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 By Group 2B.

Pacific Century CyberWorksPacific Century CyberWorks(PCCW)(PCCW)

CHEUNG KWOK KEUNG LAU HO TUNG POON WAI CHI, ALICE

WONG KA NOK WONG MAN WAI, ALVIN WONG YUK KI, GIANNE

By Group 2B

Pacific Century CyberWorksPacific Century CyberWorks

PCCW took over Cable & Wireless HKT- stock-and-cash transaction : US$27 billion

Richard Li- The founder of PCCW

Pacific Century CyberWorksPacific Century CyberWorks

Listed in May 1999

Founded in April 1999

Pacific Century CyberWorksPacific Century CyberWorks

O rg an iza tion C h art

C yb erw orksV en tu res

C yb erP ort P ac ific C on verg en ceC orp ora tion

P ac ific C en tu ryC yb erW orks

Pacific Century CyberWorksPacific Century CyberWorks

Major business activities

- technology related to Internet- delivery of broadband services- Internet services

Pacific Century CyberWorksPacific Century CyberWorks

Boost the stock price to HK$28.5 in February

Hong Kong’s high-tech future

CyberPortCyberPort

Development of Hong Kong as Asia’s information, multimedia and telecommunication hub

Outline of PresentationOutline of Presentation

Analyze the company

Nature of PCCW’s business and its interest in broadband industry

Outline of PresentationOutline of Presentation

Role and Attractiveness of CWHKT

Advantages and Disadvantages of this acquisition

Analysis of PCCWAnalysis of PCCW

Strategy

Resources and Capabilities

Key Success Factors

Corporate StrategyCorporate Strategy

Turn into a giant Internet venture capital fund

Provide hybrid Internet access and interactive TV - Hong Kong, China, Japan and India

Business StrategyBusiness Strategy

PCCW formed a joint venture with CMGI Inc.

Introduce the Network of World (NOW) TV channel

Business StrategyBusiness Strategy

Merge TV programming with Internet content

Work with cable operators to upgrade networks

Resources and CapabilitiesResources and Capabilities

Tangible resources

- strong financial background

Resources and CapabilitiesResources and Capabilities

Intangible resources

- technology

- reputation

Resources and CapabilitiesResources and Capabilities

Human resources

- experienced management level

Resources and CapabilitiesResources and Capabilities

Resources Gap

- not have physical resourcese.g. broadband

- not experienced in provision of content

Key Success FactorsKey Success Factors

Continuous expansion

Strong financial background

Experienced management level

What is Broadband What is Broadband services?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

Traditional telecommunication Traditional telecommunication services industriesservices industries

MobileIDDStandard internet dial-up services

- competitive and saturated

difficult to generate more revenue in the future

Revenue sources of broadband services- Advertisements

- Fees collected from e-business services

- Subscription fees

Broadband services industry Broadband services industry in HK and Asiain HK and Asia

Broadband services industry Broadband services industry in HK and Asia in HK and Asia (Nowadays)(Nowadays)

Customers are not willing to pay for broadband services

Keen competition

High investment and risk

Solution:- enter the industry earlier with well broadband network- provide attractive content- share the investment and risk with other companies- joint venture with Telstra

Broadband services industry Broadband services industry in HK and Asia in HK and Asia (Nowadays)(Nowadays)

Broadband services industryBroadband services industryin HK and Asia in HK and Asia (Future)(Future)

1. Introduction stage in the Industry Life Cycle- a lot of potential for development

Broadband services industryBroadband services industryin HK and Asia in HK and Asia (Future)(Future)

2. Number of Internet users is increasing in China and Asia- demand more high quality Internet services

Broadband services industryBroadband services industryin HK and Asia in HK and Asia (Future)(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

Broadband servicesBroadband services

PCCW should compete on- Content

- Connection

Build or Acquire broadband network?

Why choose to acquire?Why choose to acquire?

Immediately available rather than build up gradually

Better to transfer technology

Cable & Wireless Cable & Wireless Hong Kong TelecomHong Kong Telecom

The leading provider of integrated communication services in Hong Kong

Over HK$1.4 billion profit in 1999

Broadband Internet access Broadband Internet access services (CWHKT)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

Why choose CWHKT?Why choose CWHKT?

Same focus: IT services

Complementary resources:

1. Cable network : broadband

- high quality, fast speed

Why choose CWHKT?Why choose CWHKT?

Why choose CWHKT?Why choose CWHKT?

2. Deep market penetration and Great client base

- customer loyalty

Complementary resources:

Why choose CWHKT?Why choose CWHKT?

3. Capital: cash

- financial resources for upgrading

Complementary resources:

DisadvantagesDisadvantages

- huge debt

Strong competition with SingTel

- unreasonable high bid price

- PCCW need to raise funds

- issue shares and borrow money from third parties

RecommendationRecommendation

Broadband – future trend in InternetPCCW – enter this market earlyDebt of PCCW will eventually recoveredEarn huge profits in the long term

PCCW take over CWHKT

Background of PCCW and CWHKT

Strategies

Resource and Capabilities

ConclusionConclusion

Key Success Factors

Advantages of broadband over traditional Internet services

Pros and Cons of this acquisition

ConclusionConclusion

Question Question and and

AnswerAnswer