Billionaire Richard Li’s PCCW Ltd. plans to sell a HK$8.53 billion ($1.1 billion) stake in telecommunications unit HKT Trust & HKT Ltd., amassing cash as the Hong Kong tycoon shifts into greater media investments. The shares of both companies fell.
PCCW will sell 840.7 million shares of Hong Kong’s largest phone company for HK$10.15 apiece, it said in a statement Monday. That’s about 8.4 percent less than the last closing price.
It’s the second sale in less than a week for the youngest son of Hong Kong’s richest man, who is seeking to build on PCCW’s media assets that include pay television, music streaming and movie distribution. PCCW relied on telecom services for about 82 percent of revenue last year. Selling down its HKT stake will mean it’s entitled to less in dividends from the company as it shifts businesses with potential for faster growth like television and movie content.
“PCCW will repay its debts and continue to invest in its core media and solutions businesses,” Gary Yu, Yang Lsiu and Ansel Lin, analysts at Morgan Stanley, wrote in a note to clients Monday. The company is also going to be more active in mergers and acquisitions in its media and solutions businesses, they wrote.
HKT’s dividend contribution to PCCW will be reduced by more than 17 percent to HK$2.4 billion in 2017 from HK$2.9 billion, the Morgan Stanley analysts estimate.
PCCW fell as much as 4.7 percent, the biggest intraday decline since Aug. 12, to HK$4.63 as of 1:09 p.m. in Hong Kong, bringing the stock’s gain this year to about 10 percent. HKT dropped as much as 8.1 percent to HK$10.18, parings its 2017 climb to about 7.5 percent. The benchmark Hang Seng Index rose 0.5 percent.
PCCW’s 63 percent stake in HKT Trust & HKT will fall to 52 percent after the stock sale, which is being arranged by Goldman Sachs Group Inc.
Beyond media, PCCW will use the proceeds for debt repayments and other general purposes, it said.
Last year, PCCW took part in an investment round in STX Entertainment, the distributor of the feature films “Bad Moms” and “The Gift.”
Last week, Li agreed to sell a U.K. business to his father’s CK Hutchison Holdings Ltd.for 300 million pounds ($375 million). PCCW expects to post a gain of about HK$1.3 billion from that deal.