BT scales up Asian biz with Frontline buy

17 Dec 2007

BT hopes to realize its ambitions of scaling its Asian business via plans to acquire Singapore IT services firm Frontline Technologies for S$202 million ($139.6 million). BT will buy 100% of the
Singapore-listed company at a premium of 33.9% of its share price during November.

Founded 14 years ago, Frontline provides IT consulting, systems integration and outsourcing in China, Hong Kong, India, Indonesia, Malaysia, Singapore, the Philippines, Taiwan and Thailand.

Part of the attraction for BT is Frontline's strong presence in financial services, transportation, manufacturing, telecommunications, education, healthcare and the public sector, with a customer roster ranging from ABN-AMRO, AMD and Toyota to AIS, Globe Telecom, StarHub and Telekom Malaysia. And that's a space where BT sees plenty of opportunity to differentiate from its regional rivals, says BT Asia president Allen Ma.

'BT Asia has done well with network services, but over the next few years our customer requirements will include network, IT and professional services,' Ma told Telecom Asia. 'This isn't new, but we're seeing a convergence of these three service areas, and we believe if we can acquire a company with that kind of experience, that will put us ahead of our Asian competition.'

That will also pit BT against firms like IBM and EDS, which have the experience and presence but not the bandwidth, connectivity and network security that BT brings to the Frontline equation, Ma says.

If nothing else, it adds another 5,000 employees to BT's Asian operation. Frontline's three executive directors - Steve Ting Tuan Toon, Lim Chin Hu and Shirley Wong Swee Ping - will continue in their current roles after the merger, which is still subject to shareholder approval and confirmation by the High Court of Singapore.

Ma also put particular emphasis on Frontline's operations in China and India. 'Their scale of presence in those markets is bigger than ours, plus they have a very nice business in Thailand, so these will complement our existing footprint well,' he said.

The BT deal also includes Frontline's purchase of an extra 9% of India's Accel Frontline, raising its stake in the firm to 51%.

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