Cable & Wireless sale marks Hong Kong exit

The telecoms firm Cable & Wireless yesterday disposed of its remaining stake in the Hong Kong telecoms firm PCCW, ending a 15-year foothold in the territory as it continued its exit from non-core businesses.

The company offloaded 651.9 million shares in PCCW, or a 14 per cent stake, to the investment bank Citigroup for about £233m, or about 4.78HK$ a share - a discount of 9 per cent to the closing share price a day before.

The sale means Cable & Wireless has made £5.478bn in total from the sale of Hong Kong Telecom - the telecoms business it sold to PCCW in a cash and shares deal in 2000.

But the figure is only about half the £10bn valuation of the deal when it was completed in August of that year when shares in PCCW were riding high thanks to the dotcom boom.

When Cable & Wireless sold Hong Kong Telecom to PCCW, it received £4.3bn of cash and a 20.2 per cent stake in PCCW - then worth around £6bn.

The company sold a 6.2 per cent stake in PCCW in 2001 for about £945m but shares in PCCW have plunged further still to the current level of 5.25HK$. They were trading at around the 70HK$ to 80HK$ level when the deal was completed.

Cable & Wireless, which bought the Hong Kong firm in 1998, said yesterday the sale of the PCCW shares was part of its ongoing programme to exit non-core assets. The move comes just a day after the company unveiled a massive restructuring programme that will see it pull out of the US and slash 1,500 jobs in the UK.

As it reported a record £6.4bn loss for the year and suspended dividend payments, Cable & Wireless insisted it could turn the business around under a three-year plan.