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SCMP Reporter

Pacific Century CyberWorks' plan to transform into a high-technology company through a $12.5 billion bid to acquire Pacific Convergence Corp (PCC) may backfire, according to analysts.

 'PCC is selling a concept,' an analyst said.

 'There is risk that its business plan may not produce what is hoped.'  In a circular to shareholders on Monday, CyberWorks disclosed that PCC - a satellite-based Internet service provider (ISP) - had signed memoranda of understanding with 12 mainland cable-television operators for them to be subscribers.

 However, analysts said they were sceptical about PCC's business in the mainland, as none of these memoranda of understanding was exclusive or legally binding.

 In addition to its mainland strategy, PCC plans to capture 10 per cent Asia's cable-TV market.

 PCC has said 100 million households in the region have access to cable TV.

 However, analysts said such a goal would be difficult to reach - even for PCC, which is 60 per cent owned by Pacific Century Diversified and 40 per cent by giant chip-maker Intel.

 Pacific Century Diversified is controlled by Richard Li Tzar-kai, who also controls CyberWorks.

 'The region's Internet business is highly controlled by governments, especially in the mainland,' an analyst said. 'I doubt if PCC could easily get access to the mainland's market.'  Earlier this month, CyberWorks agreed to acquire PCC from Pacific Diversified and Intel through an asset-swap arrangement.

 Intel would also take up to a 13 per cent stake in CyberWorks.

 According to Goldman Sachs, an independent adviser to CyberWorks shareholders on the transaction, PCC would not begin operating until the first quarter.

 In evaluating the PCC acquisition, Goldman Sachs said it could not confirm an ISP was feasible.

ACQUISITIONS 



Doubts cast on CyberWorks' hi-tech plans over mainland worries