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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
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
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
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
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
Key Success Factors
Advantages of broadband over traditional Internet services
Pros and Cons of this acquisition
ConclusionConclusion