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MGTO 321 Presentation - PCCW

MGTO 321 Presentation - PCCW. Group 2C Date: 2000/11/1. MGTO 321. 2000/11/1. Introduction. Background of PCCW Founded in 1999 Subsidiary of Pacific Century Group Management Profile Executive Chairman – Richard Li Tzar-Kai. 2000/11/1. MGTO 321. Introduction (cont’d). Mission:

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MGTO 321 Presentation - PCCW

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  1. MGTO 321Presentation - PCCW Group 2C Date: 2000/11/1 MGTO 321 2000/11/1

  2. Introduction • Background of PCCW • Founded in 1999 • Subsidiary of Pacific Century Group • Management Profile • Executive Chairman – Richard Li Tzar-Kai 2000/11/1 MGTO 321

  3. Introduction (cont’d) Mission: • To deliver innovative services that enhance the lifestyle and business of customers • To be the pre-eminent channel for prudent institutional investment MGTO 321 2000/11/1

  4. Introduction (cont’d) • Core business activities - Internet related technology - Delivery of broadband services - Internet services provider (ISP) enabling services MGTO 321 2000/11/1

  5. PCCW Pacific Convergence Corporation (PCC) Cyberworks Ventures Cyberport 2000/11/1 MGTO 321

  6. Introduction (cont’d) • Cyberworks Venture Objective: - To take a strategic position in business 2000/11/1 MGTO 321

  7. Introduction (cont’d) • Cyberport Objective: - To handle the multi-billion dollar Cyberport project 2000/11/1 MGTO 321

  8. Introduction (cont’d) • Pacific Convergence Corporation (PCC) Objective: - To become the leading global provider of broadband Internet Services ( through forming partnership with the Network of the World, NOW) 2000/11/1 MGTO 321

  9. Outline of the Presentation • PCCW’s Strategies • Reasons for the acquisition • Potential problems • Summary • Q & A MGTO 321 2000/11/1

  10. Strategies • Providing subscribers with • hybrid internet access • interactive television in China, India and Japan • Characteristics in China market • few competitors • fast growing telecom market • large potential market 2000/11/1 MGTO 321

  11. Strategies (cont’d) • Implemented by PCC • Three phases: 1. Launch NOW 2. Merge TV programming with Internet content 3. Revenue-sharing with cable operators 2000/11/1 MGTO 321

  12. Strategies (cont’d) • ‘Follower’ in developing Internet business • For a pioneer: • HUGE investment cost • NUMBER of technologies are developed • RISK of entry ~ cost of failure is GREATER for firms with reputation or brands 2000/11/1 MGTO 321

  13. Strategies (cont’d) • Joint Venture • Target • software developers • content providers • Internet infrastructure firms • Merge • Pooling of resources and capabilities MGTO 321 2000/11/1

  14. Recommendation: Acquire HKT!!!

  15. Reasons for the acquisition • HKT optical fiber network • Cover 80 percent of Hong Kong • Backbone network for hybrid internet access and interactive television service 2000/11/1 MGTO 321

  16. Reasons for the acquisition (cont’d) • Backward integration • Broadband is a must to the hybrid service • Without own broadband • Provided by outside cable operators • Increase cost and reduce efficiency • With own broadband • Extra revenue from broadband service 2000/11/1 MGTO 321

  17. Reasons for the acquisition (cont’d) • Market leader • HKT has already been the internet leader in HK • PCCW would become the leader if acquire HKT • Huge potential market in China • Advantage for investment in China MGTO 321 2000/11/1

  18. Reasons for the acquisition (cont’d) • Diversification • HKT has many businesses • mobile phone services • long-distance calling services • iTV • Internet services • PCCW can diversify the business after acquisition • reduce risk MGTO 321 2000/11/1

  19. Reasons for the acquisition (cont’d) • Sustainable advantages • well-established brand of HKT • business promotion of PCCW in HK and China • lower marketing costs 2000/11/1 MGTO 321

  20. Potential Problems • Cultural difference • PCCW: newly-established IT company • HKT: traditional telecommunication company • different working style and company structure • suggestion: organize social activities to enhance relationship between staff in these two companies 2000/11/1 MGTO 321

  21. Potential Problems (cont’d) • Huge loan liability • need to borrow a large amount of money to acquire HKT • huge liability • liquidity problem • suggestion: monitor the cash flow of the company carefully MGTO 321 2000/11/1

  22. Summary • Reasons for the acquisition • resources of HKT • leader of the IT industry • diversification • sustainable advantages • Potential problems • cultural difference • loan liability MGTO 321 2000/11/1

  23. 2000/11/1 MGTO 321

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