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SCMP Reporter

Pacific Century CyberWorks has spent $215 million to acquire an 8 per cent interest in City Telecom (CTI), its 14th large investment since August.

 CyberWorks said yesterday it had subscribed to 38.4 million new CTI shares at $5.60 each.

 CyberWorks is a subsidiary of Pacific Century Group, which is wholly owned by Richard Li Tzar-kai.

 The purchase of the CTI stake came one day after CyberWorks said it would spend as much as $2.22 billion on strategic acquisitions.

 CyberWorks diclosed the investment plan in a circular to shareholders informing them about its $3.99 billion share placement and purchase of a 22.5 per cent holding in Nasdaq-listed SoftNet Systems last month.

 Yesterday, CyberWork's share price edged up 0.8 per cent to close at $5.95, while CTI's rose 14.5 per cent to $6.70.

 CTI on Wednesday said it had completed a $646 million share placement that included the listing of American depository shares on the Nasdaq market in the United States.

 However, the company did not identify the subscribers of the placement.

 A CyberWorks spokesman said: 'We are interested in [CTI's] broadband distribution networks and Internet content services.

 'We believe CTI would become a good strategic partner for CyberWorks and would add synergistic value to our business.'  According to CTI, the company has the second-largest share of Hong Kong's international direct dial and Internet markets.

 Earlier this year, CTI launched an Internet portal.

 Analysts said the purchase of the CTI stake by CyberWorks would bring synergy to both companies.

  CTI would benefit from the partnership, as its Internet portal and entertainment channels would have a regional coverage through CyberWorks' satellite networks, which are scheduled to be launched early next year to serve 110 million households in Asia, they said.

 Daiwa Institute of Research (HK) assistant research manager Stephen Leung Siu-hung noted CyberWorks was a wholesale Internet-services provider, while CTI targeted the retail market.

 He said the acquisition gave CyberWorks a potential client for its services.

 'CTI would also provide a testing vehicle for CyberWorks' operation [which would be launched early next year],' Mr Leung said.

 CyberWorks said yesterday it had no intention of participating in telephone services.

  The CyberWorks spokesman also said that the companies were not engaged in any negotiation on further co-operation.



CyberWorks buys $215m CTI stake