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China Netcom Buys 20 Percent Stake in Hong Kong Telecommunications Firm PCCW

Posted on: Thursday, 20 January 2005, 12:00 CST

Jan. 20--HONG KONG -- China Network Communications Group Corp. will pay around US$1 billion to purchase a 20 percent stake in Hong Kong telecom operator Pacific Century Cyberworks Ltd., the companies announced Thursday in a joint statement.

The deal marks the first investment in Hong Kong by a Chinese telecommunications company.

China Netcom has agreed to pay PCCW US$1 billion in cash at HK$5.9 per share, the statement said, confirming previous news reports about the deal.

As part of the agreement, China Netcom will nominate directors to three news seats on the board of PCCW. One of the three will become a deputy chairman of PCCW.

PCCW will earmark up to HK$5 billion (around US$641 million) to pursue opportunities in China in the telecommunications area and set up a Business Development Committee in China, comprised of PCCW and China Netcom members.

Competition among Hong Kong's six telecommunications operators for a population of just 6.8 million is intense with companies fighting for subscribers by offering packages at cut-throat prices.

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PCW,

Source: Kyodo News International, Tokyo

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