Board Meets On PCCW-Telstra Deal Arrangement

Board Meets On PCCW-Telstra Deal Arrangement


Board Meets On PCCW-Telstra Deal Arrangement
Christine Lacy And Luke Collins

08/23/2000
Australian Financial Review
Page 23
Copyright of John Fairfax Group Pty Ltd
 

The board of Telstra Corp met last night in Sydney to finalise the company's alliance with Pacific Century CyberWorks (PCCW).

Telstra said ``negotiations were continuing''.

The parties are working towards releasing details of the deal on Thursday, although there is some concern the deadline may be ``too aggressive''. The alliance would be Telstra's first foray outside Australia.

Directors of Telstra's 50 per cent owned pay-television group, Foxtel, also met yesterday, for a lawyers' briefing on the ramifications of Friday's legal victory which requires Telstra to open its cable network to other analog pay-TV players.

While the board members who represent Telstra and Foxtel's 25 per cent shareholders Mr Rupert Murdoch's News Corporation and Mr Kerry Packer's Publishing and Broadcasting also discussed new services for Foxtel, no decisions were made.

Details are set to be released on all four parts of Telstra's alliance with PCCW: the 50-50 infrastructure business, the 60-40 Asian mobile play, a shared business services venture and a distribution agreement with PCCW's NOW interactive broadband.

Details will also emerge on the $US1.5 billion PCCW convertible note to which Telstra will subscribe showing an initial coupon of 3 per cent and then 5 per cent.

A report released yesterday in Hong Kong by Daiwa valued the HKT mobile business and PCCW's 15 per cent stake in Singapore's Mobile One at HK$31 billion ($6.77 billion). This means Telstra's proposed 40 per cent stake in the pan-Asian mobile play would be worth HK$12.4 billion on an earnings multiple of 12.4 times.

Telstra was originally planned to contribute US$1.5 billion ($2.55 billion) into the mobile venture, which is just shy of Daiwa's latest valuation of its stake at about US$1.59 billion.