Moody's: No change for Hong Kong Telecommunications

Moody's Investors Service said the lapsed privatization offer for PCCW Ltd. will have no immediate impact on the Baa2 senior unsecured ratings of PCCW-owned Hong Kong Telecommunications Ltd. and its supported entities.

The outlook remains negative.

The decision follows yesterday's Court of Appeal ruling, which overturned the judgment of the High Court to allow the privatization of PCCW as proposed by Starvest Ltd. and China Netcom Corp. Ltd., and specifically the payment of a dividend to the post privatization shareholders in the order of HK$18 billion, Moody's said.

PCCW has instead declared a special dividend of HK$1.30 per share in lieu of a final dividend for 2008 at a total cost of about HK$8.8 billion. This will be funded from internal cash sources at the PCCW level and should not result in the incurrence of any more debt, the agency said.

The rating reflects its solid market position and the stable profile of its underlying core fixed-line telecommunications business, the agency said.

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