Tags:Sunday | 3G

PCCW intends to acquire the mobile service assets of SUNDAY Communication Ltd. (SUNDAY) while Huawei, SUNDAY''s second largest shareholder will most likely support it, a source close to the situation told Interfax.

"PCCW intends to acquire SUNDAY''s mobile service assets so that PCCW can be in charge of all SUNDAY''s operations," the source said. PCCW currently holds an 80% stake in SUNDAY while Huawei owns approximately 10%. The other minority shareholders own the remaining 10%.

SUNDAY suspended its stock trading at the Stock Exchange of Hong Kong (HKEx) Tuesday.

As SUNDAY''s largest shareholder, PCCW controls SUNDAY management and makes the strategic decisions for the company. However, SUNDAY provides the mobile services under the ''SUNDAY'' brand. The mobile market belongs to SUNDAY. Therefore, to resolve the awkward situation, PCCW has long wanted to make SUNDAY its wholly owned company.

"In December 2005, PCCW wanted to acquire the entire stake in SUNDAY. However, the acquisition did not happen because some minority shareholders did not support it for some reason," the source said.

According to Hong Kong newspaper Sing Tao Daily, to make SUNDAY a private company if its own, PCCW needed 90% voting support from the minority shareholders. However, 17% were against the acquisition last year.

PCCW is not allowed to propose again for the acquisition of stake within one year. The company therefore intends to acquire the assets of SUNDAY and gradually make SUNDAY a private company.

Sing Tao Daily said that PCCW only needs 75% minority shareholder voting support for the acquisition of assets, which is much easier than that of stake.

"Huawei supplies all the 3G mobile handsets for PCCW. The two companies have a very good relationship, and Huawei is most likely to vote for the acquisition," the source said.

"The transaction amount will be approximately HKD 2 bln (USD 256.7 mln). PCCW claims that there will be no restructuring of SUNDAY and no layoffs," the source said.

SUNDAY operates PCCW''s 2G and 3G services. The company will be left with a large amount of cash and no core business after the acquisition.

Huawei''s official could not be reached for comment.

Hans Leung, PR official of PCCW refused to comment when contacted by Interfax.

"An announcement about the matter will be posted through the Stock Exchange Hong Kong later today," Leung said.

SUNDAY''s stocks closed at HKD 0.53 (USD 0.068) per share on Tuesday at HKEx.


(source: interfax)