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Stephen Seawright

Telecommunications shares rallied strongly yesterday as signs of thawing relations between parties in the Cable & Wireless HKT takeover battle helped fuel optimism towards the sector.

 Defeated bidder Singapore Telecommunications (SingTel) said it was still interested in working closely with HKT, despite losing to bidding rival Pacific Century CyberWorks.

 At the same time, News Corp executive vice-president James Murdoch said in Beijing the Australian-based company was still 'very committed' to a joint venture between its Star TV unit and HKT.

 News Corp had backed SingTel in the struggle to take over HKT, which CyberWorks won on Tuesday with a bid of up to HK$296.41 billion.

 Meanwhile, the investment banks mandated by CyberWorks to raise financing for the bid said last night they would arrange and underwrite a US$12 billion loan which would meet the cash portion of the offer and provide working capital.

 The loan, to be arranged by BOCI Capital, HSBC Investment Bank, Banque Nationale de Paris (Hong Kong) and Barclays Capital Asia, has a maturity of 364 days with the option to extend part of it for another two years.

 HKT shares rose 6.51 per cent in a late rally following reports of Mr Murdoch's remarks.

 CyberWorks shares rose 5.79 per cent to $21.90, which also boosted HKT's stock as their merger will be financed by exchanging equity.

 China Telecom (HK) gained 4.1 per cent to a record close of $76.

 The company now has a market capitalisation of more than $1 trillion - more than 40 per cent greater than previous market leader HSBC Holdings.

 SmarTone Telecommunications soared 10.09 per cent to $34.90, while Hutchison Whampoa gained 3.29 per cent to $125.50.

 The four telecoms-related stocks pushed the Hang Seng Index up by the equivalent of 344.51 points.

 That accounted for nearly all of yesterday's gains, which ended with the index up 348.43 points at 17,285.24.

 SingTel chief operating officer Lim Toon said yesterday: 'We still believe that between SingTel and C&W HKT there is a lot of synergy and it makes business sense for the two of us to work together.'  He said SingTel would pursue future opportunities more aggressively after losing the battle for HKT.

 'We actually learnt a lot from the experience and I am sure we will work a lot harder,' said Mr Lim.

 'There are still a lot of investment opportunities, in Asia especially.'  SingTel and HKT already have a number of long-standing co-operative agreements.

 'These business arrangements, I'm sure would continue,' Mr Lim said.

 SingTel president Lee Hsien Yang declined to comment on the failed merger for legal reasons.

 'There is a limit to what we can say right now,' Mr Lee said. 'We have withdrawn right now, but we are discussing.'  He said the firm would issue a statement today, without elaborating.

 The company said it had yet to decide whether to file a law suit against HSBC, which it has accused of a conflict of interest in its role during the takeover.

  SingTel's softer stance follows conciliatory remarks on Tuesday by CyberWorks chairman Richard Li Tzar-kai, who said that future co-operation with SingTel was possible.

 Mr Li also said he was open-minded about the Star-HKT joint venture.

 The venture involves an interactive pay-TV and Internet service that had been expected to compete with CyberWorks' planned pan-Asian broadband network.

 Mr Li is due to meet News Corp chairman Rupert Murdoch in Hong Kong next week.

 James Murdoch said yesterday: 'I already met with Richard and had a very positive talk, and we both agreed we're very committed to it [the joint venture].'  He said the venture was 'not something you could walk away from'.

 'It's a meat and potatoes agreement,' he said.

 'It's a real company with real assets.

 'We're putting one of our best executives in it.'  News Corp veteran Tom Mockridge was named chief executive of the venture on Thursday.

Li subsidiary battles SingTel, Page 2; Barings to advise HKT on takeover, Markets, Page 5 



Telecoms firms rally as SingTel says it will work with HKT