"We have been working for some time to make this alliance a reality," admits Chairman-CEO Richard Li in Hong Kong. Pacific Century will receive $3.55 billion in cash, which "will allow us to reduce our debt to less than $5.5 billion, a level few thought possible when we acquired Hong Kong Telecom just seven weeks ago."
Under the terms of the agreement, Pacific Century and Telstra will form a 50:50 global IP backbone company and a regional network of Internet data centers targeted at China, Japan, Singapore, South Korea, Taiwan and New Zealand. The deal also includes a content-distribution agreement for Pacific Century's broadband Internet and TV portal Network of the World, which was launched in London last July.
In addition, Telstra will pay Pacific Century $1.68 billion for a controlling 60% stake in a regional third generation mobile telephony company that will offer wireless and voice services.
That arrangement essentially puts Pacific Century, which pulled off a surprising take-over of leading Hong Kong mobile phone player Cable & Wireless HKT earlier this year, out of the mobile phone business.
Copyright October 2000, Crain Communications Inc.