Li proposes new sale plan for Hong Kong's PCCW

Hong Kong’s leading operator, PCCW, has announced plans to consolidate its quad play offerings into a new company called HKT Group and offload 45 per cent of the operation.

The move marks tycoon Richard Li’s latest attempt to sell off the company’s assets after a 2006 effort was foiled by shareholders including 20 per cent stakeholder China Netcom.

PCCW has turned out to be a poor investment for Li, and the story of his attempts to dispose of it has been full of twists and turns. During the proposed sale two years ago, it emerged that Li’s father and Asia’s richest man, Li Ka-Shing, was involved in the consortium proposing to buy the carrier, exposing a family rift and preventing Li from voting on the sale.

Under the restructuring announced this week, HKT will consolidate PCCW’s fixed line, broadband, internet, TV and mobile services. The latest twist is that this time only 45 per cent of the new company is up for grabs, rather than 100 per cent.

Cynthia Leung, senior analyst with Ovum reports that PCCW will keep the controlling stake, and as a result has the backing of China Netcom.

Netcom itself is about to undergo major restructuring under a shake up of the Chinese telecoms market announced earlier this week.

“Since 2006, PCCW has been developing its quad-play strategy, bundling of media content and interactive services. Quad-play is part of its successful strategy to reverse fixed line access decline, maintain margins in its core fixed telecoms products and grow its broadband market share. Despite yesterday’s announcement that the spin off is for tax reduction benefits, it is widely speculated that the real intention behind is to facilitate the sale of fixed line assets, which has limited growth, and the possibility of a separate listing of HKT in the future,” said Leung.