PCCW shares gained on Friday after the company revealed it had been cleared to spin off its telecom assets into a business trust. But the operator may need to do more to keep investors excited.
PCCW said plans are not finalized, and it is working with regulators to develop a structure for the trust that complies with existing regulations, “as this is a novel concept in Hong Kong,”
The company intends to retain an estimated 55% stake in the telecom business, divesting a minority interest through an IPO and a bonus issue.
But the business trust model would allow PCCW to retain control of the telecom business even as it sells off more shares.
The deal would require shareholder as well as final regulatory approval. If trading activity on the Hong Kong exchange is any guide, investors are interested. PCCW shares grew to as high as HK$3.17 ($0.41) on Friday, before closing 4.38% higher for the day at HK$3.10.
Reuters quotes financial analysts as estimating that a spinoff could raise between HK$4 billion and HK$5 billion.
But one analyst told the wire service that PCCW could find it hard to sustain the market's interest in the deal considering the influx of IPOs.