Battling PCCW plans to sell Now TV to HKT

PCCW (0008) recorded a net loss of HK$584 million for the first half this year and plans to sell pay-TV company Now TV to its telecom subsidiary HKT (6823) for US$250 million (HK$1.95 billion).

Susanna Hiu Hon-hing, chief financial officer of PCCW and group managing director of HKT, said the transaction is expected to be completed next month at the earliest.

PCCW attributed the loss to increased investment and financing costs of the Free TV and over-the-top (OTT) businesses. It also recorded expenses associated with the Park Hyatt Niseko, Hanazono, Japan, upon the hotel's opening.

Core earnings before interest, taxes, depreciation and amortization grew 2 percent to HK$5.4 billion.

PCCW said it will also conduct a strategic review of the PCCW OTT platforms, and does not rule out spinning off the OTT Viu TV business for a public offering or introducing additional investment in PCCW OTT from strategic partners.

At the same time, it said it will distribute shares of Pacific Century Premium Developments (0432) as a special interim dividend on the basis of 85 PCPD shares for every 1,000 PCCW shares, saying that this can better reflect the value of PCPD.

The group said the increased liquidity and public float in PCPD should help to unlock value as well as enable PCPD to independently fund its future growth.

PCCW also declared an interim dividend of 9.18 HK cents in cash, the same as a year ago. Losses per share were 7.57 HK cents during the first half this year. The group had a net profit of HK$163 million in the first six months last year.

Revenue from PCCW's media business totaled HK$1.9 billion while that from Now TV decreased by 6 percent to HK$1.27 billion, primarily due to the suspension of major sporting events around the world and reduced sales activity, said the group.

It was offset by growth in free TV and OTT businesses, which recorded revenue growth of 2 percent and 14 percent from a year ago.

Now TV is operated under PCCW Media Group, which had an unaudited consolidated net asset value of HK$2.15 billion at the end of last year and an unaudited net profit of HK$41 million for 2019.