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PCCW has revived a plan to take mobile carrier Sunday Communications private despite the failure of earlier attempts to convince China’s Huawei Technologies to sell its near-10 per cent stake in the company.
Hong Kong’s largest fixed-line operator on Wednesday offered to buy the 20.65 per cent of Sunday that it does not already own for HK$0.65 per share.
At least 75 per cent of Sunday’s independent shareholders must approve the deal and not more than 10 per cent of them should oppose it for the offer to succeed.
The price is the same as that of a general offer made by PCCW in June when it first announced its plan to buy Sunday.
However, the general offer, which helped PCCW raise its holdings from 59.87 per cent to 79.35 per cent, lapsed this month after Huawei refused to sell its 9.91 per cent
Analysts said the latest offer, which expires on April 30 2006, was another effort by PCCW to buy time. The company needs to either have an offer on the table or seek a waiver from the stock exchange because the percentage of Sunday shares now in public hands is below the minimum 25 per cent.
“This offer should give PCCW sufficient time to negotiate with Huawei,” said Bertrand Chui, analyst at ICEA Securities.
Analysts had said Huawei was holding out in the hope of fostering a relationship with PCCW, which has pledged to expand Sunday from the territory’s smallest mobile operation into its most profitable by 2010.
But PCCW is eager to gain full control of Sunday as part of its plans to return to the wireless market to tap the growing popularity of convergence in fixed and mobile telecoms services. PCCW left the mobile market in 2002 when it sold its remaining 40 per cent stake in mobile carrier CSL to Australia’s Telstra.
Since then, mobile operators have been winning market share from traditional fixed-line companies, while data applications are also expected to migrate to wireless networks.
PCCW also said on Wednesday it would be too costly for Sunday to maintain its listed status. Trading volumes in its shares had been low, limiting its ability to raise new funds. as its ability to raise funds from the equity markets might be limited while trading volume had been low.
Sunday’s shares rose 3.2 per cent to HK$0.63. PCCW’s shares remained unchanged at HK$4.87.
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