Hong Kong-listed communications giant Pacific Century Cyberworks (PCCW) will sack 340 staff in an effort to streamline its Internet services division.

As part of its new Internet services strategy, the company will also be reducing its investment in Internet services over the next three years, despite describing this business unit as "key source of growth".

This year, PCCW will cap its investment at $190 million EBITDA, $10 million less than a previous commitment made by the company. For the two-year period commencing January 2002, the figure will drop to a maximum of $100 million, or $50 million for each year. PCCW says its investment represents less than 10% of the company's historical group annual EBITDA.

"The Internet Services strategy supports our core business objective to maintain margins and grow group EBITDA," says PCCW's chairman and chief executive Richard Li. "Our Internet services strategy is designed to provide a value-added service for broadband, which is a key source of growth for the company."

While Internet services currently comprise only a small component of PCCW's bottom line, the company foresees this division playing a "strategic role in contributing to high margin, broadband subscriber growth in Hong Kong".

PCCW chief financial officer David Prince said one goal of the new Internet services strategy would be to "eliminate redundancies and reduce overheads", through consolidation of related business activities.

The mass sackings follow the expiry of a 12-month moratorium on staff lay-offs. Affected staff members have been put on paid leave until August 20, at which time their employment will be terminated.