PCCW to combine telco, media units
HONG KONG (Reuters) - PCCW Ltd (0008.HK), the Hong Kong fixed-line carrier controlled by billionaire Richard Li, plans to fold its media and telecoms businesses into a separate firm and sell 45 percent of the new company to investors, its latest effort to hive off core assets.
Shares of PCCW surged more than 11 percent, ending 9.4 percent higher, on hopes of a separate listing of the assets that have a current market worth of around $3.9 billion.
PCCW and Li, scion of renowned Hong Kong deal-maker Li Ka-shing, have been thwarted in recent years by shareholders and even the Chinese government -- through its control of shareholder China Netcom (0906.HK) -- in efforts to sell itself or its core assets.
On Thursday, PCCW said it will group its main media and telecoms divisions into a new firm called HKT Group Holdings Ltd, and invite proposals from potential investors.
Analysts noted several benefits of the plan, including slashing a crippling tax burden and speeding up the possible listing of its more valuable telecoms assets separately from its Pacific Century Premium Developments (0432.HK) property unit.
"Apparently, they will put everything except properties into the new company," said Kelvin Ho, an analyst at Nomura International. "This is a way to unlock the value of its assets."
The reorganization does not require approval by company shareholders as it is an internal group shift and there is no change of ultimate beneficial ownership of the assets, PCCW said.
The company said it may use proceeds of the possible stake sale for investments in further growth initiatives in telecommunications, media and technology.
It did not identify any potential investors.
Richard Li has long tried to extricate himself from PCCW.
The 41-year-old tycoon is regarded by many observers to be more interested in making deals -- like his father -- than running a utility-like former monopoly.
Ridding himself of PCCW, where he is chairman, would free Li to pursue investments in media, property or private equity -- where his interests are believed to lie.
In 2006, Li bought 50 percent of the Hong Kong Economic Journal newspaper, and sold office space in Tokyo for $1.7 billion in what was then the largest, single-asset real estate deal in Asia.
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