China Merchants Buys 40% of PCCW’s Fiber Unit for $870 Million

Manuel Baigorri, Bloomberg News

(Bloomberg) -- China Merchants Group Ltd. bought a 40% stake in the fiber assets of HKT Trust & HK Ltd., a unit of Hong Kong telecom group PCCW Ltd.

China Merchants’ investment arm will pay about $870 million for the stake in Regional Link Telecom Services Holdings Ltd., PCCW said in a filing Wednesday, confirming a Bloomberg News report in May. Proceeds from the transaction will be used for general corporate purposes, including debt repayment, PCCW said.

The sale “could be interpreted as a cash call” by PCCW for media business development, as there’s no urgency to raise funds, Bloomberg Intelligence analysts Marvin Lo and Chris Muckensturm wrote in a note. HKT may distribute part of the proceeds as special dividends to shareholders, they said.

PCCW, controlled by Hong Kong tycoon Richard Li, has been selling other stakes, including 26.1% of its video streaming service Viu to Canal+ a year ago. The French broadcaster raised its stake this month and has the option to lift it further. PCCW also sold its data center business to DigitalBridge Group Inc.

With roots dating back to 1872, China Merchants has businesses ranging from ports and transport to finance, property and health care. Abu Dhabi Investment Authority had also been considering bidding for a stake in the fiber business, Bloomberg reported last year.

PCCW rose 0.3% Wednesday. Its shares are down 6.7% so far in 2024.

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