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Top Financial News Fri, 20 Oct 2000, 2:03pm EST CyberWorks May Pare Mobile Stake If IPO Scrapped (Update3) By Rob Stewart and Cathy Chan Kuala Lumpur, Oct. 19 (Bloomberg) -- Pacific Century CyberWorks Ltd. may pare its stake in a mobile phone venture with Telstra Corp. if the venture can`t sell shares to the public, CyberWorks Chief Executive Richard Li said. Li, speaking to investors and reporters at a conference in Kuala Lumpur, said such a step is more likely if the mobile venture seeks to quickly expand into new phones that connect with the Internet. ``On the mobile business, if it cannot go public and the company would like to grow aggressively on 3G, it`s most likely we would simply dilute down that business,`` Li said. The Nasdaq Composite Index lost a quarter of its value since Sept. 1, making it more difficult for technology-related companies to sell shares. Idealab!, a U.S. firm behind Etoys Inc. and other online commerce companies, scrapped a planned $300 million sale yesterday. Li is ``still very concerned`` about potential costs of 3G development, said Voon San Lai, vice president of research of G K Goh Securities (H.K.) Ltd. At the same time, ``It`s going to be hard to get an IPO at good valuation,`` he said. CyberWorks shares, which lost two-thirds of their value this year, fell 10 Hong Kong cents, or 1.6 percent, to HK$6.25. Telstra fell 2 percent to A$6.0. Follow the Money CyberWorks last week surrendered control of its mobile phone business to Telstra, Australia`s No. 1 phone company, to salvage a joint venture between the two companies and raise $3.55 billion it needs to repay debt due in February. Telstra agreed to pay $1.68 billion for a 60 percent stake in the mobile business. Telstra will bear the brunt of the cash demands -- billions of dollars, according to CyberWorks -- from future 3G auctions in Hong Kong and Australia, though it said it doesn`t intend to sell more debt to participate. ``We have set aside sufficient funds,`` Telstra spokeswoman Megan Lane said yesterday, declining to specify how much the new licenses might cost. In Hong Kong alone, CyberWorks estimates capital expenditure for a full network rollout may reach HK$2 billion ($258 million), said Hubert Ng, chief executive of Pacific Convergence Corp., a CyberWorks unit. CyberWorks has said it planned to sell shares in both the mobile phone venture and another Internet venture with Telstra next year. It didn`t give a more specific timetable. With investors already wary about the company`s ability to refinance $9 billion of debt, which comes due in February, CyberWorks could use more cash that it could raise by selling stakes in the mobile venture. The regional company, which currently only includes mobile assets in Hong Kong, probably needs stronger partners to fund expansion, analysts said. ``They need cash for this business,`` said Jahanzeb Naseer, an analyst at ABN Amro Ltd. in Hong Kong. ``If they don`t expand into either 3G and other markets outside Hong Kong, then the value of the business will gradually decline. It`s better to own 30 percent of a much more valuable entity than 40 percent of a less valuable entity.`` |
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