In this week's look at Asia business news, a Hong Kong telecom exits the cell phone business and South Korea moves towards privatizing a large state-owned bank.
Hong Kong's debt-ridden Pacific Century Cyberworks will sell its stake in mobile phone provider CSL. The buyer is Telstra, Australia's largest telecom.
Telstra will pay $614 million for PCCW's 40 percent share of the cellular unit, which is profitable and has more than one million subscribers in Hong Kong. Telstra already owns the rest of the company.
The funds will help PCCW pay for its buyout of Cable and Wireless HKT nearly two years ago, for which it took on a $12 billion dollar.
John Stanhope, Telstra's finance director, said "we see the Hong Kong CSL business as quite a strong business and the best mobile operator in Hong Kong. It is a valuable and highly recognized brand and the market leader in Hong Kong and it has superior network coverage. It has the best customer base and is the most profitable operator. It is debt free. It has cash and all those things are pretty good."
Hong Kong and Taiwan have signed a deal to increase the number of direct flights, after more than a year of difficult talks. The Taiwan-Hong Kong air route is the busiest international route in the world, due in part to the fact that there is no direct transport and trade links between China and Taiwan. Hong Kong serves as their main commercial liaison.
Sell-off plans for South Korea's Seoulbank are running on schedule. Korea Exchange Bank and Hana Bank have submitted bids for a controlling stake. Chohung Bank and a Singapore-based private equity firm are also expected to make offers. The government hopes to auction off 50 percent of Seoulbank to raise $800 million.
Two previous attempts to privatize the bank failed. South Korea is in the midst of selling a number of state-owned companies, including utilities and the state tobacco monopoly. The privatization program is a key plank of President Kim Dae-jung's economic reform plan.