Conglomerate sees PSINet providing international gateway and boosting its position in China broadband

Citic Pacific will buy Internet services provider (ISP) PSINet Hong Kong for an undisclosed amount to strengthen its telecommunications-related investments in mainland China.

Stephen Ho, executive vice-president of Citic Pacific, said the deal was expected to boost Citic's competitive position on the mainland, where it operates broadband services via its 80 per cent subsidiary China Express No 1 Backbone Network. The network, when finished, will span 32,000 kilometres across China.

A source at PSINet Hong Kong said Citic Pacific was paying less than US$100 million for PSINet and some of its subsidiaries.

In 1998, United States data carrier PSINet Inc paid US$20 million to buy Hong Kong's then second-largest ISP, Linkage On-line.

PSINet Inc then embarked on an investment spree, buying a series of Internet service providers in Hong Kong during 1998 and 1999, including Hong Kong Internet and Gateway Services, Huge Net, AsiaNet, Global Link and Spider Net.

Citic Pacific's proposed purchase of the company is subject to a number of closing conditions, including approval under US bankruptcy proceedings, though the deal is expected to wrap up next month.