Market gives sale thumbs-down

Cable & Wireless' (C&W) decision to sell down its stake in C&W HKT was not well received by the market.

The group's shares sank in London but recovered to close 2.22 per cent lower on the news and many analysts questioned the value of the deal.

What is at issue is not the wisdom of the decision to sell down HKT - despite the fact that it has delivered more than half the group's overall operating profits - but the decision to sell to Pacific Century CyberWorks.

'We totally back the move to sell off Hongkong Telecom,' said one analyst.

'Where we take umbrage is that they chose an Internet start-up, in which they will now take a stake themselves, whose earnings are unproven, and whose management is untested.' Analysts say they are prepared to see C&W's profit-and-loss account take a major hit - with its 12-month profits estimated to be between 25 per cent and 33 per cent lower than the previous year.

'What's disappointing is that it looks like they will take a third cash and two-thirds shares in CyberWorks,' said Nigel Hawkins, utilities analyst at Williams de Broe.

'CyberWorks is very new and the jury is still out on it.' C&W chief executive Graham Wallace dismissed the criticism and pointed out the transaction would give the group at least GBP5 billion (HK$61.84 billion) in cash between 11.2 and 20.9 per cent of CyberWorks.