Eyes on the Prize

The bidding war that erupted two weeks ago for PCCW, Hong Kong's largest telecommunications company, might strike some as bizarre. After all, fixed-line phone operators are plagued by low growth, ferocious competition and disruptive Internet technologies, making them hard to love—and PCCW is no exception. In the past six years, its stock price has crashed by 65%; last year, PCCW's consolidated revenue for its telecom operations crawled up by a paltry 1%. But if there's one positive thing to be said for such businesses, it's that they're dependable generators of cash. "Fixed-line companies are effectively like utilities," says John Heagerty, a...

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