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Macquarie offer for PCCW faces rival bid and roadblocks

Australian bank Macquarie's bid for the telecommunications and media assets of Hong Kong phone operator PCCW Ltd was complicated yesterday by a reported rival bid from US investment firm Newbridge Capital and objections from PCCW's 20-percent shareholder, China Netcom Group.

Meanwhile, PCCW, controlled by Richard Li (李澤楷), the younger son of Hong Kong tycoon Li Ka-shing (李嘉誠), and its cellphone unit SUNDAY Communications Ltd were suspended from trading in Hong Kong yesterday pending an announcement about a possible deal.

PCCW Ltd said on Tuesday that it has received an offer to buy its telecommunications and media assets, and Hong Kong newspapers have reported that Macquarie is the potential buyer and has put up HK$40 billion (US$5.2 billion) for the possible deal.

However, PCCW has denied the figure.

Macquarie Bank Ltd yesterday confirmed it is in talks with PCCW about buying some of its assets but didn't provide further detail.

"These discussions are at a very early stage and it is far too early to predict whether they will result in a transaction,'' Sydney-based Macquarie said in a brief statement.

Also yesterday, the South China Morning Post reported the US investment firm Newbridge countered Macquarie's bid with a HK$50 billion offer of its own.

Newbridge is also involved in an attempt to buy into Singapore-listed Pacific Century Regional Developments Ltd, which owns 23 percent of PCCW. The Singapore company is 75-percent held by Pacific Century Group Holdings Inc, which is wholly owned by Richard Li.

If the asset sale goes through, PCCW could turn into a mainly real estate company. It's best known for developing the Cyberport technology park project in Hong Kong, which drew fire because the government awarded the development rights to PCCW without bidding.

Critics have charged the project has become a real-estate venture, with its high-end residential component, Bel-Air, overshadowing the technology office space.

In related developments, China Netcom, a 20 percent shareholder in PCCW that owns China's second-largest fixed-line network, said in a statement the company's possible deal "may create huge uncertainty for PCCW's own development."

The state-owned company suggested it was concerned about the assets of a leading Hong Kong phone company falling into foreign hands.

"China Netcom Group isn't willing to see any changes to the assets of the Hong Kong-owned and Hong Kong-managed PCCW," the statement said.

Some analysts believe China Netcom may make a bid for PCCW's assets as well.

A PCCW spokeswoman and Newbridge's Hong Kong office didn't immediately return calls seeking comment.

PCCW, which bought Cable & Wireless HKT in 2000, offers fixed-line and broadband TV services, as well as cellphone services through SUNDAY. Another unit, its 62 percent-owned Pacific Century Premium Developments Ltd, develops high-end real estate.
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