According to the Wall Street Journal (subscription required), Hong Kong telecom service provider, PCCW (ticker: PCW), and Chinese fixed line operator, China Netcom (ticker: CN), are considering cooperating on Internet-television, wireless-phone, and real estate ventures. Real estate?
Here are the key points:
- China Netcom has agreed to take a 20% equity stake in PCCW for about $1 billion
- An announcement of specific business plans will likely
come this week
On Internet television plans:
- A deal through which China Netcom would use
PCCW's expertise to offer Internet television in Mainland China makes sense - PCCW now offers an innovative broadband-TV service
in Hong Kong to more than 400,000 subscribers - PCCW could use Netcom's existing Internet network in northern China to transmit
the service - Such a
service might take about a year to roll out and could involve PCCW
partnering with a Chinese content or media company - One analyst believes that northeast China could be a tough market in which
to peddle new broadband services. Southern China, where rival China
Telecom (ticker: CHA) has its main fixed-line and Internet network,
is considered to be more lucrative turf
On wireless phone plans:
- China Netcom doesn't yet have a
government license to offer wireless services - It is unclear how a
partnership with PCCW might help it sell mobile-phone services on the Mainland - Netcom and PCCW are "jointly
studying mobile strategy" in anticipation of China Netcom's getting a
wireless license
On property plans:
- China Netcom has a large
real-estate portfolio, including many buildings in China that were
built to house phone-network infrastructure. Netcom thinks PCCW could help it redevelop those properties - PCCW, through a subsidiary, has extensive property holdings
Quick thought: Do you get the feeling that Netcom and PCCW havent really figured out how to capitalize on their partnership? This week should be particularly telling.
