RealTime IT News

Telstra, PCCW Finalize Alliance

[SYDNEY, AUSTRALIA]Telstra has completed its alliance with Hong Kong's Pacific Century CyberWorks (PCCW), after almost a year of negotiations and amendments to the deal.

As was proposed last April and outlined last October (and as was reported on australia.internet.com - see story), Telstra and PCCW will establish three joint ventures as part of their relationship. These JVs are the IP backbone company Reach, which will merge international infrastructure assets and businesses of the partners; the Regional Wireless Company (RWC), which will operate in Asia Pacific starting with Hong Kong mobiles business CSL; and the Internet Data Centre Company, an Asia Pacific-wide data centre business that will combine the two partners' expertise.

Reach is a 50/50 joint venture between the partners that will operate independently of its parent companies. RWC's principle asset is CSL, 60 per cent of which Telstra acquired from PCCW as part of the deal for around $3.05 billion. PCCW retains the other 40 per cent of CSL.

The Internet Data Centre Company is a greenfields venture that is intended to draw on partners' strengths, as it rolls out its data centre business model across the region. The venture will leverage the links between its own operations and the carrier hotel operations of Reach to build its business.

The Telstra-PCCW JVs begin operations Friday, following the completion of arrangements to contribute assets to the new companies.

Telstra CEO Dr Ziggy Switkowski sees the alliance and the joint ventures as providing clear growth options for the telco through the Asia Pacific region.

"These businesses offer enormous potential by giving Telstra greater access to the growth markets of Asia and across the Pacific," said Switkowski, maintaining that Reach alone will tap into growing overseas markets and contribute to Australia's export earnings.

Telstra and PCCW will each appoint three directors to the boards of each joint venture, each of which will have two-year terms in their positions.