Unfazed by recent market volatility, PCCW is moving forward with its plan to spin off its telecommunications operations as a business trust in the fourth quarter. PCCW group managing director Alex Arena said yesterday that the company was going through the process of preparing the relevant documentation after receiving approval from the stock exchange last June for the proposed business trust, which would be the first public listing of its kind in Hong Kong. 'It's quite an extensive process, but we are on track,' Arena said. A business trust combines elements of a company with elements of a unit trust. It does not have a separate legal identity and is controlled by a so-called trustee manager, typically an affiliate of the company establishing the trust. Investors also hold units rather than shares, and their liability is limited to the amount they paid for those units. The required documentation from PCCW included the shareholder circular about the transformation of the company that shareholders are supposed to vote on, and the draft prospectus for the issue of new shares. The telecommunications and media giant, controlled by chairman Richard Li Tzar-kai, intended to dispose of only a minority stake in the business trust through the listing process, with an eye on retaining a 55 per cent interest. It is a novel concept in Hong Kong, but this form of initial public offering is already supported in Singapore. The company believes that a separate listing of the telecommunications business will unlock value for shareholders. At PCCW's annual general meeting in June, Li said the company could pay a much higher dividend as a business trust than as a traditional listed firm. Arena said it was 'far too premature to take any view about shelving' the plan because of recent market volatility. He pointed out that the company aimed 'to have everything ready and, capital markets willing, to complete the listing in the fourth quarter'. The proposed spin-off is supported by China Unicom, which holds a stake of about 18 per cent in PCCW. Arena said the plan received what he described as 'a very encouraging' response from minority shareholders at PCCW's annual general meeting last June. PCCW aims to do a global roadshow after the business trust listing secures its final go-ahead from the Securities and Futures Commission and shareholders. Arena said the listing had generated 'a lot of interest' in Hong Kong and 'from investors all around the world'. PCCW yesterday reported an 8 per cent increase in its consolidated first-half net profit to HK$824 million, from HK$765 million a year earlier, on strong gains across its four core business segments - fixed-line, broadband, mobile, and pay-television services. Core revenue grew 2 per cent to HK$10.936 billion from HK$10.732 billion. Despite a low contribution from PCCW's majority-owned property arm, Pacific Century Premium Developments, the group's consolidated revenue rose 3 per cent year on year to HK$12.186 billion. Arena said PCCW's application for a free-to-air television operation was 'being favourably considered'. The government, which is considering three applications, is expected to decide by the end of this year, he said. Shares of PCCW were up 2.33 per cent to close at HK$3.07 yesterday.