Global Insight Perspective | |
Significance | PCCW is in the process of selling a 45% stake in a new holding company of its telecoms and media businesses. |
Implications | Richard Li, PCCW chairman, is keen to cash-in from a stake sale. |
Outlook | TPG and Providence are the frontrunners for the bids. |
PCCW, Hong Kong's dominant fixed-line operator, is seeking around US$2.5 billion for its sale of a 45% stake in its telecoms and media assets, Dow Jones reports, citing people familiar with the deal. The sources said U.S. private-equity firms TPG and Providence Equity Partners are the frontrunners for HKT Group Holdings Limited, the unit being sold by PCCW. Other private-equity firms which have expressed interest in the assets include Australia's Macquarie Bank, which along with TPG had sought to buy PCCW's main telecoms assets in 2006. Kohlberg Kravis Roberts & Co, Blackstone Group and sovereign wealth fund China Investment Corp, were also considering a bid. But China Netcom, which holds a nearly 20% stake in PCCW, was not planning on a bid, the paper said. The deadline for the bids is today.
Outlook and Implications
- Business Reorganisation: PCCW announced in late May that it would consolidate its telecoms, media, and IT solutions businesses under a newly incorporated holding company, HKT Group Holdings Limited. The company also invited proposals from potential investors for the acquisition of up to a 45% equity interest in the new holding company. The reorganisation was aimed at improving the operational efficiency of the group and consolidating all components of its "quadruple-play" offering, comprising fixed-line, broadband, pay TV and mobile, in a transparent corporate structure which would facilitate a future listing.
- Previous Sale Attempts: The move was also another push by Chairman Richard Li, the son of Hong Kong billionaire Li Ka-shing, to cash in from a stake sale in PCCW, following several failed attempts in the past. In 2006, competing bids from Australia's Macquarie Bank and TPG for PCCW's core assets fell apart after China Netcom expressed opposition to their offers, amid Beijing's concerns that Hong Kong's main fixed-line carrier would fall into foreign hands. Later in the same year, Li's effort to sell a 22.7% holding in PCCW to a consortium, involving Spain's Telefónica and two foundations run by Li Ka-shing, also fell through when minority shareholders rejected the US$1.18-billion deal (see Hong Kong: 30 November 2006: PCCW Stake Sale Rejected by PCRD Minority Shareholders).