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Ben Kwok

May Chan

A spin-off for PCCW's property assets could be approaching with sales about to begin at its Cyberport residential project.

Although no timetable has been set, Hong Kong's dominant telecommunications carrier plans to group its property assets under PCCW Infrastructure, in what the market sees as a restructuring exercise aimed at reducing debt.

'Our overall aim is to create greater transparency for a separate and distinct business division, namely telecoms and real estate,' PCCW Infrastructure chairman Robert Lee Chi-hong said. 'A separate listing has always been a topic for PCCW. But we have no immediate plan.'

Mr Lee said accountants and lawyers were working on a listing plan for PCCW Infrastructure, which mainly has property-related assets.

After four years, two commercial blocks at the US$2 billion Cyberport development at Pokfulam have been completed.

A listing for PCCW's property portfolio will help the company open up a new financing channel and continue to reduce debt.

'Management has mentioned the property spin-off in the past,' said Christopher Fang, CSFB analyst. 'It will help if [the unit] fetches a good price.'

PCCW set up its infrastructure unit after taking over former telephone monopoly Cable & Wireless HKT in August 2000. The unit owns a Beijing commercial complex called Pacific Century Place, and three Hong Kong commercial buildings it converted from switch exchanges.

Analysts said PCCW had more than 60 switch exchanges with redevelopment potential.

PCCW is optimistic it can recoup its investment in Cyberport, despite market concerns the project will drag down the firm's core telecoms earnings amid the depressed property market.

Mr Lee said PCCW was still considering bids from local and foreign investment funds to buy more than 100 residential units, but did not want to sell them cheaply.

'If the market price is satisfactory, we prefer not to sell to investment funds at a special price,' Mr Lee said.

The first phase of the Cyberport residential project is expected to be released for pre-sale after the Lunar New Year.

Property agents have predicted the selling price would be about HK$5,000 per square foot.

MARKET RATIONALE

PCCW Infrastructure says the spin-off would improve transparency by separating its telecoms and real-estate assets

A listing would also help the company to reduce debt Investors would be buying into a unit that owns a commercial complex in Beijing and more than 60 telephone switching exchanges that have potential for redevelopment



PCCW poised to spin off property assets as Cyberport sales begin