Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : PCW - Pacific Century CyberWorks Limited -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (983)	4/4/2001 6:07:20 PM
From: ms.smartest.person	Read Replies (1) \| Respond to of 2248

PCCW needs cash - FOCUS: Telstra may have to bear brunt of jv funding needs as PCCW needs cash 2001-04-05 Terms and Conditions ---- by Lyndal McFarland ---- Telstra Corp Ltd may have to meet future cash-calls by its joint-ventures with Pacific Century CyberWorks Ltd on its own given the latter's questionable financial health, analysts said. They said that should Telstra's three joint ventures with PCCW -- the regional mobile, IP backbone and internet data centre companies -- require additional funding, PCCW may not be able or willing to oblige. In recent weeks, PCCW has reported a net loss of 886 mln usd for 2000, announced a "prudent approach" to investments and received negative publicity concerning Richard Li's academic qualifications. Yesterday, Cable & Wireless PLC launched a zero-coupon bond issue exchangeable for shares in PCCW, a move which several Hong Kong-based analysts said reflects C&W's lack of confidence in PCCW. Shaw Stockbroking analyst Scott Marshall said current issues surrounding PCCW could "definitely" affect the company's ability to fund joint ventures if they require additional capital. "It's a bit hard to tell at this stage exactly what the implications of all this is going to be." "However, I think it was clear from the company's results that PCCW does not have the capital to effectively fund the joint ventures' growth in the Asian region should they require additional capital," Marshall said. "PCCW continues to suffer in the Hong Kong market, with the share price down 88 pct from its recent peak and the credibility of Richard Li under intense pressure," he said, adding that PCCW's growth strategies have been unwound over recent months, confirming much of the Australian market's initial fears about the group. Marshall said the outcome of the current situation is unknown. He said there is a high possibility Telstra will be forced to increase its exposure to the alliances by funding the growth of the joint ventures, so increasing its stakes in them in the short term. "Telstra is a long-term investor, and needs a partner with a strong balance sheet and long-term visions. PCCW has neither of these," Marshall said. He said it is becoming increasingly evident that Telstra is distancing itself from PCCW. He said the company's establishment last week of its Hong Kong-based Telstra International division, designed to manage Telstra's Asia Pacific interests, was a good indication of its future movements. Marshall said options for Telstra in terms of future expansion into Asia included finding another partner to expand with, though he said this may prove difficult for the company. He said British Telecom was once touted as a potential partner, though "it has since developed problems of its own". He said a venture with a U.S.-based partner would possible, but added that there are few U.S. companies genuinely wanting to expand into the region. Marshall said Telstra would more than likely seek additional ventures with Asian-based telcos, though the search for a suitable partner may prove futile. Peter Mansell, telecommunications analyst at F.W. Holst & Co, said he also doubts whether PCCW would be willing, or able, to inject additional funds and it may even look to scale back its involvement in the joint ventures as it looks to bolster its books after a very disappointing 2000 result. "I guess Telstra will be there to pick up the pieces," he said, adding that this could be of benefit to the Australian company. He also cited Telstra's "go-it-alone" move into Asia through its Telstra International division as evidence it is distancing itself from PCCW. "PCCW are not a strong partner for Telstra," he said, adding that the latest problems surrounding PCCW are not going to help sentiment towards Telstra or its joint ventures with the company. ABN AMRO telecommunications analyst Andrew Hines said that on a corporate level, the current issues facing PCCW have little bearing on Telstra. He said the joint ventures were designed to be self-sufficient, but added that should they require additional funding, which is a high possibility given the capital intensive nature of the telecommunications industry, Telstra could face some problems. He said Telstra could be forced to provide additional funding for the ventures itself. He said the issues surrounding PCCW could weigh on sentiment towards Telstra, though the only impact in terms of pure fundamentals was the value of its 750 mln usd PCCW convertible notes. Telstra closed down 0.07 aud or 1.08 pct at 6.39. The S&P/ASX 200 was down 2.3 points at 3,192.3. lmf/rjf/jr/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