'CyberWorks does not want a messy bidding game. Besides, it's still too big a stake for Richard Li to go alone,' a London-based telecoms analyst said.

He did not rule out the possibility of a consortium consisting of European and American telecoms companies.

'Li has got excellent contacts on both sides of the Atlantic,' the telecoms analyst said.

News reports had suggested that a United States telecoms company may join the bidding war with CyberWorks for a stake in the dominant telephone company.

The reports said the unnamed company had appointed US-based Salomon Smith Barney as an adviser.

It was widely reported that CyberWorks may try to involve Hutchison Whampoa and its telecoms unit Hutchison Telecom, and possibly Vodafone AirTouch, the world's biggest cellular phone group, for their finance and practical experience.

Vodafone has refused to comment on reports it was interested in joining the bidding war with CyberWorks.

After the announcement of CyberWorks' interest, analysts speculated that a merger could be in the form of a share swap and could result in the eventual break-up of HKT, given CyberWorks' lack of experience in mobile and fixed-line networks.

Yesterday, CyberWorks' financial advisers met HKT's financial advisers to discuss the proposal.

'HKT's directors wish to emphasise that no offer has been made to the company and there is no certainty that any firm proposal will be made by Pacific Century CyberWorks,' HKT said in a statement late last night.

The statement said HKT's shares would resume trading on Monday morning and that an application for this had been made to the exchange.

Officials at the CyberWorks' office remained tight-lipped due to stock exchange's regulations.

But market sources said the involvement of Bank of China International in assisting the bid for HKT might indicate the deal had the tacit approval of Beijing and was not purely based on commercial considerations.

The source said that Mr Li, CyberWorks' chairman, had also met senior management of China Telecom at the beginning of last week.

State-run China Telecom remains one of the major shareholders of HKT, with a stake of 10.65 per cent.

The source said Beijing had concerns over the potential takeover of HKT by Singapore Telecommunications (SingTel), which effectively would be seen as sleeping with the enemy.

'If they negotiate a deal it would be more due to political factors than business, though there is a synergy involved in the deal,' said a telecom researcher in the University of Hong Kong telecoms project.

The researcher said the deal with HKT could give CyberWorks a backbone for its broadband Internet services.

Observers have suggested that a deal with SingTel would give Singapore a huge lead over Hong Kong in the race to become the telecoms hub of Asia.

Legislators are also concerned the deal with SingTel may result in layoffs, which could create social tensions.

The SAR Government is said to be reluctant to see the loss of control of Hong Kong's largest telecoms company to Singapore, which could see the merged entity listed in Singapore.

News reports at the weekend also suggested that Cheung Kong Holdings' boss Li Ka-shing and his youngest son were preferred by mainland authorities, which so far have not interfered in, or commented on, the deal, strictly adhering to their policy of 'one country, two systems'.

Reports said the announcement on Friday of CyberWorks' intention would be welcomed by Beijing.

The source said that one potential problem for CyberWorks was its lack of cash to finance the deal, and Bank of China International was seen as the ideal candidate to offer the financial support.

Besides, CyberWorks' aggressive expansion and investment in Internet startups may be seen as fitting better with HKT, and may offer potential for developing other alliances.

Not all market players believed the deal had political overtones.

Chan Wing-luk, deputy managing director of Tai Fook Securities, said the bid from CyberWorks was purely based on commercial interests.

He said the fact that China Telecom had sold 1.3 per cent of interest in HKT last July was evidence of China Telecom's loss of enthusiasm in the control of HKT.

Media reports in the Chinese-language press suggest Bank of China International has an impressive cable-television subscription database.

That database could help CyberWorks with its ambition to provide a pan-Asian broadband satellite Internet access network.

Approval from Beijing will prove extremely valuable, as it may allow CyberWorks a vast mainland telecoms market.

Market watchers said the sharp rise in the share prices of HKT and CyberWorks on Friday proved the market was in favour of the proposal.

That rise was in contrast to the steady decline in HKT's share price after SingTel announced its bid two weeks ago.

Mukul Munish and Clara Li