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PCCW, Legend Co-Brand Net-Enabled PCs in China

Pacific Century CyberWorks Ltd (PCCW) and China-based PC manufacturer Legend Holdings Ltd formed a strategic alliance Thursday to develop co-branded Internet-enabled PCs.

The units will be called Legend-NOW, and will assist in delivering broadband interactive Internet service in China.

Legend is the largest PC manufacturer and distributor in China with a market share of 27.3 percent in Q4 1999, according to industry research company International Data Corp. Majority-owned by the Chinese Academy of Science, Legend has 2,000 distributors across 33 provinces in China.

Terms of the agreement were not disclosed at press time.

Under the agreement, Legend will design and manufacture PCs with a built-in cable modem allowing broadband connectivity to the Internet with one-touch access to PCCW's NOW portal - "Network of the World" - an interactive digital video and Web access service.

According to company officials, the service will be launched in Asia in June this year.

Richard Li, chairman and chief executive of Pacific Century Group, the parent company of PCCW, said that 80 percent of the NOW content originates from the UK.

Li added that the NOW staff will expand from the current 300 to 700 within 45 days, and that Legend will be an exclusive partner for PCCW's China operations for both the NOW content and a broadband Internet service tailored for Chinese users.

The existing narrowband service of Legend (based on Conet: a first-generation Internet-enabled PC with one-touch connection to a Legend-operated portal) will still be non-exclusive.

Legend will provide its narrowband service users a link to the NOW portal with upgrade options to use the broadband service.

Industry analysts said that the recent merger between PCCW and Cable & Wireless HKT Ltd (HKT) announced Tuesday will help PCCW to deliver its broadband service in Asia through HKT's fixed, wireless and satellite network. HKT has 800,000 ADSL users and 1 million mobile phone users in Hong Kong.

The Financial Times newspaper interviewed Rupert Murdoch after PCCW won the HKT bid. Murdoch was reportedly concerned that the US$1 billion injection of his News Corp company (in an unsuccessful attempt to assist SingTel's rival bid for HKT) might affect cooperation between Star TV and HKT on broadband interactive TV projects.

Star TV was formerly owned by Pacific Century Group and was sold to News Corp in 1993.

In response to the report, Li said that the merger bid would not affect future cooperation opportunities between HKT and News Corp. He added that every business decision would be based on the interest of the shareholders.