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One of China's largest telcos is to shell out $1bn (£536m) for a 20 per cent slice of Hong Kong-based telecoms outfit PCCW.

China Network Communications Group Corporation (China Netcom) - which is also the the fixed-line telco for the Beijing Olympic Games in 2008 - said the strategic alliance would enable both companies to develop their businesses both in China and abroad.

As part of the deal PCCW is prepared to spend up to $641m (£344m) to pursue opportunities in China as it gains a way into the country's fast-growing telecoms market. Indeed, the opportunities presented by China were highlighted in a recent report which predicted that the country would become the world's biggest online market within two years.

Said PCCW chairman Richard Li: "The main purpose of this strategic relationship with China Netcom Group... is to create long-term value for our shareholders through actively pursuing new business opportunities."

In the UK, PCCW is known for operating a wireless broadband network. So far it's spent £21m establishing the network in the Thames Valley area serving some 300,000 homes.

The company also plans to splash out a further £21m on expanding its wireless broadband network in the UK later this year. ®

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