PCCW is planning to raise as much as 10bn Hong Kong dollars ($1.3bn; £829m) in a share sale, BBC News reported.
The company said it plans to spin off its telecom unit into a publicly traded business trust. The news comes at a time when financial uncertainty has seen many firms delaying or cancelling their listing in Hong Kong. The major chunk of the money raised will be utilized to pay off the firm’s debts.
“The directors believe that the separate listing will allow the telecommunications business to create a more defined business focus and efficient resource allocation,” the company said. However, the listing of trust will go ahead only if its market capitalization surged above HK$28.6 bn.
PCCW said, given the importance of the business unit, its separation from other businesses should translate into a higher market value.
“A separate listing will unlock value for the shareholders and better identify and establish the fair value of the telecommunications business,” the Hong Kong communications company said. Besides Christopher Wong of Aberdeen Asset Management said, “Telecom assets are more stable in terms of their cash flows, predictability and profitability.”
Mr Wong is of the view that telecommunication has become an indispensable part of everyone’s life and was one of the fastest growing sectors, making it an attractive investment option.
While PCCW is optimistic of increasing the market value of its business and raise fresh capital, other companies are being cautious. Some of China’s biggest firms have pulled back or delayed their plans for listing on the Hong Kong stock exchange.
XCMG Construction Machinery Co, China’s biggest crane maker has decided to not go ahead with its proposed $1.1 billion listing after some of the underwriters pulled out.
Last week, construction machinery maker Sany Heavy Industry Co, delayed the launch of the retail portion of its $3.3 billion offering and also pushed back the listing date.
Xiao Nan Guo Restaurants Holding Ltd has also scrapped a $75 m initial public offering. “The investors are trying to de-risk. As a result the companies are not going to get the valuations that they were looking for,” said, Mr Wong of Aberdeen Asset Management said.
PCCW is the holding company of HKT Group Holdings Ltd, Hong Kong’s telecommunications provider in the information and communications technologies industry. The company maintains presence in Europe, the Middle East, Africa, the Americas, mainland China and other parts of Asia.
