Afloor looks to have been set under the Hongkong Telecommunications share price. With investors convinced a deal settling the ownership dilemma is imminent, none is prepared to cash out. Yet the widespread belief that a resolution is imminent looks increasingly untenable. As time passes, the more likely scenario seems a lengthy hiatus, with any deal coming after the July handover. Despite intrigue and rumour, one salient fact should not be forgotten. Cable & Wireless will ensure that every last cent is squeezed from any transaction. Citic Pacific's 7.74 per cent share sale to China Resources triggered a dramatic share rally. It also strengthened the hand of the London-based parent, which seems in no hurry to tango. C&W knows that a deal for early termination of Hongkong Telecom's international licence - with a re-balancing of local tariffs - should pep up share performance. Resolution of this issue seems unlikely under the present administration. Since C&W will want to negotiate its shareholding deal with the strongest hand possible, a deal is unlikely before July. Moreover, with Hongkong Telecom sitting on an $11 billion cash pile, it is possible a significant shares buy-back programme could be instigated, increasing C&W's stake and so strengthening its position. Suddenly, brokerage analysts are trying to justify fundamental stock valuations in the $16 range. Remember, only three weeks ago few offered anything much above $13.50. Warrant prices have moved dramatically, as late-on-the-scene investors dash in for geared exposure. While the upside following a transaction suggests a share price of $18, slippage from present levels seems likely. Favoured buyers of the stake are the Ministry of Posts and Telecommunications (MPT) and new competitor China Unicom. According to SBC Warburg, talks between C&W and the MPT broke down weeks before the China Everbright deal, the State Council being unhappy over the level of competition between the two operators. The brokerage reckons the most positive outcome is a deal where Unicom takes a stake in Hongkong Telecom. This is against the Hongkong Telecom's stated wish to hook up with the MPT and ignores the fact that most of Unicom's prime contracts have already been dispersed. It will take more than a simple change of ownership to justify a sharply higher share price. Any valuation beyond $16 assumes significant mainland access, with continued market share loss to new competitors at home.