Posts filed under ‘PCCW’
PCCW’s minority shareholders yesterday approved a proposal to take the Hong Kong-based telco private, but the securities regulator will launch an investigation following allegations of vote-buying, reports Bloomberg. PCCW’s largest shareholder, chairman Richard Li, and major stakeholder China Netcom (part of China Unicom) offered HKD15.9 billion (USD2.05 billion), or HKD4.50 per share, for the remaining 52% of PCCW, and the offer was supported by more than 75% of stockholders. The deal requires High Court approval before the shares are delisted, and a hearing is set for 24 February. The Securities & Futures Commission immediately took possession of the voting records and will start investigating the buyout process, following allegations that insurance agents were offered stock in return for supporting the proposal. PCCW said it has ‘no knowledge of any improper share transfers.’ PCCW’s shares have lost 97% of their value since Li took control of the former Cable & Wireless HKT in 2000. The company has a market capitalisation of USD3.6 billion based on yesterday’s share price. The fixed line, broadband, mobile and TV operator saw its first-half net profits slump by 20% last year.
In other news PCCW yesterday confirmed that it plans to implement measures to cut its costs by up to 30%, including redundancies, but declined to divulge the potential number of jobs that will be lost. Union staff had earlier alleged that the group planned to lay off 600 employees, or around 5% of its workforce. PCCW has increased its staff total by 40% to 17,000 in the last four years.
Hong Kong-based cellco SmarTone-Vodafone on Wednesday switched on an upgrade to its HSPA (HSDPA/HSUPA) mobile broadband network, boosting maximum upload speeds from 2Mbps to 5.76Mbps; the network already supported peak downloads of 14.4Mbps. In its press release, the company said the upgraded service is being provided to existing and new customers free of charge. SmarTone followed up the announcement yesterday with a statement revealing a plan to implement ‘4G’ Long Term Evolution (LTE) technology, through the reuse of its existing spectrum, after its failure to win 2.5GHz-2.7GHz spectrum in Hong Kong’s broadband wireless access (BWA) auction. As previously reported in CommsUpdate, the company’s domestic rivals Hutchison (3), PCCW, CSL and China Mobile (Peoples) all won concessions. SmarTone said it ceased to continue with the BWA spectrum auction when the asking price ‘exceeded the cost difference between implementing LTE with new spectrum and implementing LTE on existing spectrum.’ The operator recently announced a pilot of multiple-input and multiple-output (MIMO) technology for maximising performance and bandwidth as part of its upgrade path to higher speeds and greater capacity with both HSPA+ and LTE platforms. HSPA+ can provide speeds of up to 80Mbps while LTE will further increase peak rates to 160Mbps. According to the statement, customers will also benefit from superior in-building coverage through implementation of LTE at the lower frequency spectrum.
The signs are not good for the latest attempt to take Hong Kong telecoms group PCCW private, after a share offer was launched in December by its chairman Richard Li and major stakeholder China Netcom. Financial analysts worldwide are pessimistic about the chances of success of the offer, despite it being raised to HKD4.50 (USD0.58) per share from HKD4.20 per share at the end of the month. According to one such report, in the Canadian Financial Post, the deal valued PCCW’s stock at a 45% premium to the company’s share price immediately before the bid was announced, but many retail investors bought shares at much higher levels and are angry that Li’s group appears to be taking advantage of the current market downturn to try to buy them out cheaply. The report goes on to say that minority shareholders are also unhappy the proposed deal would see Li and state-run Netcom share a special USD2.8 billion cash dividend upon closure. The new offer must be approved by 70% of shareholders at a vote likely to take place by the end of this month. Hong Kong’s telecoms regulator OFTA approved the proposed ownership change on 23 December, after studying the terms of the arrangement set out in an announcement from PCCW on 4 November, which stated that after the transaction, companies connected with its chairman would hold 66.67% of PCCW, and China Netcom would hold the remaining 33.33%. As at 4 November, PCRD (controlled by Mr Li) and Netcom held 22.54% and 19.84% respectively of the issued share capital of PCCW. Other companies controlled by Li together held a further 5.2%. The remaining 52.42% of PCCW’s share capital was held by the public.