Reach hurts PCCW earnings
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Li's PCCW took over the old Cable & Wireless HKT in 2000.
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HONG KONG, China (CNN) -- Shares in Hong Kong's largest telco PCCW are 2.7 percent lower Friday after the company's interim net profit was lower than expected at HK$703 million ($90 million) on losses at its Reach joint venture.
That compared with a loss of HK$448 million ($57.4 million) a year earlier.
Revenue rose 5 percent to HK$10.73 billion ($1.375 billion) for the six months to June 30, while net debt was $3.89 billion, compared with $4.22 billion at the end of 2002.
PCCW blamed losses at Reach, the pan-Asia undersea cable venture it shares 50-50 with Australia's Telstra. It also lost market share in the Hong Kong fixed-line market.
PCCW and Telstra were forced to write down the carrying value of Reach earlier this year after a demand downturn and massive over-capacity swamped the market.
In April the partners agreed to buy more capacity from Reach under renegotiated terms with bankers.
PCCW chief financial officer Alex Arena said conditions for Reach continued to be difficult.
PCCW is controlled by junior tycoon Richard Li, son of Hong Kong billionaire Li Ka-shing.
In an audacious takeover move, Li's PCCW paid $28.5 billion in early 2000 to buy the former monopoly fixed-line operator Cable & Wireless HKT. But its share of fixed line traffic has continued to decline and now stands at 77 percent.
PCCW shares are down 2.7 percent to HK$4.47 late on Friday.
