Not only is the PCCW auction on, the board
has also set a ten-day deadline for making a decision on it, according to the South
China Morning Post.

The SCMP broke the Macquarie Bank talks
story on Monday and has remained in front, apparently enjoying inspired leaks
from PCCW or at least “a source close to chairman Richard Li Tzar-kai”, as it
puts it this morning.

At least Crikey can claim an “I told you
so” about the overlooked importance of PCCW’s mainland connection. As Marketwatch.com
and others are now reporting, it’s a matter of “not happy, Jan” from China
Netcom:

One of PCCW’s largest stakeholders expressed dissatisfaction with the
takeover talks. State-owned China Netcom, which is
the mainland’s largest fixed-line operator and owns 20% of PCCW, said late
Tuesday it wanted the company to remain intact.

“We do not want to see any changes in PCCW, which is owned and
managed by Hong Kong people, nor any changes in its key assets,” it said.

The statement appeared to hint that Beijing views PCCW as a
strategic national asset and may oppose its sale to a foreign entity.

And it seems we’re not the only ones to
think the HK$40 billion and HK$50 billion figures being tossed around for
PCCW’s Hong Kong telecommunications and media business are the stuff of bubbles
past. Marketwatch.com reports analysts
are sceptical about the value of PCCW stock at current levels. Samuel Chua of KGI Securities said “the
upside is limited”.

The deal only makes sense if China Netcom
is a very willing partner as the blue sky is all on the mainland. One must
think there are too many smart people at MacBank to pay a multiple of 40+
earnings just for the HK business.