agenda i. pccw overview ii. transition iii. pccw-hkt analysis iv. conclusion
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AgendaAgenda
I. PCCW OverviewI. PCCW Overview
II. TransitionII. Transition
III. PCCW-HKT AnalysisIII. PCCW-HKT Analysis
IV. ConclusionIV. Conclusion
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PCCW OverviewPCCW Overview
PCCWPCCW CyberportCyberport
Cyberworks VenturesCyberworks Ventures
Pacific ConvergencePacific ConvergenceCorporationCorporation
I. PCCW OverviewI. PCCW Overview
II. TransitionII. Transition
III. PCCW-HKT AnalysisIII. PCCW-HKT Analysis
IV. ConclusionIV. Conclusion
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PCCW OverviewPCCW Overview
Pacific Convergence CorporationPacific Convergence Corporation
• Broadband access provider
• Broadband content provider via NOW (Network of the World)
I. PCCW OverviewI. PCCW Overview
II. TransitionII. Transition
III. PCCW-HKT AnalysisIII. PCCW-HKT Analysis
IV. ConclusionIV. Conclusion
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PCCW OverviewPCCW Overview
CyberportCyberport
• Real estate venture contracted by the HK government
• Information, Multimedia, and Telecommunications hub
I. PCCW OverviewI. PCCW Overview
II. TransitionII. Transition
III. PCCW-HKT AnalysisIII. PCCW-HKT Analysis
IV. ConclusionIV. Conclusion
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PCCW OverviewPCCW Overview
Cyberworks VenturesCyberworks Ventures
• Internet venture capital firm / incubator
• Over 100 companies in their portfolio worth approximately US$1 billion
I. PCCW OverviewI. PCCW Overview
II. TransitionII. Transition
III. PCCW-HKT AnalysisIII. PCCW-HKT Analysis
IV. ConclusionIV. Conclusion
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PCCW OverviewPCCW Overview
Core Business (Pre-HKT Merger)Core Business (Pre-HKT Merger)
• Strategy of core business: Build a diverse portfolio of Internet companies with strong technological capabilities, thus positioning PCCW as the gateway for Internet businesses entering Asia
• Focus on Cyberworks Ventures arm
• NOW channel is under development
I. PCCW OverviewI. PCCW Overview
II. TransitionII. Transition
III. PCCW-HKT AnalysisIII. PCCW-HKT Analysis
IV. ConclusionIV. Conclusion
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TransitionTransition
Shift in FocusShift in Focus
InternetInvestments Broadband
I. PCCW OverviewI. PCCW Overview
II. TransitionII. Transition
III. PCCW-HKT AnalysisIII. PCCW-HKT Analysis
IV. ConclusionIV. Conclusion
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TransitionTransition
Factors Leading to Shift in FocusFactors Leading to Shift in Focus
• Internet stock prices plummeting
• IPO market drying up
• Broadband use increasing
• Wave of content-access mergers
(AOL-Time Warner, Excite @Home)
I. PCCW OverviewI. PCCW Overview
II. TransitionII. Transition
III. PCCW-HKT AnalysisIII. PCCW-HKT Analysis
IV. ConclusionIV. Conclusion
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TransitionTransition
The MergerThe Merger
• Feb. 2000 – PCCW makes bid on HKT
• Aug. 2000 – PCCW acquires HKT for US$38 billion
I. PCCW OverviewI. PCCW Overview
II. TransitionII. Transition
III. PCCW-HKT AnalysisIII. PCCW-HKT Analysis
IV. ConclusionIV. Conclusion
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TransitionTransition
Strategy Behind PCCW-HKT MergerStrategy Behind PCCW-HKT Merger
• Shift in focus presents need for broadband infrastructure and expertise
• Pressure to generate a stable source of revenue because of NOW’s growing pains
• Strategic intentions or Impulse buy?
I. PCCW OverviewI. PCCW Overview
II. TransitionII. Transition
III. PCCW-HKT AnalysisIII. PCCW-HKT Analysis
IV. ConclusionIV. Conclusion
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PCCW-HKT AnalysisPCCW-HKT Analysis
Core Business (Post-HKT Merger)Core Business (Post-HKT Merger)
• Strategy of core business: To become the world’s largest provider of broadband Internet content via NOW and high-speed Internet access
• Focus on Pacific Convergence Corporation arm
• Signs of progress– NOW channel launches in Hong Kong– Deal signed with Indian ISP, Data Access
I. PCCW OverviewI. PCCW Overview
II. TransitionII. Transition
III. PCCW-HKT AnalysisIII. PCCW-HKT Analysis
IV. ConclusionIV. Conclusion
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PCCW-HKT AnalysisPCCW-HKT Analysis
Key Success FactorsKey Success Factors
• License or create compelling content for target market
• Build strong partnerships with:– Cable TV operators
– Telephony operators
• Complementary resources needed, such as distribution, marketing, and complementary technologies.
I. PCCW OverviewI. PCCW Overview
II. TransitionII. Transition
III. PCCW-HKT AnalysisIII. PCCW-HKT Analysis
IV. ConclusionIV. Conclusion
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PCCW-HKT AnalysisPCCW-HKT Analysis
Competitive AdvantagesCompetitive Advantages
• Li family influence
• Largest telecommunications infrastructure in Hong Kong
• Broadband network that reaches 70% of Hong Kong households
• Human Resources– Expertise in broadband access
– Seasoned management team
I. PCCW OverviewI. PCCW Overview
II. TransitionII. Transition
III. PCCW-HKT AnalysisIII. PCCW-HKT Analysis
IV. ConclusionIV. Conclusion
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PCCW-HKT AnalysisPCCW-HKT Analysis
ChallengesChallenges
• Direct competition
• NOW = No One Watching
– Weak content library
– Programs are currently in English only
• Broadband in Asia has yet to be widely adopted
I. PCCW OverviewI. PCCW Overview
II. TransitionII. Transition
III. PCCW-HKT AnalysisIII. PCCW-HKT Analysis
IV. ConclusionIV. Conclusion
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PCCW-HKT AnalysisPCCW-HKT Analysis
More ChallengesMore Challenges
• Financial hardships– Dead money in Cyberworks Ventures
portfolio
– Debt from acquiring HKT
• Investors skepticism
• Faltering reputation
• Deregulation of telecommunications industry in Hong Kong
I. PCCW OverviewI. PCCW Overview
II. TransitionII. Transition
III. PCCW-HKT AnalysisIII. PCCW-HKT Analysis
IV. ConclusionIV. Conclusion
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PCCW-HKT AnalysisPCCW-HKT Analysis
RecommendationsRecommendations
• Focus on content – Continue acquiring compelling content
– Develop the current eight “web channels”
– Regionalize content, making it difficult to imitate
• Continue seeking partnerships with connectivity operators in Asia
I. PCCW OverviewI. PCCW Overview
II. TransitionII. Transition
III. PCCW-HKT AnalysisIII. PCCW-HKT Analysis
IV. ConclusionIV. Conclusion
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PCCW-HKT AnalysisPCCW-HKT Analysis
More RecommendationsMore Recommendations
• Sell off unnecessary assets to:– Refocus and strengthen core business
– Pay off debt
• Increase transparency of company’s business model
• Identify and exploit potential synergies between all aspects of PCCW
I. PCCW OverviewI. PCCW Overview
II. TransitionII. Transition
III. PCCW-HKT AnalysisIII. PCCW-HKT Analysis
IV. ConclusionIV. Conclusion
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ConclusionConclusion
• Logical shift in PCCW’s business focus
• Current competitive advantages are outweighed by the number and severity of challenges
• Public had little faith at start of Richard Li’s Star TV, which is now a satellite broadcasting powerhouse.
I. PCCW OverviewI. PCCW Overview
II. TransitionII. Transition
III. PCCW-HKT AnalysisIII. PCCW-HKT Analysis
IV. ConclusionIV. Conclusion
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