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China Netcom buys 20% stake in
PCCW
BEIJING - China Netcom
Group announced it has agreed to pay approximately
US$1 billion in cash, at 5.90 HK dollars (US$0.76)
per share, for a 20% stake in the enlarged share
capital of Hong Kong-listed PCCW Limited.
China Netcom will acquire the stake by
subscribing to 1,343,571,766 new shares, the
company said in a press release on Thursday.
The company said it intends to be a
"committed investor in PCCW, participating in
shaping the future strategy of the company"
through membership on the board of directors and
existing board and management committees.
As part of the agreement, which is still
subject to PCCW shareholder approval, China Netcom
will nominate directors to three new seats on the
board of PCCW, one of whom will become a deputy
chairman of the Hong Kong company.
PCCW
will earmark up to HK$5 billion to pursue
telecommunications opportunities in the Chinese
mainland.
Zhang Chunjiang, general manager
of China Netcom Group, called the cooperation "a
win-win transaction which will create growth
opportunities for both parties.
"We
believe that with PCCW being the leading
telecommunications operator in Hong Kong, its
advanced management system, its professional
management team and operation experience in highly
competitive markets will enable China Netcom Group
to accelerate innovations in our business
management and enhance our marketing expertise,"
he said.
PCCW Chairman Richard Li said,
"The main purpose of this strategic relationship
with China Netcom Group, a major Chinese
state-owned telecommunications company and a
broadband leader, is to create long-term value for
our shareholders through actively pursuing new
business opportunities.
"This transaction
will lay the foundation for PCCW to participate in
the high potential and fast growing
telecommunications market in the Chinese mainland.
At the same time, the capital injection will
further strengthen our financial fundamentals," Li
said.
China Netcom said the share purchase
is subject to the approval of PCCW shareholders.
The date for an extraordinary general meeting will
be announced in due course.
China Network
Group Corporation is one of the largest
telecommunications companies in China. It is the
exclusive fixed line telecommunications service
provider for the Beijing 2008 Olympic Games.
PCCW Limited, one of the leading
communications companies in Hong Kong, will set up
a PRC Business Development Committee, which is to
be comprised of two nominees each from PCCW and
from China Netcom.
(Asia
Pulse/XIC) |
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