PCCW Ltd, Hong Kong's biggest phone carrier, yesterday reported an unexpected decline in first-half profit and said the sale of its telecommunications unit may be completed by October to revive earnings growth. The shares plunged.

Net income fell to HK$656 million (US$84 million), or 9.67 Hong Kong cents a share, from HK$822 million, or 11.96 Hong Kong cents, a year earlier, the company said yesterday. The profit missed the HK$1.12-billion median of three analysts' estimates in a survey by Bloomberg News.

PCCW said it has chosen a shortlist of bidders for a stake in its telecommunications and media business, where earnings fell short of estimates. Managing Director Alex Arena, seeking proceeds to invest overseas, said yesterday the company's main assets are more valuable than in 2006, when a disposal plan was blocked by shareholder China Network Communications Group Corp.

"The growth potential in the Hong Kong market is fairly limited due to its size," Marvin Lo, who rates PCCW shares "hold" at Daiwa Institute of Research in Hong Kong, said before the announcement. "The company will need to expand outside Hong Kong."

PCCW, removed from Hong Kong's Hang Seng Index in June, fell 4 percent to close at HK$4.80 in trading on the city's stock exchange yesterday, the biggest decline since December 2006, cutting the stock's gain this year to 3.7 percent. This compared with a 27-percent drop in the key Hang Seng Index.

PCCW's telecom businesses' earnings before interest, tax, depreciation and amortization in the first half rose 10 percent to HK$3.36 billion.