PCCW weighing $1B sale of fiber business – reports

Hong Kong telco and media group PCCW is in talks over the possible sale of a stake worth around $1 billion in its fiber network business.

The locally listed company has hired a financial adviser to work on the potential deal, which has drawn interest from Chinese investors and Middle Eastern sovereign wealth funds, Bloomberg reported Friday (paywall applies).

It is the latest sign of continued private equity interest in Hong Kong's fixed-line telco business.

Earlier this year, Miami-based private equity firm I Squared Capital was said to be considering a tilt at local fiber network and ICT player HKBN. Last year KKR, Stonepeak and PAG were all potential suitors for HKBN.

I Squared Capital, which owns HGC, another local fixed-line provider, was also reported to be in talks with Telstra about the possibility of acquiring enterprise unit PCCW Global Solutions two years ago.

PCCW, Hong Kong's largest telecom operator, has carried out several asset sales to raise cash in recent years. These include an investment by Canal+ of up to $300 million in its Viu streaming business, the sale of data centers to Digital Bridge for $750 million, and the $614 million sale of stakes in its ICT units to Lenovo.

Chairman buying PCCW stock 

PCCW's fiber network covers 98% of the Hong Kong population, offering up to 5 Gbit/s in downlink speeds.

Its telecom subsidiary HKT reported 986,000 FTTH customers in the first half, up 2% year-on-year and accounting for 89% of its broadband subs base. It also has 1.43 million pay-TV customers.

HKT reported 2% higher earnings of $245 million Hong Kong dollars (US$31.5 million) and revenue of HK$2.1 billion ($269.4 million), also up 2%, in the first half of the year.

Hong Kong's fixed network market has long been over-supplied, with four rival fiber access networks and an HFC cable network rolling out in the late 1990s and early 2000s to compete with PCCW.

After consolidation, only three players remain, attracting clear interest from private equity firms seeing potential in further rationalization.

PCCW's share price rose 1.78% on Friday and has gained 3.4% in the past week. 

Chairman Richard Li himself has been an active buyer of the stock, purchasing HK$11.5 million ($1.48 million) in shares this week to take his stake from 31.76% to 31.8%.

A spokesperson said the company would not comment on the report.