HONG KONG (AFX-ASIA) - Talks between News Corp and Pacific Century
CyberWorks on the future of the StarTV/Cable & Wireless HKT joint-venture,
following meetings here last week between the two chairman Rupert Murdoch and
Richard Li, are in a preliminary stage, PCCW managing director Alex Arena
said.
"We are still examining the joint venture. If it is complimentary to our
business plan, and I expect it is, then I can't see any reason why we will
not keep it," Arena said.
The StarTV/Cable & Wireless HKT tie-up was agreed in November.
Arena said both companies have complimentary skills which will benefit
each other. "There are definitely synergies there," he said.
Asked about progress in the CW HKT takeover, Arena said talks are
continuing with CW HKT.
He said CW HKT has a committee of independent directors which "need to
take a view on certain issues" and advise the minority shareholders.
Arena said he could not say what those issues are but added that CW HKT
is now working its way through the regulatory process.
"We have been down this path before with our takeover of Tricom (later
renamed as PCCW)," he added.
Arena said PCCW is still aiming to have its Network of the World (NOW) up
and running within the first half of this year.
The service will offer the world's first fully converged service
providing interactive digital video viewing and web access.
PCCW will utilise at least three global Internet and digital video
content production centres for the service.
"We have been sending satellite signals now for months and content is in
various stages of readiness for the launch," he said.
In December, PCCW formed a strategic partnership with Trans World
International (TWI), the programming arm of IMG.
Through this link PCCW will have access to TWI's wholly-owned library of
130,000 hours of archive sports programming and 10,000 hours of new material
produced annually.
Arena said PCCW is now working with other content providers but refused
to be drawn on names or numbers.
"We don't have any problem with content," he added.
Apart from sport through TWI, PCCW is looking at financial services,
weather, education, agriculture, life styles and entertainment as part of its
programme package for NOW.
"Our vision is to create an active environment where we can marry text,
web and video. The beauty about what we are creating is that you don't need a
studio to do it in."
Asked about PCCW's customer base, Arena said "our business model has
always been to form partnerships with people on the ground.
"We give them access to the technology and content which enables them to
become a broadband Internet Service Provider (ISP).
"At this stage we have developed arrangements with a number of early
adopters," he said, adding: "I can not give specific numbers as the numbers
differ from market to market. We are using them as testbeds. Once we have the
service up and running we will migrate out."
Although China, India and Japan are seen as PCCWs key markets, Arena
said the company is looking at the entire region.
PCCW has said in the past that its potential market is over 130 mln.
According to the Cable Satellite Broadcasting Association of Asia, 60 mln
households in China have cable television, 20 mln in India, 3 mln in Japan
and 4.2 mln in Taiwan.
Asked how many of these households PCCW hopes to have within the next 12
months, Arena said: "I can not give numbers as we are still in the middle of
a takeover but look at StarTV as an example. Star began in 1991 and
effectively created this universe with 1.0 mln households; now Star is seen
in over 130 mln households.
"Whether or not Star is making money I am not in any position to say but
it has been very, very successful and it is working.
"This established universe of cable operators can take as many channels
as they want and as many different forms of content as they like.
"I can confidently forecast that our free-to-air broadcast service which
takes broadcasting advertising revenue could be in a majority of those
households very quickly."
Arena added that PCCW has no intention of riding Star's on coat-tails.
"We are also looking at all those satellite dishes too. By taking our
service free, it gives us a market and we can start earning revenue from that
market straight away.
"Simultaneously we have a web site with synchronised content through the
broadcasting service. Cable operators will be able to upgrade their network
and merge the two."
Arena said PCCW is developing sales and marketing teams throughout the
region to sell the service.
"The beauty of what we have is that you can not anticipate where the
market will be. The great thing about the architecture we have is that once
you send it out, the real determinant of customer take up is how fast the
people on the ground work.
"If they are entrepreneurs they will get out and sell very quickly. "
Asked who PCCW's customers are, Arena said: "Our customers are our ground
distributors. They work with the customers, not us ... we simply provide a
service and the technical back up via our many joint ventures."
Asked how many key distributors PCCW now has in place, Arena said: "We
have stopped talking to people.
"We would rather work with a handfull key distributors rather than having
to keep many waiting. The idea is to get few key distributors going so we
have something tangible to show. That is objective this year."
Asked whether PCCW had encountered any regulatory problems, Arena said:
Not as many as most people think.
"When we started, we did not envisage the deregulation currently taking
place nor had we envisaged China opening up to the outside world with its
entry to the WTO.
"The point is we uplink from Hong Kong a service and operators on the
ground downlink.
"We don't own positions on the ground; that is left to the local
operator. We are an enabler.
"Our model is very sensitive to local requirements. With content we have
a mechanism which will allow local regulators to impose whatever regulations
they want to impose on what they receive ... we simply provide a service."
