Cable & Wireless's hopes of replenishing its bank account with the proceeds of the sale of its Hong Kong subsidiary to the internet startup, Pacific Century CyberWorks, were dashed yesterday.

Cable & Wireless has been left with a 20.2% stake in entrepreneur Richard Li's PCCW and only £4.3bn in cash from the sale of its 54% stake in Cable & Wireless HKT.

Graham Wallace, chief executive of Cable & Wireless, said earlier this year he had hoped for a minimum of £5bn cash from the deal as the proceeds had been earmarked to help fund the firm's global roll-out of its data network, web hosting centres and investments in internet service providers.

The cash amount that Cable & Wireless extracted from the deal was based on the offer's structure. PCCW made an all-stock offer of 1.1 PCCW shares for each Cable &Wireless Hong Kong share.

An alternative combined offer of 71.16 cents (47p) of a PCCW share and 92.9 cents cash for each Cable & Wireless HKT share was also put down.

If the 46% minority owners among Cable & Wireless HKT shareholders accepted the all-share offer, Cable & Wireless would have been left with an 11.2% shareholding in PCCW and about £7.1bn in cash.

The maximum Cable & Wireless could end up with under the deal was a 20.9% stake and cash of £3.8bn.

When PCCW made its bid for Cable & Wireless HKT in March, when its stock was riding the euphoria surrounding internet stocks.

Since then, PCCW's shares have tumbled as investors have become sceptical of the earnings and revenue potential of web-based companies.

This meant most of the minority shareholders in Cable & Wireless HKT opted for the cash and share alternative offer by PCCW.

"Given we're not in a bull market, the small shareholders may as well take the cash," said Phil Campbell, analyst at Schroder Salomon Smith Barney. "That's why we assumed the worst case, that Cable & Wireless would get less cash."

Cable & Wireless has already stated its intentions to sell off blocks of its 20.2% shareholding in PCCW. It may be some time before internet stocks return to favour, allowing Cable & Wireless to exit its investment.

Mr Wallace yesterday maintained that Cable & Wireless was happy with the outcome.

"We are extremely pleased with the value that has been realised for our shareholders through this merger," he said.

In 18 months Cable &Wireless has spent £650m transforming itself from a traditional telecoms operator that derived most of its revenue from voice traffic to an organisation that is increasing its investment in data and internet protocol services. Internet protocol is the language that allows computers to share resources across a network.