Ofta plan could hit PCCW sale
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Attempts by Australia’s Macquarie Group and TPG Newbridge, the US buy-out firm, to buy PCCW’s core assets could be delayed by a new government proposal to change the tariff structure of Hong Kong’s telecoms industry.
The Office of the Telecommunications Authority, the telecoms regulator, on Friday proposed scrapping interconnection fees paid by mobile operators to fixed-line companies in a move that could lower PCCW’s annual revenue by about HK$400m (US$51m).
Mobile operators pay fixed-line companies, including PCCW, Hong Kong’s largest, about HK$600m a year for any calls made between a fixed line and a mobile phone.
But Ofta on Friday proposed to cancel the arrangement, which has been in place since the early 1980s. It launched a three-month consultation.
“We don’t think the status quo is conducive to competition in today’s environment,” said MH Au, director-general.
Marvin Lo, analyst at BNP Paribas, said the recommendation could lower PCCW’s pre-tax profits by about HK$300m a year, or about 10 per cent of last year’s total. It could also reduce PCCW’s net profit by HK$250m, or about 15 per cent of 2005’s figures.
PCCW said on Friday it was too early to predict the outcome of the proposal and declined to comment on whether its financial performance would be affected.
Ofta’s proposal could affect efforts by Macquarie and Newbridge to acquire PCCW’s telecoms and media assets, analysts said. The pair, which have been competing for PCCW since last month, were dealt a blow this week when PCCW chairman Richard Li unexpectedly sold a 23 per cent stake in the company to investment banker Francis Leung.
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