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To: djane who wrote (5551)	7/6/1999 5:16:00 PM
From: djane	Read Replies (2) \| Respond to of 29987

China Telecom Sells 1.3% of C&W HKT for $407 Mln to Invest Funds at Home Technology News Tue, 06 Jul 1999, 5:11pm EDT By Biddy Chan with reporting by Joshua Fellman China Telecom Sells 1.3% of C&W HKT for $407 Mln (Update1) (Adds a fund manager's comment in the 3rd paragraph, and more background throughout.) Hong Kong, July 6 (Bloomberg) -- China Telecom (Hong Kong) Group sold a 1.3 percent stake in Cable & Wireless HKT, Hong Kong's dominant phone company, for HK$3.15 billion ($407 million) to finance telecommunications projects in mainland China. The group, controlled by China's Ministry of Information Industry, sold 156 million C&W HKT shares at HK$20.20 apiece, said Peter Burnett, head of equity capital markets at Warburg Dillion Read in Hong Kong, which arranged the sale along with Morgan Stanley Dean Witter. ''Better to sell now, and invest the profits in low-cost assets in China,'' said Andrew Look, a fund manager at Prudential Portfolio Managers Asia Ltd., which manages about $4.5 billion in the region. ''By any way you look it, (C&W HKT) is very expensive now.'' The price was a 6.5 percent discount to C&W HKT's closing price today of HK$21.60, still near its all-time high of HK$22.55 on April 23. The stock has gained 66 percent since March amid foreign optimism over the growth of its Internet business. The share sale will leave China Telecom Group, controlled by the Ministry of Information Industry, with a 10.86 percent holding in Cable & Wireless HKT, known until this month as Hong Kong Telecommunications Ltd. China Hopes China Telecom Group, also the parent of Hong Kong-listed China Telecom (H.K.) Ltd., first bought into C&W HKT in June 1997, hardly a month before China resumed sovereignty of Hong Kong. It paid $1.2 billion, or HK$14.25 a share, for a 5.5 percent stake. It also signed a letter of intent with Britain's Cable & Wireless Plc that the two parties would become equal shareholders over time. The group then bought an additional 7.8 percent from China Everbright Holdings Co., a Chinese company controlled by the State Council, in February 1998 for $1.6 billion or HK$14.20 a share. Those purchases bolstered investors' hopes that C&W HKT would be in a better position than its rivals to venture into China's telecommunications market, one of the world's fastest- growing. Since then, however, C&W HKT has been bombarded by new competition in Hong Kong. In January, it gave up its monopoly on international direct dialing eight years earlier than planned, though in return for HK$6.7 billion in cash compensation. In March, Hong Kong allowed mobile phone users to change carriers while keeping their numbers, prompting deep price cuts and causing HKT to fall into second place by subscriber numbers. The company reported its first decline in operating profits last year, and has yet to initiate a major project on the Chinese mainland. ''The sale will not affect the good business relationship between CTHK Group and C&W HKT,'' said China Telecom Chairman Wang Xiaochu in a statement. ''At present, CTHK Group has no plan to further dispose of its shareholding in C&W HKT,'' he said. ''Also it will not rule out the possibility of increasing its shareholding in C&W HKT should circumstances be appropriate.'' ©1999 Bloomberg L.P. All rights reserved. Terms of Service, Privacy Policy and Trademarks.