Li hopeful of smooth sale of PCCW assets

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Richard Li, PCCW chairman, hopes to reach a resolution this month for the sale of the Hong Kong telecoms company’s core assets which has sparked a bidding war between Australia’s Macquarie Group and TPG Newbridge, the US private equity firm.

Mr Li also said on Monday that all PCCW’s 16 directors, including three representatives from China Netcom, PCCW’s second-largest shareholder which has opposed the sale, had agreed to further discuss the deal.

“The board meeting was held in a very good atmosphere today. We have not made a decision. We will probably continue our discussions in a few days,” said Mr Li in his first public appearance since the takeover battle emerged more than two weeks ago.

PCCW received a US$7.3bn bid from a consortium led by Macquarie for the company’s telecoms and media assets on June 16. Four days later, TPG Newbridge countered with a US$7.55bn bid. PCCW has hired Lehman Brothers to study the proposals.

Meanwhile, China Netcom has objected to any sale of PCCW’s assets on the basis that the company is and should remain “owned and managed” by Hong Kong people.

To appease China Netcom, both bidders have proposed that the state-controlled telecoms group take up to 50 per cent of the assets. They are also trying to recruit Hong Kong investors.

PCCW’s asset disposal has turned into a political issue after China Netcom expressed its dissatisfaction publicly.

Many viewed the decision to issue such a rare statement as coming from Beijing, which supported Mr Li six years ago when he beat Singapore Telecom in the race for Cable & Wireless HKT.

The prospect of China Netcom emerging as the largest shareholder of Hong Kong’s core telecoms network has also raised concerns among Hong Kong’s pro-democracy camp about Beijing’s power in the territory.

A Hong Kong newspaper closely linked with Beijing reported on Sunday that the Hong Kong investment unit of Citic Group, a state-owned conglomerate, planned to team up with China Netcom to bid for PCCW’s assets. The report also said Citic Guoan might ask Macquarie to join its consortium.

China Netcom and Macquarie on Monday denied they were in talks with Citic Guoan, which was not available for comment.

Any sale of PCCW could potentially benefit its minority shareholders, who have seen the value of their shareholdings fall since PCCW took over HKT.

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