Telstra Won't Force PCCW to Cut Stakes in Joint Ventures
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Quamnet
May 04, 2001 - 10:26:42 HKT
Quamnet News Service
quamnet.com
Australia's Telstra Corp. won't force cash-starved Pacific Century CyberWorks Ltd. (0008) to reduce its holdings in their joint ventures to help pay for future acquisitions, but their alliance doesn't preclude either from making independent acquisitions, Dow Jones Newswires reported, quoting Dick Simpson, head of Telstra's international division.
Telstra and PCCW are pursuing acquisitions for joint ventures Regional Wireless Company and Reach and will consider various scenarios that may include changing their respective ownership of the companies. But Telstra won't use its cash-rich position to force PCCW to relinquish any stakes, Simpson said.
The Australian government-controlled firm has three ventures with PCCW. It owns 60 percent of Regional Wireless, which holds CSL, the mobile arm of Hong Kong Telecom; 50 percent of Reach, an Internet infrastructure joint venture; and 50 percent of a data joint venture that has no assets but is designed to house data-switching centers. PCCW holds the remaining stakes in the ventures.
Asked whether the ownership proportions could be changed, Simpson said the original agreement with PCCW was intended to be fluid. ''For example, let's take the Regional Wireless Company. Just because we're sitting at 60:40 at the moment doesn't mean to say that every deal we would ever do we'd be at 60 percent and they'd be at 40 percent,'' Simpson told Dow Jones.
Simpson noted that changing the shareholdings in the mobile telephone company would likely be easier than changing the equal stakes in the Internet venture, which would give either party control of Reach.
''It is possible, in some scenarios, that that (a change of ownership of Reach) could be an outcome, but it would be an agreed outcome rather than a forced outcome,'' Simpson said.
''With Reach it's a 50:50 (partnership) and it's probably harder to move away from that exact position...but it's not an outcome any of us have talked about and it's not an outcome we're looking for,'' he added.
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