PCCW - Telstra...and the show goes on...
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UPDATE 1-PCCW <1186.HK> in talks with Telstra
(Adds background from Australian Financial Review article) HONG KONG, April 12 (Reuters) -
Dominant Hong Kong Internet company Pacific Century CyberWorks (PCCW), moving to strengthen alliances in Asia, is in talks with Australian telecommunications giant Telstra Corp Ltd and plans a detailed announcement later on Wednesday.
Telstra confirmed it was in advanced talks with PCCW on an Asia-Pacific alliance and said the key feature of the deal would be pooling regional assets and cash in joint ventures.
But Telstra said in Sydney that any deal was conditional on PCCW completing its bid for Hong Kong's biggest telecommunications company, Cable & Wireless HKT <0008.HK>.
A PCCW spokeswoman declined to confirm details in an Australian Financial Review newspaper report on Wednesday that Telstra planned to form a strategic alliance with PCCW worth up to A$5 billion (US$2.98 billion).
But she said talks between the two companies had taken place and a detailed announcement would be made later on Wednesday.
In an unsourced report, the newspaper said Telstra would subscribe US$1.5 billion to a PCCW convertible note as part of the deal, paying the balance in cash. The report of the deal follows PCCW's bid for C&W HKT, which valued the Hong Kong telecommunications company at up to US$38.1 billion, making it Asia's largest ever merger deal. The newspaper said Telstra had been negotiating for several weeks with PCCW, run by 33-year-old Richard Li, son of Hong Kong property tycoon Li Ka-shing, about the deal but had originally hoped to be involved in the Cable & Wireless merger.
PCCW, a subsidiary of Pacific Regional Developments , closed down HK$.30 on Tuesday at HK$15.40.
Telstra was trading on Wednesday at around A$7.63, up 1.5 percent from Tuesday's close of A$7.52.
"The deal is Telstra's first significant expansion into Asia and gives it a new growth option outside the highly competitive local market, where it faces pressures on its profits from the dozens of new players since deregulation," the Australian Financial Review reported.
((Hong Kong Newsroom, +852 2843 6545, fax +852 2845 0636 hongkong.newsroom@reuters.com)) .