Shares in Hong Kong Telecom leapt by 6.4 per cent on Tuesday on fresh rumours that Cable & Wireless is to sell its stake in the company to mainland Chinese telecomms utilities.
Chinese officials were original rumoured to have urged Cable & Wireless to give up 20 per cent of its 59 per cent stake in Hong Kong Telecom in return for access to the burgeoning mainland market. However, the stakes have now been raised and China wants to take complete control, allowing Hong Kong Telecom to operate in a market closed to foreign operators. Analysts believe a deal could be announced as early as tomorrow, when Hong Kong Telecom posts its results.
The shares could go to China?s Ministry of Posts and Telecommunications or might be split with Hutchison Whampoa - co-owner of mobile phone operator Orange - or to Citic, a Beijing-controlled investment group, which already has a 12.27 per cent share in Hong Kong Telecom.
One analyst commented on the Hong Kong company's share trading activity: ?This kind of rally has little to do with Hong Kong Telecom?s operations and a lot to do with its possible connections in China in the future.?
The speculation was fuelled by Hong Kong Telecom?s announcement last week that it will work with the Beijing Telecomms Administration to jointly offer an international frame relay service between Beijing and Hong Kong. Hong Kong Telecom is the first company to offer a frame relay service for high speed data applications between the two locations.
Hong Kong Telecom shares rose by 85 HKcents to HK$14.10 on Tuesday.
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