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Hong Kong Phone Operator in Sale Talks

Posted on: Tuesday, 18 May 2004, 06:00 CDT

HONG KONG (AP) - Hong Kong's main phone operator PCCW Ltd. is in talks to sell a stake of its land line business to China's No. 2 phone company, China Network Communications Group Corp., or China Netcom.

PCCW said in a late Tuesday statement the two firms are discussing "strategic and business cooperation opportunities," including joint ventures that may entail China Netcom taking an interest in PCCW's fixed-line unit.

The negotiations come as China Netcom prepares an initial public offering.

PCCW didn't provided further details of its talks, and it did not immediately return a call Wednesday.

Founded as a dot-com venture, PCCW stunned many with its $28.5 billion acquisition of Cable & Wireless HKT in 2000, Hong Kong's dominant phone operator. Since the Internet slump, PCCW has relied heavily on phone revenues but faces increasing competition.

China Netcom was formed during a government-ordered merger in 2002. It incorporated two small data-communications companies, China Netcom Corp. and Jitong Network Communications Co., as well as 10 provincial telephone networks formerly belonging to China Telecom Group, the country's biggest fixed-line phone company.

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