Telstra to Invest $3B in PCCW Alliance

HONG KONG (04/12/2000) - Australian telecommunications carrier Telstra Corp. and Hong Kong Internet investment company Pacific Century CyberWorks Ltd. today announced an Asia-Pacific telecommunications alliance under which the companies plan to pool assets and cash to form a number of joint ventures across the region, according to a Telstra statement.

Telstra will invest approximately US$3 billion in PCCW and inject both cash and assets into mobile telecom ventures, according to press reports.

Trading in shares of both companies were suspended pending an announcement planned later today, the companies stated in stock exchange disclosures.

The deal promises to bring much-needed cash to PCCW, which is still trying to complete an audacious takeover deal for Hong Kong's incumbent carrier, Cable & Wireless HKT, analysts said. It also would help Telstra to expand out of its home country, where, as an incumbent in a deregulated market, it faces ever more fierce competition, they said.

The Australian carrier recently was awarded a telecom license in Singapore, where the market was deregulated starting April 1.

"Telstra will be coming in strong to the other two big telecom markets in Asia, being Hong Kong and Singapore," said Sandra Ng, an analyst at International Data Corp., in Singapore. "They really want to expand into the Asia market."

Because of Telstra's financial structure, with 51 percent of its stock locked up in state ownership, it is an especially good fit with PCCW, another analyst said.

"They don't have share material they can trade with them, they only have cash.

That's what makes them attractive to PCCW," said Geoff Johnson, a telecom analyst at Gartner Group Inc., in Brisbane, Australia.

PCCW, meanwhile, is most focused on developing its broadband capabilities for delivery of information and entertainment over its Network of the World service.

In the wake of the pending C&W HKT takeover, "It's clear that they're not very interested in the core phone business or mobile business," Ng said.

Telstra can be reached at +61-2-9206-0106 or online at http://www.telstra.com/.

PCCW, in Hong Kong, can be reached at +852-2514-8888 or online at http://www.pcg-group.com.

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