PCCW Ltd, Hong Kong's biggest phone company, fell to a nine-year low on the city's stock exchange after the company scrapped plans to sell part of its main unit because offers fell short of expectations. PCCW fell 1.8 percent to HK$2.51 (US$0.32), the lowest since April 1999, after declining as much as 13 percent earlier. Hong Kong's benchmark Hang Seng Index jumped 10 percent yesterday.
The Hong Kong company, controlled by billionaire Chairman Richard Li, failed to bring in new investors to HKT Group Holdings Ltd even after pledging to grant buyers priority to the unit's dividends. Private equity bidders didn't submit "sufficiently attractive" offers because of the global financial crisis, PCCW said on Sunday.
"In the absence of a deal, PCCW shares look expensive compared with other regional phone carriers," said Marvin Lo, who rates the stock "hold" at Daiwa Institute of Research in Hong Kong. "PCCW offers slower growth, and the firm is more leveraged."
PCCW shares trade at 13 times last year's earnings, compared with 11 times at China Mobile Ltd, the world's most valuable telecommunications company, according to Bloomberg News data.
TPG Inc, Providence Equity Partners Inc, Macquarie Group Ltd, Apax Partners Inc, Bain Capital LLC and MBK Partners Ltd, which were short-listed by PCCW to bid for the HKT Group stake, were seeking to borrow between US$400 million and US$600 million to fund the stake purchase, three people in the matter said last week.
PCCW had planned to use funds from selling up to 45 percent of HKT Group to invest in overseas businesses.