Hong Kong Regulator: PCCW's Sunday Buyout Not Anticompetitive

HONG KONG -(Dow Jones)- Hong Kong's telecommunications regulator said Tuesday fixed-line operator PCCW Ltd.'s (0008.HK) takeover of mobile carrier Sunday Communications Ltd. (SDAY) isn't anticompetitive, indicating the deal can go ahead as planned.

Under Hong Kong regulations, the Office of the Telecommunications Authority has the power to block mergers and acquisitions that could stifle competition in the telecom industry.

The telecom regulator said a merged PCCW/Sunday would have a combined share of less than 30% in the mobile and fixed-line market.

PCCW said last month it will reenter Hong Kong's mobile telecom market by buying a 60% stake in the mobile operator from its two major shareholders, Distacom Communications Ltd. and USI Holdings Ltd. (0369.HK), for HK$1.16 billion cash or 65 HK cents a share.

PCCW is now carrying out a mandatory unconditional cash offer to buy the remaining stock in Sunday at 65 HK cents per share.

Sunday is the smallest mobile operator in Hong Kong with a share of roughly 10% of the local market, where every ten people own about 12 mobile phones.

PCCW in 2002 sold its 40% stake in mobile-phone company CSL to Australia's Telstra Corp. for US$618 million as part of efforts to cut debt. In 2001, PCCW sold 60% in CSL to Telstra for US$1.68 billion.

-By Julie Wang, Dow Jones Newswires; 852-28027002; julie.wang@dowjones.com

-Edited by Sharon Buan

(END) Dow Jones Newswires"

Posted to the site on 5th July 2005