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Published by: Asia Case Research Centre, The University of Hong Kong
Published in: 2002
Length: 25 pages

Abstract

In late January 2000, Cable & Wireless plc (C&W) and Singapore Telecommunications Limited (SingTel) unveiled a proposed merger of equals between Cable & Wireless HKT (HKT) and SingTel. Both HKT and SingTel were the leading telecoms operators in their local markets, and a merger between the two would create the second largest full service telecoms provider in Asia outside Japan. Nonetheless, the proposed deal was received coolly in Hong Kong and Singapore owing to uncertainty over its political and financial ramifications. C&W anticipated that the Chinese government would prefer to keep HKT in local investors'' control, and had therefore considered the possibility of receiving offers from potential suitors in Hong Kong, possibly including Pacific Century CyberWorks Limited (PCCW). To respond to SingTel or any other potential bidders, C&W had to prepare itself for the negotiations and find a fair value for its stakes in HKT. This case is one of a three-part case series that includes ''Singapore Telecommunications Limited: The Bid for Cable & Wireless HKT Limited'' (102-017-1) and ''Pacific Century CyberWorks Limited: The Bid for Cable & Wireless HKT Limited'' (102-018-1). The three cases can be taught singly or can be combined into a bilateral/trilateral negotiation exercise where students are assigned parts to play. The available teaching note discusses the approach to teaching this case singly. Please refer to the teaching note ''The Bid for Cable & Wireless HKT Limited Teaching note'' (102-017-8) for a detailed teaching plan for a bilateral/trilateral negotiation exercise. This case serves as a useful vehicle for students to discuss the motives behind a divestiture and the impact of divestiture on a firm''s value and to exercise valuation skills in a merger negotiation. The case was used in the 2002 Concordia MBA Case Competition.

About

Abstract

In late January 2000, Cable & Wireless plc (C&W) and Singapore Telecommunications Limited (SingTel) unveiled a proposed merger of equals between Cable & Wireless HKT (HKT) and SingTel. Both HKT and SingTel were the leading telecoms operators in their local markets, and a merger between the two would create the second largest full service telecoms provider in Asia outside Japan. Nonetheless, the proposed deal was received coolly in Hong Kong and Singapore owing to uncertainty over its political and financial ramifications. C&W anticipated that the Chinese government would prefer to keep HKT in local investors'' control, and had therefore considered the possibility of receiving offers from potential suitors in Hong Kong, possibly including Pacific Century CyberWorks Limited (PCCW). To respond to SingTel or any other potential bidders, C&W had to prepare itself for the negotiations and find a fair value for its stakes in HKT. This case is one of a three-part case series that includes ''Singapore Telecommunications Limited: The Bid for Cable & Wireless HKT Limited'' (102-017-1) and ''Pacific Century CyberWorks Limited: The Bid for Cable & Wireless HKT Limited'' (102-018-1). The three cases can be taught singly or can be combined into a bilateral/trilateral negotiation exercise where students are assigned parts to play. The available teaching note discusses the approach to teaching this case singly. Please refer to the teaching note ''The Bid for Cable & Wireless HKT Limited Teaching note'' (102-017-8) for a detailed teaching plan for a bilateral/trilateral negotiation exercise. This case serves as a useful vehicle for students to discuss the motives behind a divestiture and the impact of divestiture on a firm''s value and to exercise valuation skills in a merger negotiation. The case was used in the 2002 Concordia MBA Case Competition.

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