PCCW is likely to remain the major shareholder of HKT, with its stake reducing from 63.07% to 51.97% after the placement, and will use the $1.1 billion which it raises to grow its core parent operations, IT Solutions and Media, strategic investments and debt repayment.
The news comes after an announce-ment that PCCW plans to dispose of its UK wireless internet provider Relish to Three UK for $300 million.
The sale of the HKT stake, through its wholly owned subsidiary CAS Holding, is via a secondary placement at HK$10.15 per share stapled unit.
This consideration would be $1.1 billion based on the deal price. Equity research at Goldman Sachs, which launched the trade as sole bookrunner, said: “We remain Buy on HKT, given improving mobile and broadband fundamentals, and also its robust dividend growth outlook.”
It represents the region’s biggest overnight bookbuild in 2017 so far.
Goldman Sachs continued its forecasts: “HKT’s mobile postpaid ARPU will grow 3% to 4% per annum in 2017E-18E, driven by a rising mix of high ARPU customers, as the carrier began leveraging its superior network quality after completing the network integration (CSL and HKT) in 3Q16.”
On the broadband front, they are also confident as they believe the Hong Kong residential broadband market has become even healthier.
PCCW relied on telecom services for about 82% of revenue last year.
