Cable & Wireless Plc continues to stall over the future of its 59% subsidiary Hong Kong Telecom Ltd, despite endless speculation from the analytical community and in the media that C&W will be reducing its holding. The company maintains that it cannot be forced to sell any of its stake to the Chinese authorities, following last weeks acquisition by the little known China Everbright Holdings Co of a 7.7% stake in what China regards as a strategic industry. China Everbright is the investment arm of the Chinese State Council and according to the Wall Street Journal, it has assets in excess of $10bn. After C&W’s majority holding, China now controls the second biggest stake. Analysis of C&W’s year end results, announced on Wednesday, shows that Honk Kong Telecom contributed approximately 44% of group revenues together with 65% of operating profits. The UK-based telecommunications giant has announced group net profits for the year to March 31 up 11.5% at 677m pounds on revenue up 9.7% to 6.05bn pounds. C&W Finance Director Robert Lerwill told Dow Jones the company is still having talks regarding the future of its stake in Hong Kong Telecom and he refused to rule out changes in the share ownership before Hong Kong’s transfer to Chinese rule on July 1. He reiterated that C&W has no need or obligation to change its shareholding in Hong Kong Telecom. Nevertheless, speculation continues that a deal will be done in return for allowing C&W access to the lucrative telecommunications markets opening up in mainland China. The directors have recommended a final dividend of 7.7 pence per share, bringing the total for the year to 11.1 pence.
