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PCCW shares fall amid speculation

Shares of Hong Kong phone operator PCCW Ltd (電訊盈科) declined as they resumed trade yesterday amid uncertainties and heavy press speculation surrounding rival bids for the company's core assets.

After being suspended three times in the previous four sessions, PCCW was down 1.74 percent at HK$5.65 on resuming trade yesterday. On Thursday, it had surged 10.6 percent to HK$5.75 in just eight minutes of trade before being suspended.

The blue-chip telecom company, controlled by Richard Li (李澤楷), the younger son of Hong Kong tycoon Li Ka-shing (李嘉誠), is in negotiations with Australia's Macquarie Bank Ltd and US private-equity firm TPG-Newbridge over a possible sale of its telecommunications and media assets.

The bids are in the range of US$7 billion, Dow Jones Newswires said quoting unidentified people familiar with the situation.

Investors were sidelined amid a barrage of news reports and the potentially political impact the sale could make, said Peter Lai, director of DBS Vickers Research.

"Investors don't know what's lying ahead. They especially don't understand why Richard Li will want to annoy Beijing," Lai said, referring to objections from state-owned China Netcom (中國網通) -- a 20 percent stakeholder in PCCW -- over changes to PCCW or its key assets.

In a statement yesterday, Newbridge acknowledged China Netcom's concerns, stressing it was prepared to cooperate with shareholders to pursue a deal that's "acceptable to all parties."

PCCW said in a statement yesterday that media reports saying it would make a decision over the bids within 10 days, and those saying the company will pay special dividends to encourage shareholders to support the possible sale, were pure speculation.

"No time limit has been set by the board for its consideration and decision-making of either expression of interest," the statement said.

"No consideration has yet been given by the board as to what might be done with any proceeds of sale," it said.

The company had no intention of disclosing any details of the bids at this stage, it added.

The unusual trading pattern of PCCW shares over the past few days drew concerns from Hong Kong finance chief Henry Tang (唐英年), who requested the regulatory watchdog to probe the matter, the Wen Wei Po and Oriental Daily newspapers reported yesterday.

A spokeswoman at the Securities and Futures Commission, who declined to be named citing policy, said she could not comment on individual cases.

Trading of PCCW and its mobile phone unit SUNDAY Communications Ltd resumed yesterday.

Hong Kong media reported yesterday that a group of private equity investors would join Macquarie and Newbridge in bidding for PCCW's assets.

The group consisted of Ashmore Investment and Spinnaker Capital, both of London, and New York's Clearwater Capital, the South China Morning Post newspaper reported, citing unidentified sources.

Meanwhile, Chinese-language newspaper Ming Pao Daily said Li was hoping to sell some telecom assets and pay-TV NOW Broadband TV and use the cash to buy a stake in Hong Kong broadcaster Television Broadcasts Ltd.

PCCW is best known for developing the Cyberport technology park project in Hong Kong, which drew fire because the Hong Kong government awarded the development rights to PCCW without offering the bid for tender.

Critics have charged that the project has become a real estate venture, with its high-end residential component, Bel-Air, overshadowing the technology office space.
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