LONDON (CNNfn) - Cable & Wireless HKT provided only qualified support on Thursday for the takeover bid from Internet investor Pacific Century CyberWorks (PCCW) as Hong Kong's dominant telephone operator reported a 90 percent slide in full-year 1999 earnings.|
PCCW secured agreement from London-based Cable & Wireless in February to acquire its 54 percent stake in HKT for a combination of cash and shares that valued the target at as much as $38 billion.
However, PCCW's share price has plunged over the past 10 weeks, slicing the offer value to less than HKT's current share price. The setback has raised the prospect of a counterbid, with a combination of Rupert Murdoch's News Corp. and Singapore Telecom viewed as favorites to try to trump PCCW.
HKT's board called on the firm's management to proceed "as soon as possible" with the PCCW merger, but stopped short of a formal endorsement of the deal, reserving its final opinion until May. 20.
HKT shareholders are due to vote on PCCW's offer on Jun. 26.
The slide in HKT's 1999 profit was in line with analysts' forecasts, and reflected one-off charges to replace outdated equipment.
Net profit slid to HK$1.14 billion ($146.3 million) compared to $11.51 billion a year earlier, including the extraordinary loss of HK$7.09 billion.
However, declines in local and international call charges also slashed profit margins, cutting operating earnings by 27 percent to HK$9.54 billion, while revenue dropped 12.6 percent to HK28.31 billion.
HKT shares fell 2.2 percent to close at HK$18.20, while PCCW shares lost 2.9 percent to end at HK$15.15. This values its offer at HK$18.01 per share or $28.01 billion.
Cable & Wireless (CW-) shares were 3 percent lower at 999 pence in midday London trading.