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PCCW shares decline after Netcom deal

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PCCW's share price was 0.53 per cent lower at $4.675 in early afternoon trade on Friday after Hong Kong's leading fixed-line telecommunications firm sold a 20 per cent stake to China Network Communications Group.

PCCW opened the morning session higher and remained in positive territory until just before the lunch break, when it was unchanged from the Wednesday close. The stock had ended at $4.70 on Wednesday and the share was suspended on Thursday for the announcement.

China Netcom will pay $7.9 billion for a 20 per cent stake in PCCW, marking the biggest investment since 1997 by a mainland company in a Hong Kong firm.

The deal paves the way for PCCW to invest in mainland telecoms ventures with the mainland's second-largest fixed-line carrier, although no firm plan has been reached apart from the promise to investigate future deals.

'The significance of this deal is that it sets a precedent. We're the first company with significant telecom business anywhere in the world to have a Chinese incumbent carrier taking a 20 per cent stake,' said Alex Arena, PCCW group chief financial officer.

Neither China Netcom executives nor PCCW chairman Richard Li Tzar-kai appeared at Thursday's announcement, but Mr Li later told the South China Morning Post: 'This is not the end game, it is the beginning of the game.'

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