PCCW sees future gains after telecoms arm offer

PUBLISHED : Tuesday, 27 September, 2011, 12:00am
UPDATED : Tuesday, 27 September, 2011, 12:00am


A successful listing of Hong Kong's first business trust could enable telecommunications giant PCCW to unlock more value from its other businesses in future.

PCCW on Sunday estimated proceeds of more than HK$10 billion from the proposed spin-off of its telecommunications operations as a business trust in the fourth quarter.

In a filing with the Hong Kong stock exchange, PCCW said the separate listing of its telecommunications arm would 'increase the visibility' of its remaining businesses and 'further crystallise the value of those higher growth businesses by aligning them with the appropriate type of investors'.

Ben Kwong Man-bun, .the chief operating officer at brokerage firm KGI Asia, said: 'Over time, PCCW may have the potential to move for a separate listing of its media and IT services units. That will make its corporate structure more clear-cut so investors can determine what kind of businesses they like the valuation of.'

PCCW's media business includes its Now TV pay-television operations, online content and video-streaming services, and the web-based Yellow Pages service. The company also expects to soon add a free-to-air television operation.

Its PCCW Solutions Group is a premier information-technology and business process outsourcing services provider, with large projects on the mainland.

Lisa Soh, an analyst at Macquarie Securities, said the media and solutions businesses would have revenue of HK$2.3 billion after the telecommunications operations are spun off.

PCCW's revenue from its so-called core businesses, which include telecommunications, media and solutions services, reached HK$10.94 billion in the first half this year. The company also has a venture portfolio, interest in wireless equipment supplier UK Broadband, and a 61.53 per cent stake in property developer Pacific Century Premium Developments.

Kwong said the separate listing of PCCW's other key businesses 'will take time because the company must first show these are valuable, revenue-generating operations', following its precedent-setting business trust offering in Hong Kong.

A business trust, which allows investors to receive dividends from operating cash flow, is new to the city, but it is a method of initial public offering already used in Singapore.

PCCW plans to offer 36.7 per cent in HKT Trust, the proposed business trust entity, and serve as its trustee-manager. It is expected to have a minimum market capitalisation of HK$28.6 billion. An additional HK$1.6 billion will be raised if the over-allotment option is exercised.

A shareholders meeting on the planned business trust offering is planned for October 12. Shares of PCCW fell 5.81 per cent to close at HK$3.08 yesterday.


Total core revenue, in HK dollars, recorded by PCCW last year

- Now TV had 1.04 million subscribers at the end of last year