Reuters-News on PCCW-Gefahr für PCCW????

                   at US$35.9 billion or an alternative -- for braver investors -- of an all-stock offer
                   valued at HK$38.1 billion.

                   The deal, said to be Asia's largest-ever corporate merger, will turn PCCW into a
                   vertically integrated communications giant with a sophisticated fibre-optic network
                   covering 80 percent of Hong Kong and a growing portfolio of Internet content to fill
                   it.

                   PCCW will also gain 3.3 million paying fixed line customers, 1 million mobile
                   customers and nearly 500,000 Internet subscribers.

                   C&W HKT's revenues were HK$32.41 billion in its last fiscal year, versus
                   PCCW's HK$283.6 million, most of which came from property and businesses it
                   inherited from Tricom Holdings.

                   The broadband Internet service that PCCW's Pacific Convergence Corp unit is
                   developing, to be beamed from satellites to cable television networks throughout
                   Asia, is months away from commercial launch.

                   "Really, at this point, PCCW is just a concept. When they merge with HKT, they
                   will get some real assets -- fixed-line, mobile and a broadband network," said Kim
                   Eng Securities telecom analyst Alfred Li.

                   FASTER ROLLOUT

                   PCCW said in a statement that the deal will allow a faster roll-out of its Internet
                   content offerings to C&W HKT's broadband-ready subscriber base.

                   "HKT provides immediate customers for our talent, services, additional distribution
                   platforms and will accelerate PCCW's roll-out throughout Asia," group chairman
                   and founder Richard Li said in a statement.

                   Before launching his quest to merge with Hong Kong's biggest telecom provider, Li
                   had built PCCW into one of Asia's biggest Internet plays largely by using the
                   company's soaring stock price to invest in other Internet startups.

                   Its venture capital arm, CyberWorks Ventures, has invested about US$550 million
                   in Asian and Western companies that provide content and web applications, ranging
                   from Chinese Internet portal Sina.com to U.S. venture fund CMGI Inc .

                   Analysts said it was mainly C&W HKT's local digital subscriber line network -- one
                   of the few in the world that can deliver full video on demand -- that attracted
                   PCCW, which can use it as a laboratory to develop its services.

                   One analyst, who declined to be named, said one of the group's main goals was to
                   develop Mandarin and Hindi content for the world's largest developing markets --
                   China and India.

                   "It gives Richard Li the backbone, the platform from which to build," said Matthew
                   McGarvey, an Internet analyst with International Data Corp in Hong Kong.

                   "Bandwidth in Asia-Pacific is a very hot commodity."

                   Another jewel was C&W HKT's joint venture with News Corp's Star TV, which is
                   developing a new digital pay television service that will be distributed over the Hong
                   Kong network.

                   Li, who founded Star TV and sold it to News Corp in 1995, aimed to compete
                   with his former company by creating a new satellite television channel, Network of
                   the World, which would be broadcast with embedded links to his Internet service.

                   News Corp withdrew US$1 billion in investment backing from SingTel after
                   PCCW's offer emerged victorious.

                   ASSET SALES SEEN

                   But the merged PCCW-HKT must still deal with the competitive pressures of Hong
                   Kong's fast deregulating telecoms market. C&W HKT said it expects another year
                   of earnings decline before a rebound in the fiscal year ending in March 2002.

                   To cope with this and reduce debt, Li may opt to sell some of HKT's other assets,
                   particularly its mobile unit, which lost significant market share.

                   A likely buyer is Hutchison Whampoa Ltd , controlled by Li's father, tycoon Li
                   Ka-shing, which used aggressive price promotions to take the leading mobile
                   market position away from C&W HKT last year.

                   SHARE SALE OVERHANG

                   Another concern is the overhang created by a stake of up to 21 percent held by
                   Cable & Wireless Plc . Cable and Wireless said it planned to sell four percent of
                   PCCW shares as soon as possible, but would hold the remainder for six months,
                   selling no more than 50 percent in the following six months.

                   "I would expect there would be some short term selling pressure on PCCW
                   shares," said Kim Eng's Li, who is no relation to Richard. "If I were China
                   Telecom, I wouldn't want to hold PCCW shares."

                   State-controlled China Telecom, which will hold up to 5 percent of the merged
                   company, on Tuesday applied to operate its own international traffic gateway to
                   Hong Kong a move that would put it in direct competition with PCCW-HKT.