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Pacific Century CyberWorks (PCCW)

CHEUNG KWOK KEUNG LAU HO TUNG POON WAI CHI, ALICE. WONG KA NOK WONG MAN WAI, ALVIN WONG YUK KI, GIANNE. Pacific Century CyberWorks (PCCW). By Group 2B. Pacific Century CyberWorks. PCCW took over Cable & Wireless HKT - stock-and-cash transaction : US$27 billion. Richard Li

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Pacific Century CyberWorks (PCCW)

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  1. CHEUNG KWOK KEUNG LAU HO TUNG POON WAI CHI, ALICE WONG KA NOK WONG MAN WAI, ALVIN WONG YUK KI, GIANNE Pacific Century CyberWorks(PCCW) By Group 2B

  2. Pacific Century CyberWorks • PCCW took over Cable & Wireless HKT - stock-and-cash transaction : US$27 billion • Richard Li - The founder of PCCW

  3. Pacific Century CyberWorks • Listed in May 1999 • Founded in April 1999

  4. Pacific Century CyberWorks

  5. Pacific Century CyberWorks • Major business activities - technology related to Internet - delivery of broadband services - Internet services

  6. Pacific Century CyberWorks • Boost the stock price to HK$28.5 in February • Hong Kong’s high-tech future

  7. CyberPort • Development of Hong Kong as Asia’s information, multimedia and telecommunication hub

  8. Outline of Presentation • Analyze the company • Nature of PCCW’s business and its interest in broadband industry

  9. Outline of Presentation • Role and Attractiveness of CWHKT • Advantages and Disadvantages of this acquisition

  10. Analysis of PCCW • Strategy • Resources and Capabilities • Key Success Factors

  11. Corporate Strategy • Turn into a giant Internet venture capital fund • Provide hybrid Internet access and interactive TV - Hong Kong, China, Japan and India

  12. Business Strategy • PCCW formed a joint venture with CMGI Inc. • Introduce the Network of World (NOW) TV channel

  13. Business Strategy • Merge TV programming with Internet content • Work with cable operators to upgrade networks

  14. Resources and Capabilities • Tangible resources - strong financial background

  15. Resources and Capabilities • Intangible resources - technology - reputation

  16. Resources and Capabilities • Human resources - experienced management level

  17. Resources and Capabilities • Resources Gap - not have physical resources e.g. broadband - not experienced in provision of content

  18. Key Success Factors • Continuous expansion • Strong financial background • Experienced management level

  19. What is Broadband services? • Broadband - the high-speed connections or "fat pipes" - 20 times faster than standard dial-up connection - allow the next generation of multimedia content - delivered to PCs, TVs and wireless devices

  20. Traditional telecommunication services industries • Mobile • IDD • Standard internet dial-up services - competitive and saturated difficult to generate more revenue in the future

  21. Broadband services industry in HK and Asia • Revenue sources of broadband services - Advertisements - Fees collected from e-business services - Subscription fees

  22. Broadband services industry in HK and Asia (Nowadays) • Customers are not willing to pay for broadband services • Keen competition • High investment and risk

  23. Broadband services industry in HK and Asia (Nowadays) Solution: - enter the industry earlier with well broadband network - provide attractive content - share the investment and risk with other companies - joint venture with Telstra

  24. Broadband services industryin HK and Asia (Future) 1. Introduction stage in the Industry Life Cycle - a lot of potential for development

  25. Broadband services industryin HK and Asia (Future) 2. Number of Internet users is increasingin China and Asia - demand more high quality Internet services

  26. Broadband services industryin HK and Asia (Future) 3. Keen competition will increase the quality of broadband services and lower the price - attract more and more customers Broadband services is a future trend

  27. Broadband services • PCCW should compete on - Content - Connection • Build or Acquire broadband network?

  28. Why choose to acquire? • Immediately available rather than build up gradually • Better to transfer technology

  29. Cable & Wireless Hong Kong Telecom • The leading provider of integrated communication services in Hong Kong • Over HK$1.4 billion profit in 1999

  30. Broadband Internet access services (CWHKT) • 3.7 million fixed lines in Hong Kong • Over 400,000 km of optical fibre • World's largest Asynchronous Transfer Mode (ATM) broadband services network

  31. Why choose CWHKT? • Same focus: IT services

  32. Why choose CWHKT? • Complementary resources: 1. Cable network : broadband - high quality, fast speed

  33. Why choose CWHKT? 2. Deep market penetration and Great client base - customer loyalty • Complementary resources:

  34. Why choose CWHKT? 3. Capital: cash • Complementary resources: - financial resources for upgrading

  35. Disadvantages • Strong competition with SingTel - unreasonable high bid price - PCCW need to raise funds - issue shares and borrow money from third parties - huge debt

  36. Recommendation PCCW take over CWHKT • Broadband – future trend in Internet • PCCW – enter this market early • Debt of PCCW will eventually recovered • Earn huge profits in the long term

  37. Conclusion • Background of PCCW and CWHKT • Strategies • Resource and Capabilities

  38. Conclusion • Key Success Factors • Advantages of broadband over traditional Internet services • Pros and Cons of this acquisition

  39. Question and Answer

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