Pacific Century CyberWorks (PCCW), Hong Kong's emerging Internet powerhouse, is armed with reinforcements to take over Hong Kong's incumbent telecom carrier Cable & Wireless HKT (C&W HKT), while a possible three-way deal involving original suitor Singapore Telecommunications (SingTel) has reportedly been scuttled.
PCCW's well-received new placement of its stock on Monday yielded the company approximately $US1 billion that it said may be used in a deal to acquire C&W HKT, Hong Kong's largest telecom carrier.
Meanwhile, C&W HKT's original suitor, SingTel, will not be part of a joint purchase deal with PCCW that had been reported in the works earlier this week. SingTel announced two weeks ago that it was in discussions with C&W HKT's parent, UK-based Cable & Wireless PLC, over a possible merger between the two Asian telecom providers.
A PCCW statement released on Saturday confirmed that the company has approached Cable & Wireless PLC to propose a merger with C&W HKT.
PCCW stated that the deal "would create an undisputed Asian Internet powerhouse, and eventually a truly global leader with roots in Hong Kong".
According to PCCW's statement, a merger could create "revenue synergies" and allow PCCW to reposition C&W HKT as a broadband Internet access provider.
Conflicting press reports beginning last week have indicated that PCCW may form an international consortium to take over C&W HKT. The company on Saturday denied reports it is in discussions with Hong Kong conglomerates Cheung Kong Holdings or Hutchison Whampoa. Both are controlled by relatives of PCCW chairman Richard Li.
The Hong Kong company's proposal comes just weeks after SingTel confirmed it was in talks to merge with C&W HKT. That proposal had raised some concerns in Hong Kong's government over foreign ownership of the territory's biggest carrier. Both Singapore and Hong Kong have voiced intentions to become the Internet hub of Asia.