Chen hopes PCCW will leap through the window once again. The business, headed by Richard Li, Hong Kong’s hottest cyberpreneur, may bid on Hong Kong Telecom, the city’s largest telecommunications company. With no revenue to speak of, PCCW’s valuation depends to a large part on its as-yet unrealized business plan–to become the leading broadband Internet provider in Asia. By contrast, Hong Kong Telecom, which is controlled by Cable & Wireless, is a $4 billion-a-year enterprise with a network of fixed-phone and fiber-optic lines and 14,000 employees. The deal would foil an attempt by Singapore’s government-controlled telecommunications company to take over HKT. But PCCW’s rumored purchase has set off a firestorm of controversy, ranging from concerns that Beijing may be meddling in Hong Kong’s affairs to alarm about the influence of Li and his famous father, Li Ka-shing, who was Hong Kong’s wealthiest tycoon–until his son came along.
Why would PCCW be interested in a bricks-and-mortar firm like HKT? The telecom’s broadband service already links millions of customers–and could be used as a vehicle for PCCW’s planned video technologies.
But the deal has quickly become political. Some analysts believe Beijing, which owns 10.8 percent of HKT through China Telecom, is encouraging PCCW’s counterbid as a way of keeping control of Hong Kong’s telecommunications industry out of Singapore’s hands. They point out that a PCCW deal could promote business with Beijing down the road. The Hong Kong government flatly denied that Beijing–or Hong Kong–is interfering in the deal. PCCW declined to comment.
Hong Kong’s democrats, meanwhile, warned against the Li family’s expanding empire. Li Ka-shing owns a major Hong Kong telecommunications company, along with grocery, shipping and real estate businesses. If the merger goes ahead, according to Next magazine, the Li family would control almost 40 percent of the Hong Kong stock market’s assets. “I have no ambition but only a loving heart for Hong Kong,” Li Ka-shing said in response to criticism. On the day PCCW announced its possible bid for HKT, the telecom’s share price shot up 22.7 percent, lifting the market to an all-time high. “In today’s world,” Next magazine wrote, “what international financial center is controlled by one family?” Stay tuned: it might be Hong Kong.
