China Network Communications Group, which controls the country's second largest fixed line operator, has recently borrowed $800 million (HK$6.24 billion) to finance its $1 billion purchase of a 20 per cent stake in PCCW, Hong Kong's dominant fixed line telecom operator, according to a regulatory filing. China Construction Bank provided a five-year, $150 million loan with an annual interest rate of 90 basis points over Libor while Bank of Communications lent $150 million over three years that cost China Netcom 80 basis points over Libor. Bank of China and the Shanghai branch of the overseas-listed Bank of China (Hong Kong) lent $300 million and $200 million respectively over a five-year period. Both banks were paid 70 basis points over Libor.

The remaining $200 million came from China Netcom's internal resources.

Beijing-based Netcom bought 1.34 billion shares in PCCW for HK$5.9 each. The acquisition will give PCCW entry into the mainland telecom market which it hopes to capitalise on through joint ventures in three areas, including high speed internet services in six southern cities.