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The Office of the Telecommunications Authority (OFTA) announced today (December 23) that consent has been granted to the proposed privatisation of PCCW Limited under the mergers and acquisitions (M&A) provisions of the Telecommunications Ordinance.
：The Telecommunications Authority has formed an opinion that the proposed privatisation would not have, or would not be likely to have, the effect of substantially lessening competition in a telecommunications market in Hong Kong. Accordingly, the Telecommunications Authority has given consent to the proposed privatisation,； a spokesperson for OFTA said.
：Before giving the consent, the Telecommunications Authority has consulted the industry and assessed the impact the proposed privatisation would have on competition in the telecommunications market, including the markets for mobile services and external fixed services. The authority considers there is effective competition in those markets. Further, the proposed privatisation is essentially a matter internal to PCCW, which involves the increase of shareholding by its existing shareholders. The proposed privatisation does not directly create any new areas of overlap between the telecommunications operations of PCCW, and the operations of any other operators in Hong Kong. Having regard to these considerations, the Telecommunications Authority is satisfied that the proposed privatisation would unlikely give rise to any competition concern,； the spokesperson said.
：The Telecommunications Authority will publish in due course a report setting out the full reasons for giving the consent."
The Telecommunications Authority・s consent in respect of the proposed privatisation is specific to the terms of the scheme of arrangement set out in PCCW・s November 4, 2008 announcement. The consent does not authorise any other transactions in connection with PCCW which does not fall within the terms set out in the announcement, which essentially stated that after the privatisation, the companies connected with Mr Richard Li would hold 66.67% of PCCW, and the Netcom group would hold the remaining 33.33%. The consent shall lapse if the proposed privatisation does not materialise in the terms set out in the announcement.
Background
On November 4, 2008, PCCW announced that its two major shareholders, PCRD (which is controlled by Mr Richard Li) and China Netcom Corporation (BVI) Limited (Netcom BVI), were proposing to privatise the company. As at November 4, 2008, PCRD and Netcom BVI held 22.54% and 19.84% respectively of the issued share capital of PCCW. Other companies controlled by Mr Richard Li together held a further 5.2%. The remaining 52.42% of PCCW・s share capital was held by the public. If the proposed privatisation is approved by PCCW shareholders, Mr Richard Li・s interests will hold 66.67% of PCCW and Netcom BVI will hold 33.33%.
On November 26, 2008, PCCW submitted a formal application for the Telecommunications Authority・s prior consent to the proposed privatisation under the M&A provisions (section 7P) of the Telecommunications Ordinance (Cap 106). A public consultation on the application was conducted on November 28, 2008. The consultation ended on December 15, 2008. Two submissions were received by OFTA. The submissions were posted on OFTA website.
Ends/Tuesday, December 23, 2008
Issued at HKT 17:39
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