[00-8-24] CyberWorks Broadens Global Pact With Australia's Telstra
By Adam Creed, Newsbytes.
HONG KONG, CHINA,
24 Aug 2000, 12:13 AM CST
****CyberWorks Broadens Global Pact With Australia's Telstra 08/24/00 HONG KONG, CHINA, 2000 AUG 24 (NB) -- By Adam Creed, Newsbytes. Asia's largest Internet company, Pacific Century CyberWorks [NYSE:PCW], has today filled in the details of a US$3 billion global and regional alliance featuring merged Internet and wireless businesses, combined data centers and broadband Web TV services with Telstra Corporation Ltd [NYSE:TLS] of Australia.
The in-principle agreement was announced today after the completion this week of CyberWorks' takeover of Hong Kong's largest telephone company, Cable & Wireless HKT.
The completed takeover was a requirement of the proposed alliance. Now Telstra, Australia's largest phone, wireless and Internet provider, will buy 40 percent of cellular operator Cable & Wireless HKT CSL Ltd from CyberWorks for $1.5 billion.
HKT CSL came into CyberWorks' hands on completion of the merger. With a highly-experienced mobile network operator on board, the Hong Kong-based joint venture will become each company's focus for mobile wireless operations, acquisitions and license bids across Asia. The company already has a 23 percent market share in Hong Kong with 958,000 subscribers.
The alliance will also see a joint effort at attracting global Internet protocol (IP) -based communications business. The two players will merge some unspecified businesses and assets to create a 50:50 Hong Kong-based global IP backbone business.
CyberWorks has considerable cable and satellite infrastructure in Hong Kong and into Greater China and Southeast Asia, while Telstra is growing its backbone and points of presence into Asia and the US and Europe.
CyberWorks and Telstra intend to inject up to $1.125 billion and $625 million respectively into the new IP backbone company.
Related to this new company will be another 50:50 joint venture that will own and operate Internet data centers - providing Web hosting and server hosting services - throughout the Asia-Pacific region. It will operate outside CyberWorks' and Telstra's home markets of Hong Kong and Australia and draw backbone capacity from the IP backbone company.
Finally, Telstra will help CyberWorks roll out its Network of the World (NOW) converged Web and TV service on its high-speed cable, satellite and digital subscriber line networks in Australia. This will deliver Telstra significant content from Asia as it tries to maintain its position as Australia's top content and access company.
For CyberWorks, NOW is a flagship service that it is rolling out in Asia, with plans for Europe and the US.
The Japan operations were announced earlier this month - CyberWorks plans to pump some $250 million into listed Japanese video game software producer Jaleco Ltd. The Sega and PlayStation software development company will be renamed Pacific Century CyberWorks Japan, and expand its business into broadband Internet content.
A unit of Japan's Sony Corp. will join with CyberWorks to build a production studio that will create integrated television and Web-based content for NOW.
The CyberWorks-Telstra alliance is driven by each company's desire for a pan-Asian Internet, wireless and IP connectivity business. From its base in Hong Kong, the wireless joint venture is expected to grow in the region though acquisitions and other alliances.
Under the terms of the alliance, CyberWorks will receive a total of $3 billion from Telstra - $1.5 billion for the 40 percent stake in HKT CSL and $1.5 billion in the form of a subordinated convertible bond. The Hong Kong company will use this sum to refinance its debt.
CyberWorks said that the alliance is subject to definitive agreements and other approvals, but that it expects to sign a solid deal sometime in the next two months with the transactions to be completed by the end of the year.
Reported By Newsbytes.com, newsbytes.com .
00:13 CST
(20000824/WIRES ASIA, TELECOM, ONLINE, BUSINESS/PCCW/PHOTO)
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