Cable & Wireless buys stake in Optus

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SYDNEY -- British telecommunications giant Cable & Wireless plc has reached agreement with U.S. giant BellSouth to buy its 24.5% of Optus Communications Ltd for about $750m. The deal gives C&W 49% of the company which is both Australia's second telephony company and owner of the emerging pay-TV network Optus Vision, head- to-head rival with Foxtel that is jointly owned by Rupert Murdoch's NewsCorp and Australia's major telecommunications company, Telstra.

Optus Communications plans to float on the stock exchange during the first half of next year with Mayne Nickless Ltd, the company's other major shareholder, planning to sell its 24.9%. At present the remaining 26.1% is held by Australian institutional shareholders.

Entry into the telephony and pay-TV industries has been costly, with Optus holding a current debt level of about $1.9bn against an equity base of about $1.4bn. Market analysts say that existing Optus shareholders will be required to inject more equity into the company ahead of the float. BellSouth's sale is understood to have released it from the obligation to contribute more funding.

Copyright July 1997, Crain Communications Inc.

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