PCCW Wins H.K. Approval for Business Trust

Hong Kong Exchanges & Clearing Ltd. approved PCCW’s spinoff proposal after the phone carrier committed to retain its information technology business for at least three years, according to a regulatory filing yesterday. The plan, initially blocked by the exchange, still requires further regulatory approval and backing from shareholders, PCCW said in the filing.

Billionaire Chairman Richard Li is seeking the first listing of a business trust in Hong Kong to generate funds to invest in faster-growing businesses to lift earnings at PCCW after fixed-line sales fell last year. The proposed spinoff is at least the sixth attempt since 2006 to reorganize the phone company, whose shares have underperformed rivals including SmarTone Telecommunications Holdings Ltd. this year.

“The news will provide a boost to PCCW shares in the short term,” said Linus Yip, chief strategist at First Shanghai Securities in Hong Kong. “There is still some uncertainty because of the need to get clearance from shareholders and regulators, and the company should also provide guidance on how it plans to re-invest proceeds from the spinoff.”