2000-02-14
Pacific Century CyberWorks (1186, PCC) announced that an approach was made to merge with Hong Kong Telecom (8, HKT). The company proposed a mixture of cash and PCC shares, but no exact figures were released.
As stated in our previous article (please click here), PCC is eyeing HKT's network. The company said in the announcement that "HKT's prime quality broadband network together with PCC's broadband internet content proposition would create an undisputed Asian internet powerhouse...the potential for substantial value creation from revenue synergies".
Cheung Kong (1) and Hutchison (13) had already announced that they would not join the bidding consortium. But South China Morning Post reported that Hikari Tsushin would be a possible candidate.
Though the handsome prince is making a formal proposal, the beautiful princess HKT said the talks between the company and Singapore Telecom (SingTel) still continued.
PCC is not necessarily a better choice over SingTel, as the synergy to be created with HKT is in doubt. But except for rumours, no concrete terms has yet been put on the table. We cannot assess if the proposed merger is beneficial to both companies or not.
However, SingTel is a profit maker, which is an absolute advantage over PCC. With a capitalization of about US$26 billion and a manpower of 12,000 staff, the company earned US$1.2 billion in the last financial year, against US$1.5 billion profit of HKT. Should it merge with HKT, the dilution of earnings per share will not be too significant. Moreover, the combined company should enjoy economies of scale. They can share their resources and perhaps lay off redundant staff.
Pacific Century CyberWorks (1186, PCC) announced that an approach was made to merge with Hong Kong Telecom (8, HKT). The company proposed a mixture of cash and PCC shares, but no exact figures were released.
As stated in our previous article (please click here), PCC is eyeing HKT's network. The company said in the announcement that "HKT's prime quality broadband network together with PCC's broadband internet content proposition would create an undisputed Asian internet powerhouse...the potential for substantial value creation from revenue synergies".
Cheung Kong (1) and Hutchison (13) had already announced that they would not join the bidding consortium. But South China Morning Post reported that Hikari Tsushin would be a possible candidate.
Though the handsome prince is making a formal proposal, the beautiful princess HKT said the talks between the company and Singapore Telecom (SingTel) still continued.
PCC is not necessarily a better choice over SingTel, as the synergy to be created with HKT is in doubt. But except for rumours, no concrete terms has yet been put on the table. We cannot assess if the proposed merger is beneficial to both companies or not.
However, SingTel is a profit maker, which is an absolute advantage over PCC. With a capitalization of about US$26 billion and a manpower of 12,000 staff, the company earned US$1.2 billion in the last financial year, against US$1.5 billion profit of HKT. Should it merge with HKT, the dilution of earnings per share will not be too significant. Moreover, the combined company should enjoy economies of scale. They can share their resources and perhaps lay off redundant staff.
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