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Netcom looks for stake in PCCW

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China Network Communications Group Corp (China Netcom) has offered to buy a 20 per cent stake in PCCW.

The proposal by the mainland carrier was confirmed by PCCW on Tuesday after shares in the local fixed-line carrier soared as much as 7.1 per cent in the final 20 minutes of trading, following a report that the once-stalled talks between the two companies were close to a breakthrough.

PCCW said in a statement that Netcom had 'recently expressed interest' in buying 20 per cent of the company through a new share issue, adding that 'discussions on co-operations and new shares are continuing but no agreement has yet been reached'.

PCCW did not disclose how much Netcom would be expected to pay for the stake.

With a market capitalisation of $26.33 billion, a 20 per cent stake in PCCW would cost Netcom about $5.2 billion, based on yesterday's closing price.

PCCW can issue new shares worth up to 20 per cent of the company without seeking approval from its shareholders.

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