a single class and shall not have regard to theconsequences of such exercise for individual Bondholders and the Trustee shall not beentitled to require, nor shall any Bondholder be entitled to claim, from the Issuer or theTrustee any indemnification or payment in respect of any tax consequences of any suchexercise upon individual Bondholders; provided that the Trustee shall not agree toexercise such powers, trusts, authorities or discretions if, in the opinion of the Trustee,such exercise would prejudice the holders of either the Tranche A Bonds or theTranche B Bonds considered in each case as a separate and single class.

15 FURTHER ISSUES

The Issuer may from time to time without the consent of the Bondholders create and issuefurther securities of the same class having the same terms and conditions as the Bonds ofsuch class in all respects so that such further issue shall be consolidated and form asingle series with the outstanding Bonds of the same class. The original issue of Bondsand any further issues pursuant to this Condition 15 may not in aggregate exceedU.S.$988,000,000. References in these Conditions to the Bonds include (unless the contextrequires otherwise) any other securities issued pursuant to this Condition and forminga single series with the Bonds. Any further securities forming a single series with theoutstanding Bonds of the same class constituted under the Trust Deed or any deedsupplemental to it shall be constituted under a deed supplemental to the Trust Deed.The Trust Deed contains provisions for convening meetings of the Bondholders.

16 INDEMNIFICATION OF THE TRUSTEE

The Trust Deed contains provisions for the indemnification of the Trustee and for its relieffrom responsibility. The Trustee and its parent, subsidiaries and affiliates are entitled toenter into business transactions with the Issuer and any entity related to the Issuer withoutaccounting for any profit.


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17 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

No person shall have any right to enforce any term or condition of the Bonds under theContracts (Rights of Third Parties) Act 1999.

18 GOVERNING LAW

(a) Governing Law: The Trust Deed, the Agency Agreement and the Bonds are governed by,and shall be construed in accordance with, English law.

(b) Jurisdiction: The courts of England are to have jurisdiction to settle any disputes whichmay arise out of or in connection with the Bonds and accordingly any legal action orproceedings arising out of or in connection with the Trust Deed and the Bonds(“Proceedings”) may be brought in such courts. The Issuer has in the Trust Deedirrevocably submitted to the jurisdiction of such courts.

(c) Agent for Service of Process: The Issuer has in the Trust Deed appointed an agent inEngland to receive service of process in any Proceedings in England. If for any reasonthe Issuer does not have such an agent in England, it will promptly appoint a substituteprocess agent and notify the Bondholders of such appointment in accordance withCondition 13. Nothing herein shall affect the right to serve process in any other mannerpermitted by law.


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SCHEDULE 1

SUMMARY OF PROVISIONS RELATING TO THE BONDS WHILE IN GLOBAL FORMThe Tranche A Global Bond and Tranche B Global Bond representing the Tranche A Bondsand Tranche B Bonds, respectively, contain provisions which apply to the Bonds while theyare in global form, some of which modify the effect of the terms and conditions of the Bonds.Terms defined in the terms and conditions have the same meanings in the paragraphs below.The following is a summary of certain of the provisions contained in the Tranche A Global Bondand the Tranche B Global Bond, respectively:

ExchangeA Global Bond is exchangeable in whole but not in part (free of charge to the holder) forthe Definitive Bonds described below (i) if the Global Bond is held on behalf of a clearingsystem and such clearing system is closed for business for a continuous period of 14 days(other than by reason of holidays, statutory or otherwise) or announces an intentionpermanently to cease business or does in fact do so, or (ii) if the Issuer would suffera material disadvantage in respect of the Bonds as a result of a change in the laws orregulations (taxation or otherwise) of any jurisdiction referred to in Condition 8 whichwould not be suffered were the Bonds in definitive form and a certificate to such effectsigned by a director of the Issuer is delivered to the Trustee, for display to Bondholders.Thereupon (in the case of (i) above) the holder may give notice to the Principal PayingAgent and (in the case of (ii) above) the Issuer may give notice to the Principal PayingAgent and the Bondholders, of its intention to exchange the Global Bonds for DefinitiveBonds on or after the Exchange Date (as defined below) specified in the notice.

On or after the Exchange Date, the holder of the Global Bond may surrender the GlobalBond to, or to the order of, the Principal Paying Agent. In exchange for the Global Bond,the Issuer shall deliver, or procure the delivery of, an equal aggregate principal amount ofduly executed and authenticated Definitive Bonds, security printed in accordance with anyapplicable legal requirements and in or substantially in the form set out in Schedule 1 tothe Trust Deed. On exchange of the Global Bond, the Issuer will, if the holder so requests,procure that it is cancelled and returned to the holder together with any relevant definitiveBonds.

“Exchange Date” means a day falling not less than 60 days after that on which the noticerequiring exchange is given and on which banks are open for business in the city in whichthe specified office of the Principal Paying Agent is located and, except in the case ofexchange pursuant to (i) above, in the cities in which the relevant clearing system islocated.

PaymentsPayments of principal and interest in respect of Bonds represented by the Global Bond willbe made against presentation for endorsement and, if no further payment falls to be madein respect of the Bonds, surrender of the Global Bond to or to the order of the PrincipalPaying Agent or such other Paying Agent as shall have been notified to the Bondholders forsuch purpose. A record of each payment so made will be endorsed in the appropriateschedule to the Global Bond, which endorsement will be prima facie evidence that suchpayment has been made in respect of the Bonds.

NoticesSo long as the Bonds are represented by the Global Bond and the Global Bond is heldon behalf of a clearing system, notices to Bondholders may be given by delivery of therelevant notice to that clearing system for communication by it to entitled accountholdersin substitution for publication as required by the Conditions.

PrescriptionClaims against the Issuer in respect of principal and interest on the Bonds while the Bondsare represented by the Global Bond will become void unless it is presented for paymentwithin a period of 10 years (in the case of principal) and five years (in the case of interest)from the appropriate Relevant Date (as defined in Condition 8).


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MeetingsThe holder of the Global Bond will be treated as being two persons for the purposes of anyquorum requirements of a meeting of Bondholders represented by that Global Bond and,at any such meeting, as having one vote in respect of each US$1.00 of principal amount ofBonds for which the Global Bond may be exchanged. The Trustee may allow a person withan interest in the Bonds in respect of which a Global Bond is issued to attend and speak ata meeting of Bondholders on appropriate proof of his identity and interest.

Purchase and CancellationCancellation of any Bond required by the Conditions to be cancelled following itsredemption or purchase will be effected by reduction in the principal amount of theGlobal Bond.

Trustee’s PowersIn considering the interests of Bondholders while the Global Bond is held on behalf of aclearing system, the Trustee may have regard to any information provided to it by suchclearing system or its operator as to the identity (either individually or by category) of itsaccountholders with entitlements to the Global Bond and may consider such interests asif such accountholders were the holder of the Global Bond.

EnforcementFor the purposes of enforcement of the provisions of the Trust Deed against the Trustee,the persons named in a certificate of the holder of the Bonds in respect of which the GlobalBond is issued shall be recognised as the beneficiaries of the trusts set out in the Trust Deedto the extent of the principal amount of their interests in the Bonds set out in the certificateof the holder, as if they were themselves the holders of Bonds in such principal amounts.


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ANNEXURE 4TELECOMMUNICATIONS, POSTAL AND

BROADCASTING REGULATION IN SINGAPORE

The following is a general summary of the Singapore laws and regulations relating to provision oftelecommunications, postal and broadcasting services in Singapore. It is for general information only, anddoes not purport to be an exhaustive or comprehensive description of those laws and regulations.

Overview of telecommunications, postal and broadcasting services in Singapore

The provision of telecommunications services in Singapore is regulated primarily under theTelecommunications Act (Chapter 323) (the “Telecommunications Act”). The Telecommunications Actprovides the general and legal framework for the provision and operation of telecommunications systemsand services in Singapore.

The IDA is the regulatory authority principally responsible for administering the Telecommunications Actand regulating and promoting the information and communications industry in Singapore. The IDA is astatutory board that was established under the Info-communications Development Authority of SingaporeAct (Chapter 137A) (the “IDA Act”). Pursuant to the IDA Act, the IDA’s functions and duties include:

• promoting the efficiency and international competitiveness of the information and communicationsindustry in Singapore;

• ensuring that telecommunication services are reasonably accessible to all people in Singapore and aresupplied as efficiently and economically as practicable and at performance standards that reasonablymeet the social, industrial and commercial needs of Singapore;

• promoting and maintaining fair and efficient market conduct and effective competition betweenpersons engaged in commercial activities connected with telecommunications technology inSingapore;

• advising the Government of Singapore on national needs and policies in respect of all information andcommunications technology matters;

• exercising licensing and regulatory functions in respect of telecommunications systems and services inSingapore, including the establishment of standards and codes relating to equipment attached totelecommunications and radio-communication systems, and any equipment or software used as anadjunct to or in conjunction with such systems and the monitoring of and access to such equipmentand software;

• exercising licensing and regulatory functions in respect of the allocation and use of satellite orbits andthe radio frequency spectrum in Singapore for all purposes, including the establishment of applicablestandards and codes;

• exercising licensing and regulatory functions in respect of the installation, use and provision ofsubmarine cables, cable frontier stations and satellite stations, receivers and transmitters in Singaporeand all equipment used in connection therewith;

• exercising regulatory functions in respect of the determination and approval of prices, tariffs, chargesand the provision of telecommunications and related services; and

• encouraging, promoting, facilitating, investing in and otherwise assisting in the establishment,development and expansion of the information and communications industry in Singapore.

The provision of postal services in Singapore by SingPost is regulated under the Postal Services Act(Chapter 237A) (the “Postal Services Act”). The Postal Services Act provides for the licensing andregulatory power of the IDA (as the Postal Authority) in respect of postal matters. The Postal Services Actconfers on the Postal Authority the exclusive privilege to convey from one place to another letters andpostcards and to perform all incidental services of receiving, collecting, sending, despatching anddelivering letters and postcards, as well as the right to grant licences in respect of all such services.The Postal Authority may also designate any postal licensee as a public postal licensee to perform all orany of the functions relating to the provision of postal services within the exclusive privilege of the PostalAuthority under the Postal Services Act.

In providing video-on-demand and Internet services in Singapore, SingTel is regulated by the SingaporeBroadcasting Authority (the “SBA”) under the Singapore Broadcasting Authority Act (Chapter 297) (the“SBA Act”). The SBA’s duties include exercising licensing and regulatory functions in respect of anybroadcasting service, which means a service by a person having equipment appropriate for receiving, orreceiving and displaying (as the case may be) that service, irrespective of the means of delivery of thatservice, whereby signs or signals transmitted, whether or not encrypted, comprise (a) any programcapable of being received, or received and displayed, as visual images, whether moving or still, (b) anysound program for reception, or (c) any program, being a combination of both visual image (whethermoving or still) and sound for reception, or reception and display. In particular, no person may providethe following broadcasting services in or from Singapore without a broadcasting licence granted bythe SBA:

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T E L E C O M M U N I C A T I O N S , P O S T A L A N D B R O A D C A S T I N G R E G U L A T I O N I N S I N G A P O R E

• free-to-air localised, nationwide or international television services;• subscription localised, nationwide or international television services;• free-to-air localised, nationwide or international radio services;• subscription localised, nationwide or international radio services;• special interest television or radio services;• audiotext, videotext and teletext services;• video-on-demand services;• broadcast data services; and• computer on-line services.

SingNet is also regulated by the SBA, being an ISP as defined under the Singapore Broadcasting Authority(Class Licence) Notification 1996. Pursuant to the terms of its class licence, SingNet is subject to theprovisions of the Internet Code of Practice issued under section 18 of the SBA Act.

Telecommunications Licensing FrameworkThe Telecommunications Act confers on the IDA the exclusive privilege to operate and providetelecommunication systems and services in Singapore, including the rights of establishing, installing,maintaining, developing, constructing, promoting, hiring and selling communication systems andservices, as well as the right to grant licences for the running of such telecommunication systems andservices. The IDA Act and the Telecommunications Act provide the IDA with broad powers to regulateand monitor licensees and to lay down standards and codes to be observed by operators oftelecommunication systems and services. If a licensee is found to be contravening, or has contravenedany of the conditions of the licence, any provision of any code of practice or standard of performance,or any direction issued by IDA under the Telecommunications Act, the IDA may issue a written order forcompliance, impose a fine, cancel the licence, suspend the licence for a specified period or reduce theterm of the licence. The IDA also has the power to modify the terms of a licence. A licensee who isaggrieved by a decision of the IDA may appeal to the Singapore Minister for Communications andInformation Technology, whose decision is final.

Upon full liberalisation of the telecommunications market being brought forward by two years from1 April 2002 to 1 April 2000, the IDA released guidelines with respect to the licensing framework underthe Telecommunications Act for the provision of telecommunications networks and services in Singapore.The licensing framework seeks to facilitate the entry of new players and the expansion of the scope ofoperations by existing licensees. IDA has announced that it will not pre-determine the number of licencesto be awarded. The IDA issues the following two broad categories of licence:

• facilities-based operator (“FBO”) licences; and• services-based operator (“SBO”) licences.

Further authorisation may be required from other government agencies for the deployment or provisionof certain types of networks or services. FBOs are individually licensed while SBOs are individually licensedor class-licensed. A class licence is a licensing scheme where the terms and conditions are gazetted.Anyone who provides the services within the scope of the class licence is required to comply with theterms and conditions of the class licence and register with the IDA.

There are no foreign equity limits imposed on any licensee, but a licensee must be a companyincorporated under the Singapore Companies Act.

Facilities-based operator licencesFBOs are operators who deploy any form of telecommunications network, system or facility to offertelecommunications switching, transmission capacity and/or telecommunications services to otherlicensed telecommunication operators, businesses and/or consumers. Facilities in respect of whichoperators would require an FBO licence include:

• fixed telecommunications systems (such as exchanges, fibre, ducts, submarine cables, frontier stationsand international cable and satellite gateways) needed to offer local and international voice, data andleased circuit services; and

• mobile communications systems (such as base stations and mobile switching centres) needed to offerpublic mobile telephone, paging, trunked radio and mobile data services.

The IDA has announced that it will adopt a technology-neutral approach in the licensing of FBOs toensure that licensees will continually strive to innovate and respond competitively to meet the needs ofusers. The configuration of the systems deployed and the technology platform (wired or wireless)

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T E L E C O M M U N I C A T I O N S , P O S T A L A N D B R O A D C A S T I N GR E G U L A T I O N I N S I N G A P O R E

adopted will be left to the choice of the licensee, subject to spectrum and other physical constraints. FBOlicences are granted on the merits of the licence application. In considering an application for an FBOlicence, the IDA considers, among other things, the applicant’s commitment to developing and investingin Singapore’s info-communications infrastructure, its ability to deliver its proposed service orinfrastructure commitments, and its commitment to quality of service standards, subject to spectrum andother physical constraints which would limit the number of licences that could be awarded.

FBOs are required to comply with interconnection and access obligations as well as the minimum qualityof service standards set by the IDA. They are also required to provide the IDA with a performance bondto secure their licence commitments and any additional terms deemed necessary by the IDA.

An FBO must obtain the prior approval of the IDA for any proposed changes to the scope of its licensedoperations and services. An FBO must obtain the IDA’s prior approval for assignment of its licence, andfor any change in the FBO’s ownership, shareholding or management. Given the significance of thepercentage of SingTel Shares to be issued to Optus Shareholders as a result of the Offer, SingTel hasobtained the IDA’s approval for the changes in its ownership that will result from the Offer.

Services-Based Operator LicencesSBOs are operators who lease telecommunications network elements (such as transmission capacity,switching services, ducts and fibre) from FBOs to provide telecommunications services to third partiesor to resell the telecommunications services of FBOs. SBOs can either be individually licensed orclass-licensed.

SBO (Individual) LicenceIn general, operators who lease international transmission capacity for the provision of their services willbe licensed individually. Services that are individually licensed include, but are not limited to, internationalsimple resale (ISR), resale of leased circuit services, virtual private network (VPN) services, managed datanetwork services, Internet access services, Internet exchange services, store and forward value-addednetwork services, mobile virtual network operation and live audiotex services.

SBO (Class) LicenceServices provided over the public switched telephone network or over the public Internet are classlicensed. SBO class licence terms and conditions are gazetted. Interested parties are required to registerwith the IDA and pay the prescribed registration fees. Services that are class-licensed include resale ofpublic switched telecommunication services, callback/call re-origination services, Internet-based voice anddata services, store and retrieve value-added network services, international calling card services andaudiotex services.

SBO licences may cover more than one service category. An SBO must obtain the prior approval of theIDA for any proposed changes to the scope of its licensed operations and services.

3G licensingIDA announced on 11 April 2001 that three eligible bidders, MobileOne (Asia) Pte Ltd, SingTel Mobileand StarHub Mobile Pte Ltd, were each provisionally awarded a 3G spectrum right of their choice. Each3G licensee was required to pay a licence fee of S$100 million to IDA by 23 April 2001. On 23 April2001, SingTel Mobile was awarded a 3G spectrum right and an FBO licence to provide 3G mobilecommunications services within Singapore.

3G licensees are required to roll out their nationwide network by 31 December 2004, but the IDA mayreview that deadline, in light of market reports on likely delays in the delivery of network equipment andhandsets for cellular services and international market developments.

An incumbent FBO operating public cellular mobile telephone services networks, and who is also granteda 3G FBO licence, must offer roaming services on their existing cellular networks to new 3G entrants.If agreement cannot be reached in negotiations between an incumbent FBO and a new 3G entrant, theIDA will intervene to help establish a roaming agreement. The price and non-price terms and conditionsdetermined by the IDA will apply (unless there are reasons justifying departure) to all other incumbentoperators who are unable to commercially negotiate such roaming agreements with new 3G licensees.

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Material FBO Licences held by SingTelFBO LICENSEE ISSUE/RENEWAL DATE EXPIRY DATE LICENSED FACILITIES

SingTel 1 April 1992 31 March 2017 Establishment, installation and maintenanceof telecommunications systems to operateand provide international and domestictelecommunication services includingpublic switched telephone services, publicswitched message services, public switchedintegrated service digital network (ISDN)services, leased circuit services, publicswitched data services and publicradiocommunication services.

SingTel is also designated a PublicTelecommunication Licensee undersection 6 of the Telecommunications Act.

SingTel Mobile* 1 April 1992 31 March 2017 Establishment, installation and maintenanceof telecommunication systems for thepurposes of operating and providing publiccellular mobile telephone services(including voice telephony, voicemessaging services, short messagingservices, international roaming services,operator services and other value addedservices).

SingTel Mobile 23 April 2001 31 December 2021 Establishment, installation and maintenanceof 3G mobile communications systems forthe provision of 3G mobile communicationsservices.

The IDA has also granted SingTel Mobilethe right to use the following paired andunpaired radio frequency spectrum whichhas been allocated to SingTel Mobile forthe purposes of operating the 3G mobilecommunications systems for the provisionof 3G services:

(i) the paired radio frequency bandconsisting of the range of radiofrequencies between the upper andlower frequency limits of the radiofrequency bands specified below:

Lower Band– Lower Frequency Limit = 1935.1 MHz– Upper Frequency Limit = 1950.1 MHz

Upper Band– Lower Frequency Limit = 2125.1 MHz– Upper Frequency Limit = 2140.1 MHz

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FBO LICENSEE ISSUE/RENEWAL DATE EXPIRY DATE LICENSED FACILITIES

(ii) the unpaired radio frequency bandconsisting of the range of radiofrequencies between the upper andlower frequency limits of the radiofrequency band specified below:

Unpaired Band– Lower Frequency Limit = 1909.9 MHz– Upper Frequency Limit = 1914.9 MHz

SingTel Paging** 1 April 1992 31 March 2017 Establishment, installation and maintenanceof telecommunication systems for thepurposes of operating and providing publicradio paging services, public cordlesstelephone services and public mobile dataand location tracking services. Public radiopaging services include auto pagingservices, operator-assisted services,information services and direct accesspaging services.

* This licence was originally issued to SingTel on 1 April 1992 and was subsequently assigned to SingTel Mobile on 31 October 1994.** This licence was originally issued to SingTel on 1 April 1992 and was subsequently assigned to SingTel Paging on 31 October 1994.

Material SBO (Individual) Licences held by SingTelSBO LICENSEE ISSUE/RENEWAL DATE EXPIRY DATE LICENSED SERVICES

SingNet 25 May 2000 24 May 2003 Operation and provision of public Internetaccess services, virtual private networkservices and international simple resaleservices.

SingTel 17 April 2000 30 June 2002 Provision of live audiotex services.Yellow Pages

Material Telecommunication Dealer’s Class Licences held by SingTelLICENSEE ISSUE/RENEWAL DATE EXPIRY DATE LICENSED SERVICES

Telecom 11 June 1999 31 July 2004 For dealing in type-approvedEquipment (renewable on a telecommunications equipment.Pte Ltd five yearly basis)

Postal Licences held by SingTelPOSTALLICENSEE ISSUE/RENEWAL DATE EXPIRY DATE LICENSED SERVICES

SingPost 1 April 1992 31 March 2017 Provision of international and domesticpostal services (in particular, conveyance,receipt, collection, sending, despatch anddelivery of letters within, from and toSingapore and conveyance, receipt,collection, sending, despatch and deliveryof postcards within, from and to Singapore).

SingPost 20 February 2001 28 February 2004 Provision of express letter service.(renewable on a three yearly basis)

Other LicencesSingTel holds a licence for the provision of video-on-demand services in Singapore. This was issued by theSBA on 15 November 1997 and will expire on 14 November 2002.

SingTelSat Pte Ltd, a subsidiary of SingTel, holds a satellite system licence from the IDA to utilise theSingapore registered satellite orbital slot and to establish, install and maintain the satellite system for thecarriage of signals for telecommunication and broadcasting. This licence was granted to SingTelSat on26 October 1998 and will be valid for the duration of the design lifetime of the satellite of 12 years.

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Code of Practice for Competition in the Provision of Telecommunications ServicesPursuant to section 26 of the Telecommunications Act, the IDA may from time to time issue and reviewcodes of practice and standards of performance in connection with:

• the operation of telecommunications systems and equipment;• the provision of telecommunications services; and• the conduct of telecommunications licensees in the provision of telecommunication services.

Every telecommunications licensee is required to comply with the codes of practice and standards ofperformance applicable to it.

To provide a regulatory framework for the development of a fully competitive telecommunication marketin Singapore, the IDA issued a Code of Practice for Competition in the Provision of TelecommunicationServices (the “Code”). The Code sets out the IDA’s regulatory principles and contains provisions relatingto duties of licensees to their end-users, required co-operation amongst licensees to promotecompetition, interconnection, infrastructure sharing, sector-specific competition rules and enforcementmechanisms.

The Code is intended to:

• promote the efficiency and international competitiveness of the information and communicationsindustry in Singapore;

• ensure that telecommunication services are reasonably accessible to all people in Singapore, aresupplied as efficiently and economically as practicable and at performance standards that reasonablymeet the social, industrial and commercial needs of Singapore;

• promote and maintain fair and efficient market conduct and effective competition between personsengaged in commercial activities connected with telecommunication technology in Singapore;

• promote the effective participation of all sectors of the Singapore information and communicationsindustry in markets (whether in Singapore or elsewhere);

• encourage, facilitate and promote industry self-regulation in the information and communicationsindustry in Singapore; and

• encourage, facilitate and promote investment in and the establishment, development and expansionof the information and communications industry in Singapore.

Regulatory Principles under the CodeThe Code sets out the principles that will guide the IDA in the implementation of the provisions of theCode. These include:

• maximum reliance on voluntary negotiations and market forces where effective competition exists;• clear and effective regulatory requirements to promote full competition where it does not yet exist;• use of regulation that is no more burdensome than necessary to achieve regulatory goals;• technological neutrality; and• open and reasoned decision-making.

The Code came into effect on 29 September 2000. The IDA will review and amend or remove provisionsfrom the Code that cease to be necessary as competition develops. It will also conduct a review of theprovisions of the Code not less than once every three years. The Code also provides for IDA’s authority togrant exemptions from, modify or suspend the Code.

Classification of Facilities-Based LicenseesThe Code distinguishes between licensees that are subject to competitive market forces (non-dominantlicensees) and those whose conduct is not constrained adequately by competitive market forces(dominant licensees). The IDA will classify a licensee as either a dominant licensee or non-dominantlicensee.

A licensee will be classified as dominant if it controls facilities that provide a direct connection to end-users within Singapore, regardless of the technology used, and:

• the facilities are sufficiently costly or difficult to replicate such that requiring new entrants to do sowould create a significant barrier to rapid and successful entry by an efficient competitor; or

• the licensee has the ability to restrict output or raise prices above competitive levels fortelecommunications services provided to end-users over those facilities.

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A dominant licensee must comply with special requirements set out in the Code. There are procedures bywhich a dominant licensee can seek reclassification or an exemption on a service or facilities specific basis,from these special requirements.

Pursuant to the provisions of the Code, the IDA has designated SingTel and Singapore CableVisionLimited (which is not related to SingTel) as dominant licensees with effect from 29 September 2000.

Duties to End-Users under the CodeLicensees must modify their service agreements with their business or residential end-users to incorporatecertain basic requirements, including the following duties:

• to comply with minimum quality standards;• to provide accurate and timely bills;• to provide fair dispute resolution procedures; and• to protect end-user service information.

In addition, dominant licensees are required to provide telecommunications services on demand, on anunbundled basis, on prices, terms and conditions that are just, reasonable and non-discriminatory, andpursuant to tariffs approved by the IDA. The Code sets out the procedure that the IDA will use to assessa dominant licensee’s tariffs.

Interconnection Obligations under the Code

Minimum Interconnection DutiesIn order to ensure seamless any-to-any communications throughout Singapore, FBOs and SBOs that useswitching or routing equipment to provide telecommunication services to the public are required tosatisfy the minimum interconnection duties set out in the Code (“Minimum Interconnection Duties”).For example, licensees must, whether directly or indirectly, interconnect with any other licensee that seeksto do so, must establish compensation agreements for the origination, transit and termination oftelecommunication traffic and provide billing information. The IDA will allow non-dominant licensees tointerconnect, without the IDA’s prior approval, on any terms agreed between the non-dominantlicensees, so long as they satisfy the Minimum Interconnection Duties. The Code also specifies additionalobligations that licensees must fulfil even in the absence of an interconnection agreement, such aspublicly disclosing its network interfaces (necessary to allow the deployment of telecommunicationservices and equipment that can interconnect and inter-operate with its network), complying withmandatory technical standards, facilitating number portability and rejecting certain discriminatorypreferences (for example, having access to towers, ducts, or conduits controlled by its affiliated entity atprices, terms and conditions that are not available to all other similarly situated licensees).

Interconnection with Dominant LicenseesThe Code also sets out the interconnection obligations of dominant licensees. A licensee that seeks tointerconnect with a dominant licensee (“Requesting Licensee”), can choose any of three options inorder to enter into an interconnection agreement. First, the Requesting Licensee can accept theprovisions specified in the dominant licensee’s Reference Interconnection Offer (“RIO”) which isdeveloped by the dominant licensee and has been approved by the IDA. Second, the Requesting Licenseecan “opt-in” to an existing agreement between the Dominant Licensee and any similarly situatedlicensee. Third, the Requesting Licensee can seek to negotiate an individualised interconnectionagreement with the dominant licensee.

Subject to certain provisions in the Code, SingTel’s RIO (updated as of 21 March 2001, and which ispublicly available on the IDA’s website), provides that the prices, terms and conditions contained in anyinterconnection agreements arrived at by accepting the RIO will be effective for three years from theeffective date of the Code.

The Code contains detailed requirements regarding the terms that a dominant licensee must include inits RIO and also detailed procedures regarding the negotiation process. The IDA will allow a dominantlicensee to enter into mutually agreed interconnection agreements provided that the MinimumInterconnection Duties are satisfied and do not discriminate against other licensees, and if the licenseesare unable to reach agreement within 90 days of the date on which the Requesting Licensee submittedits request to negotiate an individualised interconnection agreement, either party may request the IDA toconduct a dispute resolution exercise. To the extent that an issue in dispute is addressed by the prices,terms and conditions of the dominant licensee’s RIO approved by the IDA, the IDA will apply thoseprovisions. To the extent an issue in dispute is not addressed by the RIO, the IDA will have full discretion

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to impose whatever solution it deems appropriate (even if neither licensee advocates that solution). TheIDA requires the parties to agree that any disputes regarding the implementation of an interconnectionagreement arrived at through the dispute resolution exercise conducted by the IDA will be referred to theIDA for resolution.

Infrastructure Sharing under the CodeThe Code permits a licensee to request the right to share infrastructure controlled by another licensee.The licensees must first attempt to negotiate a voluntary sharing agreement. If they are unable to do so,the requesting licensee may ask the IDA to make a determination as to whether the infrastructure mustbe shared – either because it constitutes Critical Support Infrastructure (as defined in the Code) orbecause the IDA concludes that sharing it would serve the public interest. The Code designates certaininfrastructure that licensees must share at cost-based prices – such as masts, poles and towers. Uponreceiving all information required by the IDA in relation to any infrastructure sharing dispute, the IDA will,in accordance with the Code, issue a binding direction as to whether the licensee that controls theinfrastructure is required to share it. Where the licensees are unable to reach a sharing agreement afterthe IDA has directed that a specific infrastructure has to be shared, the requesting licensee may ask theIDA to conduct a dispute resolution exercise under the Code.

Competition Rules under the CodeThe Code sets out rules that preclude licensees from engaging in unilateral anti-competitive conduct.A dominant licensee must not abuse its market position in a manner that unreasonably restrictscompetition, for example, it may not set prices at levels that are so low as to unreasonably restrictcompetition, nor may it leverage its position in the market to impede competition in an adjacent,currently competitive market.

The Code prohibits licensees from entering into agreements that unreasonably restrict competition andsets out a framework by which the IDA will assess the permissibility of such agreements. Licensees areprohibited from entering into certain types of agreements, such as price fixing arrangements or groupboycotts. The permissibility of a licensee entering into other agreements, such as joint research ormarketing ventures, will be assessed based on each agreement’s likely or actual impact on competition.

In addition, licensees are subject to a prohibition on engaging in unfair methods of competition such asfalse advertising or unnecessarily degrading the quality of a competitor’s service.

Each FBO licence issued by the IDA requires the licensee to obtain the IDA’s approval prior to anyassignment of the licence or any change in the ownership, shareholding or management of the licensee.The IDA will not approve a request to assign an FBO licence or a change of ownership, shareholding ormanagement of an FBO licensee in connection with a proposed consolidation that is likely tounreasonably restrict competition.

EnforcementThe IDA may enforce the provisions of the Code by initiating an enforcement action either on its owninitiative or in response to a request filed by a third party. Such actions must be initiated within two yearsafter the date on which the alleged contravention occurred or, in certain cases, within two years after thedate of discovery of the alleged contravention. In enforcing the provisions of the Code, the IDA may issuewarnings, directions or orders to cease and desist. The IDA may also impose financial penalties andsuspend, shorten the duration of, or terminate a licensee’s licence. While reserving the right to imposefinancial penalties of up to S$1 million, the IDA will consider all relevant aggravating or mitigating factorsin order to ensure that any financial penalty imposed is proportionate to the contravention.

Quality of Service StandardsThe IDA regulates the performance of service operators by setting the quality of service standards byreference to primary and secondary performance indicators. Generally, primary performance indicatorsrelate to standards that tend to have a wider public impact over a longer period of time and which cancause major public inconvenience should there be failure of compliance.

Service operators must submit quarterly reports regarding their service quality to the IDA. The IDA alsoconducts surveys to monitor customer satisfaction and to obtain consumer feedback on how services maybe further improved. Based on these findings, service operators are instructed by the IDA to correct theirareas of weakness. The findings are also used to fine-tune the IDA’s performance quality standards.

The IDA has established a penalty framework for non-compliance with quality of service standards (up toa penalty of S$5,000 per primary indicator per month and S$1,000 per secondary indicator per month).

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Since 31 March 2000 (being the date of the balance sheet in SingTel’s most recently published annualreport), SingTel has made the following material public announcements and media releases to theSGX-ST:

• On 17 April 2000, SingTel announced to the SGX-ST that SingTel Yellow Pages, has extended a sixmonth convertible loan of 480 million baht to Teleinfo Media Co., Ltd (“Teleinfo Media”) ofThailand. The loan provides SingTel Yellow Pages with the option to take a 25% stake in TeleinfoMedia at the end of the six month period.

• On 3 May 2000, SingTel announced to the SGX-ST that it has agreed to buy a 31% stake in PointAsia Dot Com (Thailand) Limited, the parent company of Thailand’s leading Internet Service Provider,Loxley Information Service Company Limited, for US$23 million.

• On 31 May 2000, SingTel announced to the SGX-ST that SingaSat Private Limited, SingTel’swholly-owned subsidiary which holds its satellite investments, has doubled its stake in Hong Kongbased APT Satellite International Company Limited (“APT International”) from one seventh to twosevenths (28.57%). APT International holds 51% of APT Satellite Holdings Limited.

• On 13 June 2000, SingTel announced to the SGX-ST that SingTel Ventures (Singapore) PrivateLimited, a wholly-owned subsidiary of SingTel, has acquired 63,158 series A preferred shares of S$1.00each in the capital of Airgateway.com Private Limited, representing a 24% interest in Airgateway.com.

• On 21 June 2000, SingTel announced to the SGX-ST that APT Satellite Glory Limited (“APT Glory”),a wholly-owned subsidiary of APT Satellite, and SingaSat Private Limited (“SingaSat”) signed a jointventure agreement in relation to APT Satellite Telecommunications Limited (“APT Telecom”). APTTelecom is 55% owned by APT Glory and 45% owned by SingaSat. APT Telecom was granted anexternal satellite-based Fixed Telecommunication Network Services Licence in Hong Kong on 19 June2000 by the Office of Telecommunications Authority of Hong Kong. Under the terms of the licence,APT Telecom, which is based in Hong Kong, will be able to offer external telecommunications servicesin the Hong Kong Special Administrative Region through APT Satellite’s APSTAR satellites and othersystems.

• On 18 July 2000, SingTel announced to the SGX-ST that it has formed a subsidiary, C2C AsiaPac PteLtd, to embark on the construction of the C2C cable network, a state of the art pan-Asian submarinecable system.

• On 24 July 2000, SingTel announced to the SGX-ST that other leading companies in Asia and theUSA have become shareholders of C2C, a new cable builder and operator formed by SingTel. Theannouncement states that the new shareholders of C2C include Globe Telecom of the Philippines,GNG Networks, Inc. of South Korea, iAdvantage (Network) Offshore Limited of Hong Kong, KDDI(formerly known as KDD) of Japan, NCIC of Taiwan and Norwest Venture Partners of the USA, amongothers. With the participation of the new shareholders, SingTel’s stake in C2C was reduced to about60%.

• On 27 July 2000, SingTel announced to the SGX-ST that it has invested US$45 million for a 30% stakein Infoserve Technology Corporation, a leading Asian ISP with operations in Taiwan, Japan, HongKong and the USA.

• On 27 July 2000, SingTel announced to the SGX-ST that SingPost, TNT Post Group NV (“TPG”) andthe British Post Office had signed a joint venture agreement to establish a global cross border mailalliance. The alliance would be constituted by a global joint venture company (“JVC”) in which TPGwould have a 51% stake and the British Post Office and Singapore Post would each have a 24.5%stake, as well as an Asia Pacific joint venture company to be incorporated in Singapore in whichSingapore Post would have a 50% stake and the global JVC would hold the balance of 50%. The jointventure agreement is subject to conditions precedent, including the approval of relevant authorities.

• On 28 July 2000, SingTel announced to the SGX-ST that NCS, a wholly-owned subsidiary of SingTel,has acquired a 70% interest in Shanghai Zhong Sheng Information Technology Co Limited.

• On 7 August 2000, SingTel announced to the SGX-ST that SingTel International has entered intoagreements with the Bharti Group for the acquisition by SingTel International or its nominees of thefollowing:

– an aggregate interest of approximately 20% in the share capital of Bharti Telecom Limited; and

– an interest of approximately 15% in the issued capital of Bharti Tele-Ventures Limited.

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• On 21 August 2000, SingTel announced to the SGX-ST that following the lifting of the foreignshareholding restrictions in the Taiwanese telecommunications sector, SingTel has increased itsinterests in NCIC from 18% to 24.3%.

• On 6 October 2000, SingTel announced to the SGX-ST that it has been informed by the InlandRevenue Authority of Singapore that the compensation payment of $859 million to be made toSingTel by the IDA of Singapore in respect of the accelerated liberalisation of the communicationsmarket from 1 April 2000 would not attract any income tax liability. The Inland Revenue Authorityof Singapore has advised that this interpretation would also apply to the earlier compensationpayment of S$1.5 billion made to SingTel in 1997.

• On 24 October 2000, SingTel announced to the SGX-ST that SingTel and Bharti Enterprises, aresetting up a joint venture to build and operate India’s first private sector submarine fibre-optic cablenetwork. The announcement states that the venture plans a total investment of US$650 million.A consortium of Alcatel Submarine Networks of France and Fujitsu Limited of Japan has been selectedto design, manufacture, install and commission the Singapore-Chennai cable. The value of the supplycontract is nearly US$250 million. Construction has commenced and the cable is expected to startcarrying commercial traffic by end 2001.

• On 10 November 2000, SingTel announced to the SGX-ST its half year results for the six monthsended 30 September 2000. The announcement stated that the compensation payments from theSingapore Government for modification of SingTel’s original licence and the earlier introduction ofmarket liberalisation are accounted for as deferred compensation in the balance sheet and recognisedon a straight line basis over seven financial years from 1 April 2000. The compensation payments havebeen ruled by the Inland Revenue Authority of Singapore as not taxable. The IDA has claimed that theassumed tax component on the compensation payment of S$1.5 billion in 1997 should be repaid bySingTel.

• On 20 November 2000, SingTel announced to the SGX-ST that it had entered into a joint ventureagreement with the Virgin Group. The announcement states that SingTel and the Virgin Group willhave an equal shareholding in a joint venture company, which will be known as Virgin Mobile Asia.The initial funding for this joint venture was US$100 million, funded equally by SingTel and theVirgin Group.

The announcement states that SingTel will grant to Virgin Mobile Asia a secured convertible loanfacility of up to US$450 million, on commercial terms, to be used for regional expansion under ajointly agreed business plan. Virgin Mobile Asia will have a 30 year licence to use various Virgin trademarks in the Asian region. Singapore Telecom Mobile Private Limited will supply or procure the supplyof telecommunications services to the joint venture in Singapore.

• On 23 November 2000, SingTel announced to the SGX-ST that SingTel and STT Communications Ltd,a subsidiary of Singapore Technologies Telemedia Pte Ltd, have entered into an agreement to mergetheir trunked radio service operations. The announcement states that the new joint venture company,to be named Digital Network Access Communications Pte Ltd (“DNA Comms”), will offer trunkedradio services, a wireless communications service using handsets that function as both a two-wayradio as well as a phone. SingTel and STT Communications will hold equal stakes in DNA Comms.

• On 24 November 2000, SingTel announced to the SGX-ST that SingTel International has subscribedP929,421,000 for 1,281,960 Philippine Deposit Receipts issued by Globe Telecom Holdings Inc. Inconnection with this Philippine Deposit Receipts issue, Globe Telecom has issued additional shares,reducing SingTel International’s direct shareholding in Globe Telecom from 39.07% to 35.63%.

• On 7 December 2000, SingTel and KDDI (formerly known as KDD) announced that the joint ventureplan between the parties entered into in November 1999 would be put on hold.

• On 31 January 2001, SingTel announced to the SGX-ST that Asia’s two e-powerhouses, Singapore-based SESAMi.com and Hong Kong-based Asia2B.com Holdings Limited (“Asia 2B”), will merge tocreate the Asia Pacific region’s foremost e-commerce service provider and operator of the leadinge-hub in Asia. The announcement states that the newly merged entity will be known as SESAMi Inc.The shareholder weighting will be evenly split: Asia 2B’s and SESAMi.com’s existing stakeholdergroups will hold 50% of the shares each. SingTel, which held an 89% interest in SESAMi.com priorto the joint venture, now holds a 44.5% interest in the new joint venture company.

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• On 2 February 2001, SingTel announced that its wholly-owned subsidiary, SingTel Yellow Pages, hadacquired a 25% stake in Teleinfo Media Co., Ltd.

• On 15 February 2001, SingTel announced to the SGX-ST that it had submitted a non bindingindicative expression of interest for the acquisition of shares in Optus. The acquisition is subject to theapproval of the Board of Directors and all other necessary regulatory and other approvals.

• On 19 February 2001, SingTel announced that it has launched a S$1 billion bond issue as part of itseffort to continually optimise its capital structure.

• On 7 March 2001, SingTel announced to the SGX-ST that Globe Telecom and its principalshareholders Ayala Corporation (“Ayala”) and SingTel International have signed a series of agreementswith Asiacom Philippines, Inc (“Asiacom”) and DeTe Asia Holding GmbH (“DeTeAsia”), awholly-owned subsidiary of Deutsche Telekom AG, to facilitate the acquisition by Globe Telecom of100% of Isla Communications, Co. (“Islacom”). DeTe Asia and Asiacom will become shareholdersin Globe Telecom, and SingTel International and Ayala will acquire shares in Asiacom. Theannouncement states that the transaction is subject, inter alia, to the approval of the PhilippineSecurities and Exchange Commission. The National Telecommunications Commission approved theacquisition by Globe Telecom of 100% of Islacom on 2 February 2001.

• On 26 March 2001, SingTel announced to the SGX-ST that it has announced a bid for Optus. Theannouncement states that Optus Shareholders will be offered 1.66 SingTel Shares, or 0.8 SingTelShares plus A$2.25 cash, or 0.54 SingTel Shares plus A$2.00 cash plus A$0.45 SingTel US$denominated bonds. The announcement states that the terms of this Offer imply an equity purchaserange of A$14.9 billion to A$16 billion. If the Offer succeeds, SingTel will seek a general listing onthe ASX.

• On 12 April 2001, SingTel announced to the SGX-ST that it had mandated Citibank and SalomonSmith Barney as the coordinator and Mandated Lead Arranger for a bridging loan facility of up toA$3 billion. The announcement states that the loan will be used to finance SingTel’s proposedacquisition of Optus.

• On 27 April 2001, SingTel announced to the SGX-ST that the Singapore Minister for Finance(Incorporated) has given written notice of the surrender of all special rights attached to the SpecialShare and conversion of the Special Share to an ordinary share with effect from the date the Articlesof Association are altered to delete reference to the Special Share and the Special Member (theSingapore Minister for Finance (Incorporated)).

• On 4 May 2001, SingTel announced to the SGX-ST that it had acquired a 30% interest in SDT, which,in turn, has a 47.55% interest in DPC. DPC operates and provides PCN cellular services in Thailand.

• On 7 May 2001, SingTel announced that it will increase its investment in the Bharti Group by up toUS$200 million. SingTel’s latest commitment will increase its total investment in the Bharti Group toUS$650 million. SingTel stated that Bharti had also announced that a number of financial investorsincluding E.M. Warburg Pincus have separately committed investments totalling up to US$260million.

• On 9 May 2001, SingTel announced to the SGX-ST that it has received the modifications from ASICand the ASX referred to in its 26 March 2001 announcement of its offer for Optus. Theannouncement states that the IDA’s approval has been obtained, while the process of obtaining othersis progressing well.

• On 10 May 2001, SingTel made an announcement to the SGX-ST of its audited results for the yearended 31 March 2001.

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ANNEXURE 6MATERIAL OPTUS INFORMATION RELEASES



Since 31 March 2000 (being the date of the balance sheet in the last annual report), Optus has made thefollowing material public announcements and media releases:

• On 3 April 2000, Optus announced that it had signed a wholesale communications capacity deal toprovide AAPT with a national backbone network. The announcement states that the deal with AAPTis part of a series of wholesale capacity deals that the company has done over the last financial yearon each of its five networks. The new capacity will be used to extend the geographic reach of AAPT’sexisting network as well as providing telephone and data transmission for its mobile and LMDSnetworks. AAPT is expected to be able to access its new network capacity in approximately12 months.

• On 4 April 2000, Optus announced the rollout of Australia’s first operational high speed mobile datanetwork, using GPRS technology. Using this technology Optus will be able to deliver data to mobilephones up to four times faster than is currently available. GPRS works by breaking information intodiscrete “packets” for faster transmission. This makes it ideal for delivering data such as internet andintranet pages, graphics and even video to mobile phones and other mobile devices.

• On 12 April 2000 Optus announced that Australia’s three GSM mobile network service providers,Telstra, Optus and Vodafone, had finalised arrangements that will enable GSM customers to send SMStext messages to each other using their mobile phones. SMS messages are created by using thekeypad on a mobile phone to type a text message that can then be sent to other mobile phones.Prior to these arrangements customers could only send messages to people on the same mobilenetwork. The new intercarrier SMS service will be available to all three service providers’ GSMcustomers with SMS compatible handsets from Wednesday 12 April 2000.

• On 12 April 2000 Optus announced that it had signed a deal with internet retailer “dstore” to deliveronline shopping through WAP (Wireless Application Protocol) to mobile phones. Customers will beable to buy goods and services using the keypad of a mobile phone handset to enter credit carddetails. At launch, consumers will be able to select items from a range of dstore’s most popularcategories including books, music CDs, videos, games, DVDs, toys and sporting goods. The dstorecontent will be available on Optus Networker in early May 2000. Optus Networker is available toOptus’ GSM mobile customers with a WAP capable mobile phone.

• On 23 May 2000, Optus announced that it had signed a six year, A$42 million contract withAirservices Australia (“Airservices”) to provide a national integrated communications network. Theannouncement states that Optus has been a long term supplier of satellite services to Airservices andthis new contract will see Optus provide a range of land-based communication capabilities. Airservicesis the commercial authority responsible for air space and air traffic flow management, navigationservices, search and rescue alerts and fire fighting at airports. Under the contract Optus will provide asophisticated combination of communication infrastructure including satellite, fibre optic cable andframe relay services to link over 30 locations around Australia, including the major airports.

• On 26 May 2000, Optus announced that it had sold its Optus Health Solutions business to IBATechnologies Limited (“IBA”). Under the terms of the deal, Optus will take an 8% stake in IBA and anoption to acquire a further 5%. In exchange, IBA will acquire Optus’ Health Solutions business. OptusHealth Solutions provides electronic claiming and billing systems for general practitioners and alliedhealth professionals. John Filmer, Director of Enterprise Cable & Wireless Optus, will join theIBA board.

• On 5 June 2000, Optus and the Virgin Group announced that they have formally established anAustralian joint venture company, Virgin Mobile Australia. The establishment of the company cementsan announcement in February that Optus and Virgin had signed a Heads of Agreement to form a jointventure.

• On 7 June 2000, Optus announced its Application Service Provider push into the Australian market onthe back of a global alliance between Cable and Wireless plc and key global industry players Compaqand Microsoft. Optus, in partnership with Compaq and Microsoft, will deploy Microsoft Office andOutlook as a hosted application set to the small and medium enterprise (“SME”) market.

The announcement states that Compaq will be providing a range of internet access devices such asiPAQ Pocket – PC through to storage and server infrastructure. Optus and Compaq will developselected channels to market and sell the new services. Optus will continue to expand the applicationportfolio to SMEs and will incorporate the Commerce One procurement application into the offeringamong others.


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• On 8 June 2000, Optus announced that using Dense Wavelength Division Multiplex (“DWDM”)technology it will increase 40 fold the capacity of its fibre optic network. The system will provide upto 40 wavelength channels at 10Gbps with the ability to expand to 160 channels. The announcementstates that Optus is set to award multi-million dollar contracts for DWDM technology to NortelNetworks and Fujitsu. DWDM is a technology which increases the capacity of existing optic fibres byusing multiple lasers and transmitting multiple light signals over a single optical fibre. The DWDMequipment is expected to be installed and in use by October 2000.

• On 14 June 2000, Optus announced a strategic alliance between its wholly owned subsidiary XYZedand Lucent Technologies to build a national digital subscriber line network to deliver broadbandaccess to business customers. Lucent will build, manage and maintain the initial XYZed networkincluding the provisioning of equipment in Telstra exchanges and customer premises, as well asperformance monitoring and field maintenance. XYZed will use the AnyMedia@Access System,Lucent’s integrated narrowband and broadband access platform, to provide broadband services inkey metropolitan areas. XYZed’s high speed access service will be marketed through wholesaleagreements with Optus, other service providers and businesses from September 2000.

• On 15 June 2000, Optus announced that it would move quickly to take advantage of the new globalalliance between German based software house SAP and US based business to business e-commercespecialist, Commerce One, to deliver integrated B2B (business to business) solutions to its customers.Optus is the exclusive licence holder of Commerce One’s MarketSite in Australia and New Zealand.Optus launched Australia’s first internationally recognised B2B e-commerce platform CWO MarketSiteand Enterprise Buysite in early 2000. MarketSite is an electronic marketplace allowing business totrade online in real time. The portal links to suppliers, contains supplier catalogues and processestransactions.

• On 23 June 2000, Optus announced that it had closed an issue of US$500 million of senior unsecuredguaranteed notes through a private placement to institutional investors in the United States onThursday 22 June. The notes carry a coupon of 8% in US$ and Optus has swapped the notes back toA$. The issue was announced and priced within four days reflecting strong investor demand. Theannouncement states that the issue was a huge success in terms of timing, execution and pricing.Allocations were made to over 75 investors and the issue builds on Optus’ US investor base.

• On 13 July 2000, Optus announced that it had won a contract valued at up to A$18 million over threeand a half years to supply and manage all of the South Australian Government’s mobile telephoneservices. The contract will cover an initial 18 month period followed by two one-year optionalextensions. Under the terms of the contract, Optus will be the supplier of mobile fleet managementservices to over 160 South Australian Government agencies and will oversee the Government’s mobileinventory, providing web-based billing and reporting services as well as managing the mobile servicesprovided by other service providers. The contract includes a commitment by Optus to acceleratethe roll-out of its GSM mobile telephone infrastructure, to add another 50 base stations to the133 already in operation in South Australia.

• On 18 July 2000, Optus announced the launch of Ozitalk, a network of unique worldwide allianceswith the aim of putting an Optus mobile into the hands of every overseas visitor. The alliances includemajor communications service providers, airlines and overseas retailers. Ozitalk caters for inboundtravellers’ communication needs by providing services from mobiles to calling cards as well as offeringtravel assistance.

The announcement states that, using Ozitalk, tourists will be able to buy or rent a pre-paid mobilephone or purchase a global calling card, quickly and easily from anywhere in the world. In addition,Ozitalk will also provide a 24 hour help hotline including medical and legal advice, automotiveassistance, translator services and travel tips.

• On 8 August 2000 Optus announced alliances with Computer Science Corporation, IBM and Nokiathat will deliver the next generation of mobile data services for business. Optus and Nokia had alsoagreed to launch a data incubator centre, which will develop data business applications specifically forWAP, GPRS and other mobile technologies. The announcement states that the alliances will providesolutions allowing the transition of corporate systems to the mobile environment. Earlier this yearOptus launched Australia’s first operational GPRS network.


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• On 8 August 2000, Optus announced that it had formed a partnership with the world’s largestinternet telephony service provider, ITXC Corp, to further the rollout of the Optus network onto itsVoice Over Internet Protocol (“VoIP”) network. The partnership allows Optus to increase the reach ofits worldwide network ahead of other Asia Pacific communication service providers.

The announcement states that the added benefits of the VoIP partnership are reduced internettransport costs while service provider grade quality is assured through the combination of Optus’stringent performance systems and ITXC’s patent-pending BestValue Routing Technology. Theannouncement states that Optus’ long term international strategy is to continue the deployment ofits international IP network which, allied to the Cable & Wireless global IP network, builds a solidfoundation for lower cost transport for international voice/data services.

• On 10 August 2000, Optus confirmed that it is considering options for the future of its Consumer& Multimedia Business which include bringing in a partner or proceeding to a launch of digitalinteractive television.

• On 15 August 2000, Optus announced a special brand called Boost for the youth market which willoffer a range of pre-paid mobiles and phone cards. Boost is the result of a strategic alliance betweenOptus and Boost Tel Pty Limited, a company with a team of experienced youth marketers who havedeveloped such brands as Stussy, Mossimo and Globe. The pre-paid mobile phones will be available innon-traditional retail outlets including General Pants, Rebel Sport and Surf and Ski shops Australiawide.

• On 2 September 2000, Optus announced that XYZed, a wholly owned subsidiary of Optus, launchedits wholesale DSL service, which will compete directly with Telstra in the $1.5 billion market for highspeed broadband access. It is the first competitor to build a dedicated national DSL network. Thecompany launches with a presence in 50 exchanges nationally and will continue to roll out its networktargeting more than 100 exchanges where corporate and large enterprise businesses are located.XYZed will offer competitively priced, high speed, business quality DSL access to approximately 75%of Australian businesses. DSL technology makes it possible to deliver high-speed data over exitingcopper phone lines.

• On 26 September 2000, Optus announced that it was in the process of seeking an equity partner forits satellite business. Optus believes that an appropriate partner will deliver substantial benefitsincluding cost savings due to economies of scale and additional capacity, as well as providing accessto substantially more satellites.

• On 27 September 2000, Optus announced that it was conducting an ongoing review of structuraland strategic options for all three of its operating businesses, Data and Business Services, Mobile andConsumer & Multimedia. The announcement states that the company believes it appropriate toexamine which structures for the three businesses will optimise Optus’ growth prospects and createthe greatest value for shareholders. The review will include options which Optus has already beenexamining including an equity partnership in Consumer & Multimedia, a regional branding andequity alliance for its Mobile business or new investment partners.

On 13 October 2000, Optus announced that it had obtained a 7.996% share of the issued capitalof IBA Technologies Limited. This was consideration for the sale of Optus Health Solutions to IBATechnologies Limited which was announced on 26 May 2000.

• On 28 November 2000, Optus announced that it was successful in bidding for spectrum in the27 GHz auction held by the Australian Communications Authority. Optus stated that the spectrumwould be used to deploy a Local Multipoint Distribution System (“LMDS”) customer access networkacross Australia. LMDS technology delivers high speed data and voice services, can be implementedquickly, scaled up easily and provides businesses with a greater choice of communication options.Agility Networks, a wholly owned subsidiary of Optus, will use a wholesale model for marketing theLMDS network services.

• On 18 December 2000, Optus announced the sale of Dingo Blue, a wholly owned subsidiary, to AGLfor A$22 million. Dingo Blue is an online service provider offering a suite of communications productsand services. The announcement states that the sale will help forge close ties between the two greatAustralian companies. The sale will allow AGL to diversify and add value to clients, while Optus gainsby a closer relationship with one of Australia’s leading companies. The announcement states that thepartnership will result in the building of a significant new distribution channel for Optus and a growthopportunity for Dingo Blue.


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• On 27 December 2000, Optus announced a wholesale communications deal to provide PrimusTelecom with a national backbone network. The announcement states that Primus is expected tobe able to access its new network in approximately six months. Optus stated that the deal will beaccounted for in a similar manner to that of the national backbone leasing arrangement with AAPT.Optus will manage the network for Primus.

• On 10 January 2001, Optus announced that it would seek court resolution of an accounting issueraised by ASIC concerning the accounting treatment of wholesale cable capacity sales in the1999/2000 financial year. The long running dispute relates to Optus’ financial accounts for the1999-2000 financial year in which a profit of A$28 million from a capacity sale to AAPT was notrecognised. In the same accounts, a A$82 million capacity sale was recognised. ASIC has questionedOptus’ accounting treatment and Optus has been seeking resolution since 1999. Optus announcedthat it would begin proceedings in the Supreme Court of New South Wales today.

• On 22 March 2001, Optus announced that it was successful in bidding for 3G spectrum in the22 March 2001 2 GHz auction held by the Australian Communications Authority. The announcementstated that Optus paid a total of A$248.87 million for 3G spectrum. This included A$241.1 million fora national licence which covers 10 MHz in capital cities and 5 MHz in regional areas, plus Optusbought 5 MHz of unpaired spectrum in most capital cities for A$7.77 million.

• On 2 April 2001, Optus unveiled its plans to deliver Australia’s first 3G network by announcing aA$900 million infrastructure deal with Nokia, including a commitment for 3G applicationsdevelopment.

• On 26 April 2001, Optus announced that it had received a dividend of US$80 million (A$160 million)from its on-going investment in the Southern Cross Cable Network (“Southern Cross”). Theannouncement further stated that the Optus share of Southern Cross profits is expected to beapproximately A$115 million, which will be booked in the Optus results for the year ended 31 March2001, to be announced in May 2001. The announcement stated that the Southern Cross dividend willcontribute to Optus cash flow in the year ended 31 March 2001. Further on-going and substantialdividend payments are expected to be received in the financial year ending March 2002 and futureyears, based on Southern Cross continuing its successful marketing program.

• On 27 April 2001, SAP, SAPMarkets and Commerce One announced the signing of a strategic allianceto offer integrated e-commerce solutions to businesses in Australia and New Zealand. Theannouncement stated that under the agreement, the companies will jointly identify, market anddistribute e-commerce solutions and value-added services to selected customer accounts in targetedindustries and markets.

• On 10 May 2001, Optus announced its audited results for the year ended 31 March 2001.


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CORPORATE DIRECTORY

Singapore Telecommunications Limited31 Exeter RoadComcentreSingapore 239732

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