CyberWorks Confirms Intention to Merge With HKT

The Pacific Century CyberWorks Limited (PCCW) of Hong Kong tycoonRichard Li Tzar-kai confirmed Sunday that it had approached theCable & Wireless plc about a merger between PCCW and the localtelecoms giant Cable & Wireless HKT Limited.

"An approach was made during the afternoon of February 11 to C &W in relation to the proposed transaction," said an announcementpresented by the PCCW to the Stock Exchange of Hong Kong. C & W owns54.5 percent of HKT.

PCCW proposed that the shareholders of HKT receive cash andshares in PCCW.

The announcement also confirmed that Warburg Dillon Read and theBank of China International had been engaged on February 10 as thefinancial advisers to PCCW on the deal.

PCCW denied that it, as some local media reported, had discussedwith Cheung Kong (Holdings) Limited or Hutchison Whampoa Limited,both owned by Li's father Li Ka-shing, with regard to the deal. Italso said that no consortium had been formed to deal with thematter.

By February 11, Hutchison Whampoa, Cheung Kong and the PCCWrespectively ranked the third, the fourth and the sixth biggestlisting companies on the Hong Kong market in terms of the marketcapitalization.

It is estimated that the merging between PCCW and HKT would forma giant internet and telecoms group with a market capitalization of500 billion HK dollars (64.1 billion U.S. dollars).

HKT has three million telephone lines in the Hong Kong SpecialAdministrative Region with a population of 6.8 million and runs thelargest Internet service provider with more than 700,000subscribers.

The direct contention between PCCW, a fledgling Internetinvestment group, and Singapore Telecommunications (SingTel), whichhas been in talks with HKT and C & W about "a merger of equals" forjust over two weeks, has drawn wide public attention in Hong Kong.

Upon the reports on the deal between PCCW and HKT, the shareprice of PCCW rose 1.25 HK dollars to 24.65 HK dollars and that ofHKT increased four HK dollars to 21.65 HK dollars before the twocounters were suspended in the afternoon of Friday. The share priceof SingTel dropped 1.8 percent to 2.76 Singaporean dollars.

"Application has been made for trading in the shares of PCCW onthe stock exchange to resume at 10.00 a.m. on Monday," said PCCW'sannouncement.