Telstra/PCCW HK venture goes ahead

Telstra/PCCW HK venture goes ahead

Pacific Century Cyberworks (PCCW) shareholders yesterday voted unanimously to support the revised terms of a joint venture with Telstra.

The deal, which has been in the making for some months, stalled in October when PCCW's market value dropped dramatically.

Telstra revised the financial terms, reducing its cash commitment by $1billion and increasing its asset control of Hong Kong Telecom (HKT) mobile network by 60 per cent. This 60 per cent, payable to PCCW, is valued at $1.68 billion.

Catherine Payne, Telstra public affairs manager, said yesterday Telstra didn't expect any problems with shareholder acceptance. The deal is set to be finalised within the next month.

Payne declined to comment on PCCW's waning share price which has bottomed out at $HK4.55 compared with a high of $HK28 last year.

Concerns over the company's financial situation have investors running scared, however, "the core PCCW assets are very strong," she said, and are the reason for Telstra's continued interest.

PCCW issued a statement at the request of Hong Kong stock exchange yesterday saying it had "noted the recent decrease in the price and increase in trading volume of the shares", but was "not aware of any reasons for such movements".

Payne also declined to comment on speculation of a delayed public listing of the IPBC on the Honk Kong Stock Exchange, which has been making the papers this week. "We have to complete the alliance before we can move into what the next step will be," she said. "It's one step at a time."

The PCCW/Telstra joint venture comprises three components - an Internet protocol backbone (IPBC), involving a 50/50 cash payment between the two companies; an Internet Data Centre bred from a consolidation of the PCCW and Telstra Internet hosting services; and investment in mobile networks.

The plan is to position Telstra as a leading operator in the voice/data/ Internet market in Asia.

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