The merger between Pacific Century CyberWorks and Cable & Wireless HKT cleared the final hurdle yesterday when Hong Kong's High Court approved the multi-million dollar telecommunications deal. An extraordinary meeting on July 3 had seen almost 98 per cent of shareholders voting in favour of the merger. Yesterday's decision was a fast-track one, and the deal is now expected to take effect August 17. Shares in the combined company, yet to be named, are scheduled to begin trading on August 22.
CyberWorks chairman Richard Li Tzar-kai has promised "extraordinary"
growth in customer service capacity, "explosive" growth
for shareholders and "unprecedented" growth for staff.
He said: 'Today marks the beginning of a new era - an era that
will be good for Hong Kong, Asia and the global new economy in
which we will now be better able to operate as a major player.'.
Mr Li added that in the coming weeks the company would unveil
a "new aggressive and focused corporate structure" called
"eight by three", merging eight business units into
three operating sectors. It is widely believed that those sectors
will be fixed network services, high-speed broadband and Internet.
mobile services and that they will come under a joint venture
to be created with Australia's Telstra. Mr Li said: 'The new company
created by today's decision essentially adds sparks to the tried
and true.'.
The merger is Asia's largest-ever outside Japan, with an aggregate market capitalisation of HK$393 billion. The terms of the deal include a cash consideration payment of US$11.32 billion and all Cable & Wireless HKT shares will be cancelled with the company becoming wholly owned subsidiary of CyberWorks. Cable & Wireless HKT shares will be suspended from trading on August 9 and de-listed on August 17.
Cable & Wireless HKT, which operates the largest broadband network in Hong Kong alongside its mobile and traditional fixed telephony services, gives CyberWorks a prime platform for implementing its vision of converged TV and Internet content. PCCW's Network of the World (NOW) began operating in late June via a satellite that can reach viewers across Asia. Though broadband Internet access and two-way cable systems are relatively rare across the region, CyberWorks has already begun offering NOW on HKT's broadband DSL (digital subscriber line) network in Hong Kong.
The merger may help to transform Cable & Wireless HKT from
an incumbent carrier in a market undergoing deregulation into
a regional company with a multimedia content business and extensive
investments in Internet companies. However, there is the problem
of a heavy initial debt burden and the organisational challenge
of merging and old style company with a new economy one.
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