PCCW has finalized an agreement to sell a 40% stake in its fibre business to China Merchants Group, a state-owned investor, for $870 million. The Hong Kong telecommunications company had been in talks with various potential buyers for 12 months, but officially signed with the Chinese firm.
The transaction, involving Fiber Link Global which provides copper and fibre access in Hong Kong and the Greater Bay Area, is set to be completed by June next year. However, PCCW has indicated that the deal could be finalized sooner if conditions are met promptly.
China Merchants Group will acquire the fibre firm through its investment arm, purchasing the holding company that is a subsidiary of PCCW’s HKT. The deal entails a reorganization of PCCW’s passive networks business and establishing a shared services agreement between the companies. Regulatory and governmental approvals are still required to complete the transactio.
The motivation behind the deal is straightforward: China Merchants Group is looking to invest in passive infrastructure assets, while PCCW aims to monetize its assets. PCCW stated that this partnership allows HKT to unlock value in its passive network business and share future capital expenditure for network expansion to support business growth.
HKT, owned by PCCW, sees this transaction as an opportunity to enhance and broaden its service offerings, particularly in digital applications and advanced technology solutions for enterprise customers. The investment will support expansion into new residential development areas in Hong Kong and closer integration within the Greater Bay Area.
Analysts have suggested that PCCW might use the proceeds to fund media business development or possibly provide a special dividend to shareholders. This sale follows PCCW’s recent asset disposals, including the sale of its data centres to DigitalBridge and a stake in its Viu streaming service to Cannal+
