Telstra threatening to cancel Cyberworks deal<\/p>\n
SYDNEY (AFP): Australian telecoms giant Telstra has threatened
\nto walk away from its US$3 billion alliance with Hong Kong's
\nPacific Century CyberWorks unless the deal price is slashed, a
\nreport said Thursday.<\/p>\n
The Australian newspaper quoted a source at Telstra as saying
\nit would try to reduce the HK$19.52 (US$2.50) entry price after a
\nslump in PCCW's share price, which closed at HK$9.0 Wednesday.<\/p>\n
\"The negotiations will have to get tougher and we're saying:
\nif you refuse to deal in good faith, we'll consider our options,\"
\nthe source said.<\/p>\n
PCCW, run by whizz kid entrepreneur Richard Li, faces a US$12
\nbillion debt and badly needs Telstra's support, the report said.<\/p>\n
\"They have to refinance their loan and they need our cash,\"
\nthe source said. \"They're still keen to go ahead.\"<\/p>\n
Teams from both companies were meeting in Hong Kong to discuss
\nnew terms, The Australian said.<\/p>\n
Senior Telstra executives were meanwhile working on a new
\ninternational strategy for the company in the event the deal,
\nhailed as the company's \"defining moment\" when it was signed
\nApril, fell through.<\/p>\n
The telco had planned to directly invest in PCCW by
\nsubscribing for US$1.5 billion in convertible notes. It was also
\nto inject US$1.5 billion in cash, and plough in mobile phone
\nassets estimated to be worth a further US$1 billion.<\/p>\n
Telstra's beleaguered share price rallied Wednesday as rumours
\nabout the renegotiation of the PCCW deal circulated around the
\nmarket.<\/p>\n
Concerns over the costly alliance have seen Telstra scrip
\nbeaten savagely in the market, with the shares falling 23 percent
\nto A$5.65 (US$3.11) between August 17 and September 25.<\/p>\n
The stock continued to make gains in early trade Thursday,
\nwith fully-paid shares seven cents higher at A$5.97 and
\ninstalment receipts up six cents at $2.92.<\/p>\n
Telstra had planned to create two new Asian companies,
\nincluding a regional mobile phone operator and an internet
\ninfrastructure company, in the deal with PCCW and its subsidiary
\nHong Kong Telecom.<\/p>",
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"sponsor": "Okusi Associates",
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