The chiefs of Cable & Wireless (C&W) and British Telecommunications (BT) have held top-level talks for the first time, in a move widely interpreted as an encouraging sign that the proposed GBP34 billion (about HK$396.44 billion) merger between the two companies will go ahead.
The news emerged as it became apparent that China was studying the deal closely, with BT officials privately confident that Beijing would give its stamp of approval.
Sources close to the talks confirmed that C&W chairman Brian Smith, and acting chief executive Rod Olsen, had met BT chairman Sir Iain Vallance, and Sir Peter Bonfield, the group's recently appointed chief executive at separate meetings.
It is thought that the development shows the talks are coming together satisfactorily.
'Not everything has been ironed out, and there is still a lot of areas that need to be finally discussed, but I would say that we could have a deal in a matter of weeks,' one source said.
The structure of the deal would be through a reverse takeover, with every three BT shares, plus cash thought likely to be about 50 pence, for every two C&W shares.
Areas that still need to be resolved include China and the clash of operations between the two companies in Germany.