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Banking

PCCW takeover: Real deal is a steal

The saga of the PCCW takeover does little good for Hong Kong’s reputation as a financial centre.

The bluffing and counter-bluffing is over and the hands are revealed. No one should be surprised that Hong Kong banker Francis Leung’s US$5.2 billion purported bid for local telecom operator PCCW is in fact a careful orchestration of control for the utility by master conductor Li Ka-shing (KS Li) on behalf of mainland Chinese telecom carrier China Network Communications Group (China Netcom).

As predicted in these pages (see HK telecommunications carrier PCCW: Wrong connections, August 2006) Francis Leung has been fronting for Li senior in ensuring that three critical objectives are realized. The first is that Richard Li, KS Li’s youngest son, is extricated from his PCCW nightmare; second, that control of the company now rests with China Netcom; and third, that none of the parties involved with the carve-up was required to make an offer for all of the PCCW shares. It looks like mission accomplished on all three fronts.

To achieve this legerdemain, Leung and company have enlisted the help of Spanish telecom carrier Telefónica Internacional. In November, Leung revealed that his consortium to purchase the 22.65% stake in PCCW from parent Singapore-listed Pacific Century Regional Developments (PCRD) would comprise Telefónica purchasing 8% and two charities of Li Ka-shing purchasing a combined stake of 12%.

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