It's time for Unicom to buy PCCW

28 Apr 2009

Richard Li’s attempts to exit Hong Kong’s biggest telco have been as successful as his tenure in running it.

The latest effort was a lamentable one for Hong Kong corporate governance.

Until they were blocked by the Hong Kong Court of Appeal, Li and China Unicom planned to pay $2 billion for the company, helped by a $257 million sweetener from shareholder funds on completion of the deal.

But the fault is not entirely his own.

Li could have sold the company to a private equity group in 2006 for as much as $6 billion if Beijing had not exercised its veto.

Through its 20% shareholder China Netcom (now Unicom), China’s central government’ once more made certain that no foreign investor would play a major role in China’s telecom market.

Since the deal was called off last week, PCCW’s share price has sunk even further. It last traded at HK$3.31, well off the $4.50 offered in the buyout.

This is a mess made in Beijing and only Beijing has the solution, which is for Unicom to acquire Li’s holding.

That would give the mainland’s number two fixed-line carrier a footprint in the business center of Hong Kong and access to expertise it can sell abroad.

It would put PCCW – whose underlying performance as a telco is solid – into the hands of committed owner.

Most of all it would return a few dollars to the long-suffering shareholders and put an end to this dispiriting saga.

Related content

No Comments Yet! Be the first to share what you think!

This website uses cookies

This provides customers with a personalized experience and increases the efficiency of visiting the site, allowing us to provide the most efficient service. By using the website and accepting the terms of the policy, you consent to the use of cookies in accordance with the terms of this policy.