C&W studies joining with US giant in global group
Hongkong Telecom parent Cable and Wireless has confirmed it is involved in separate talks with giant United States telecoms companies AT&T and Sprint about a possible multi-billion dollar alliance.
Negotiations were being held with a variety of partners, chief executive Dick Brown said, according to a report in the Sunday Times.
His comments follow C&W's decision to pull out of its European venture with German industrial group Veba, confirmed last Friday.
The end of the Veba relationship could clear the path for C&W to hook up with a telecom operator of similar size to itself.
'We will be completely free and it's up to us to decide who we want as a global partner, if anybody,' Mr Brown said.
'We are an attractive partner. I can't think of anyone that wouldn't want us.' Any move to tie C&W formally with one of the global partnerships would undoubtedly also pull C&W's 59.6 per cent-owned Hongkong Telecom into a closer alliance.
As one of C&W's key assets, discussions about the future share structure and shape of Hongkong Telecom are likely to figure large in any discussions.
Hongkong Telecom, with its potential in China and its position as a regional hub, would be an attraction.
However, if an alliance were to involve equity swaps, it seems likely partners would want to be certain Hongkong Telecom's long-term future after the handover was assured, possibly through greater Chinese-backed equity involvement.
Talks with the US companies appear to have been going on for some time. Last November, it was reported that C&W was discussing international co-operation with the Global One partnership of Sprint, France Telecom and Deutsche Telecom.
AT&T's World Partners alliance links the Unisource European consortium and Singapore Telecommunications among a string of other partners.
Any deal is likely to focus on C&W being allowed to sell a package of global business services in return for use of its telecoms infrastructure across the Atlantic and the Pacific Rim.
A link with AT&T or Sprint, where Mr Brown previously worked, would create an organisation to rival the Concert group, to be formed by the proposed merger of British Telecom and MCI.
'In a lot of situations, you have to seize the opportunities when they arise. We will take some big risks, we will spend the cash - but only if it makes sense,' Mr Brown said.
Under the terms of the breakup of the German deal, C&W will receive 2.21 billion deutschemarks (about HK$10.36 billion) for its 45 per cent stake in the Vebacom joint venture. After the separation, Veba will continue to hold a 10.4 per cent stake in C&W.
Mr Brown said the two-year-old alliance was dissolved because the two partners had divergent ambitions. 'We just had a difference of opinion,' he said.
