STOCKWATCH: PCCW lower as no buyer emerges for C&W stake
2001-02-21
Terms and Conditions
Pacific Century CyberWorks Ltd shares were lower in midmorning trade, undermined by the absence so far of any buyer for Cable & Wireless PLC's shares in the company, dealers said. Weak sentiment on global telecommunication stocks also weighed heavily on PCCW, they added. At 10:56 am, PCCW was down 0.225 hkd or 4.839 pct at 4.425. The Hang Seng index was down 35.73 points at 15,460.23.
Among other telecom stocks, SmarTone eased 0.35 to 11.60, CCT lost 0.03 to 1.03, Hutchison was flat at 95.25, China Unicom lost 0.10 to 11.75 and China Mobile was down 0.20 at 44.70.
Cable & Wireless issued a statement late yesterday saying it has not set any timetable for the sale of its stake in PCCW, which dealers said effectively signalled to the market that it has not found any buyers.
C&W has since PCCW's takeover of C&W HKT last August had a stake of around 15 pct in PCCW and a lock-up period for half of that stake has now expired.
The market that has been full of rumours of potential buyers for the shares, ranging from an established global carrier to large corporates, dealers said.
There have also been rumours that C&W may exchange its shares in PCCW for a stake in one of the PCCW-Telstra joint ventures.
GK Goh Securities telecommunications analyst Voon San Lai believes there is now a greater likelihood that the stake sale will only be finalised in August, when the lock-up period for the second tranche of PCCW shares expires.
"I have been saying for a while now that nothing will happen until August. It doesn't make sense to resolve this issue until August," he said.
He said even if there had been any buyers for the initial 7.5 pct now, the sale would have likely included an option on the remaining 7.5 pct as well.
"Things are still uncertain for the next six months. Why buy now when one can buy it cheaper later. Why take the risk?" he said.
He said the agreement signed by all the parties involved makes it difficult for C&W to sell the second tranche before the lock up period expires in August.
"The transfer cannot take place until August. It is a signed document ... unless they rewrite the document," he said.
ra/jw
For more information and to contact AFX: www.afxnews.com and www.afxpress.com
At 11:27 am, PCCW was down 0.15 hkd at 4.50, off a low of 4.40, on 32.801 mln shares. The Hang Seng index was down 27.19 points at 15,463.77.
Voon said given the weak telecommunications sector outlook, it is evendifficult for C&W to sell shares in PCCW now.
"The failure of the market to turn around is making it more difficult going forward, especially for purchasers within the telecommunications sphere. Going forward, valuations are going to come under pressure," he said.
He said uncertainty on PCCW shares will continue until August.
"Everyone is running around in circles. Once the August deadline passes, then one can see who is more desperate at that point of time."
He said sentiment could still turn and it could be "booming days" again for the telecommunications sector.
"There are still a lot of questions about the sector, although in the long term, the outlook is good," he said.
He said there have been warnings by telecommunication equipment manufacturers that orders of networking equipment and telco equipment seem to be falling off.
"The 3G implementation is still several years away. So far, no country in Asia has even issued a 3G licence. We are looking at at least 3-5 years before 3G becomes a reality (in Asia)," he said.
He said the outlook for 3G is also weak with regards to the exact costs of a licence, and the returns.
"There are too many unknowns. Different countries are allocated 3G spectrum in different ways and it is difficult to model returns," he added.
Despite the concerns in the short term, he said the longer term outlook for the sector is still positive.
"The telecommunications industry is a huge industry. Technology gets replaced and replenished in 12-18 months. It is not a sunset industry," he said.
ra/jw
For more information and to contact AFX: www.afxnews.com and www.afxpress.com
Terms and Conditions
Copyright© 2000 LEXIS-NEXIS, a division of Reed Elsevier Inc. All rights Reserved.
quamnet.com |
