Monday, March 21, 2011

Hong Kong - PCCW may spin off telecoms business because of poor performance on stock exchange

[bloomberg] PCCW Ltd. (8), billionaire Richard Li’s flagship listed company, is considering spinning off telecommunications assets after its shares lagged behind other Hong Kong phone operators this year.

PCCW has started talks with regulators in Hong Kong on the possible spinoff, it said in a statement to the city’s stock exchange today. Plans for the possible transaction are at a preliminary stage, it said.

SmarTone Telecommunications Holdings Ltd. and Hutchison Telecommunications Hong Kong Holdings Ltd. (215) have outperformed the city’s benchmark Hang Seng Index this year, while Li’s phone unit has fallen 4.7 percent. Telecommunications generates most of the company’s revenue and earnings.

PCCW spokeswoman Anita Choi couldn’t immediately comment on which of the company’s telecommunications businesses will be included in the proposed business trust.

PCCW shares rose 3.7 percent to HK$3.40 in Hong Kong trading as of 9:34 a.m. The stock has declined 1.7 percent this year.

SmarTone, controlled by Sun Hung Kai Properties Ltd. (16), has surged 79 percent this year, while Hutchison Telecommunications has gained 13 percent

PCCW may list the telecommunications operations as a business trust, the company said. Li Ka-shing, Hong Kong’s richest man and the PCCW chairman’s father, spun off some container-terminal operations from Hutchison Whampoa Ltd. (13) earlier this month. The newly-formed entity, Hutchison Port Holdings Trust, fell 5.9 percent on its first day of trading on March 18.

In October 2008, PCCW scrapped the proposed sale of as much as 45 percent of its HKT Group Holdings Ltd. unit, owner of the company’s main telecommunications and pay-television businesses, citing a lack of attractive offers.

Richard Li’s PCCW May Spin Off Telecommunications Business

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