Macbank's Asia Telco Bid

The Age

Thursday June 22, 2006

ROD MYER

MACQUARIE Bank seems destined to slug it out with Newbridge Capital for control of Pacific Century CyberWorks' telco assets. Both companies are prepared to bid more than $7 billion for most of the company, controlled by Richard Li.

Macquarie admitted yesterday after heavy speculation that it was part of a potential consortium that was in discussions with PCCW over a purchase.

"These discussions are at a very early stage and it is far too early to predict whether they will result in a transaction," the bank said in a statement. Macquarie sources refused to comment further on the bank's PCCW plans.

PCCW and its Singapore holding company Pacific Century Regional Development were both suspended from trading yesterday pending an announcement. But by the end of trading in Hong Kong last night, no announcement had been made.

Newbridge, the private equity firm that recently paid $1.4 billion to buy the Myer department store business, has a heavy focus on Asia. A company spokesman said he could not comment on whether Newbridge would bid for PCCW.

But the markets were awash with speculation that Macquarie's PCCW aims would be challenged by Newbridge, and that PCCW's controlling shareholder, Richard Li, would have real competition for his assets.

Newbridge has already tried to buy the minority stake in PCRD. Mr Li holds about 75 per cent of PCRD and PCRD in turn holds Mr Li's 23 per cent stake in PCCW.

Newbridge has significant investments in the telecommunications and IT sectors in Asia. Its stakes include a holding in Hi China, the leading web hosting and internet company in mainland China, and a stake in Japan Telecom, the third largest telco in Japan.

PCCW would be an attractive addition for both Newbridge and Macquarie. It has a strong income flow from 2.5 million Hong Kong phone customers and is its second largest pay TV operator.

It is unclear whether Mr Li is willing to part with PCCW's telco assets, which have plummeted in value from $US28 billion ($A37.95 billion) to $US4.5 billion since he bought them at the top of the dotcom boom.

But PCCW has become something of a world leader in new media, developing business in internet TV and mobile phone data services.

The decision on the future of PCCW is not all with Mr Li. China Net holds 20 per cent of the company and is said to oppose major changes to its investment.

© 2006 The Age

Back to News Index | Back to Home