Shares of PCCW, Hong Kong's largest telecommunications firm, rose 0.4 per cent to HK$5.04 yesterday after former investment banker Francis Leung Pak-to unveiled the investors behind his planned acquisition of the 23 per cent stake in the company owned indirectly by Richard Li Tzar-kai. Under the terms of the deal, which still must be approved by minority shareholders of Pacific Century Regional Developments, the Singapore-listed firm that owns the PCCW stake, mainland fixed-line operator China Network Communications will become the largest single shareholder in the firm. After effectively pooling its existing 20 per cent stake in PCCW in a joint venture with one of Mr Leung's investors, Spanish telecommunications firm Telefonica, Netcom will control 28 per cent of PCCW, the largest block of shares. That could portend closer ties between the two firms, perhaps giving Netcom a boost in the coming battle for 3G market share in China through its access to the expertise of PCCW's Sunday Communications mobile subsidiary. China Netcom Group Corp, the Hong Kong-listed arm of China Netcom, rose 3.13 per cent yesterday to close at HK$15.82. PCRD shares fell 0.5 Singapore cents to close at 40.5 Singapore cents. PCRD's minority shareholders will vote on the proposed sale of the firm's principal asset by the end of this month. Since the Singapore stock exchange barred Mr Li from voting his 75 per cent stake in the company, the deal could still be rejected by shareholders. 'The uncertainty as to how PCRD's shareholders would be compensated is a far more meaningful debate - it is tough to call how shareholders would vote,' Citigroup analyst Rohit Sobti said in an email yesterday. Sources close to the transaction have warned that the deal may yet be voted down. Mr Leung said on Sunday that his consortium includes the Hong Kong and Canadian foundations of Asia's richest man, Li Ka-shing. The two charitable trusts will purchase a combined 12 per cent stake in PCCW for HK$4.8 billion. Telefonica will pay Euro323 million (HK$3.23 billion) for an 8 per cent stake. Telefonica will have the right to swap its PCCW shares for China Netcom stock at prevailing market prices in the future. At last Friday's closing price, its PCCW stake could be exchanged for a 3.2 per cent stake in China Netcom, boosting its holding to 8.2 per cent. That arrangement led some analysts to suggest that Telefonica is basically acting as a stalking horse for its mainland partner. 'The share-swap arrangement indicated that Telefonica does not want to get involved in the transaction,' broker BOC International said in a research note. 'The company holds the stake for Netcom temporarily.'