Moody's confirms PCCW-HKT Telephone

Moody's Investors Service said it confirmed the Baa2 senior unsecured ratings of PCCW-HKT Telephone Ltd. and its supported entities.

The outlook is negative.

The ratings had been placed on review for possible downgrade following news that PCCW Ltd. proposed a joint privatization proposal made by Starvest Ltd. and China Netcom Corp. Ltd. Moody's said it always assessed PCCW-HKT ratings on a group consolidated basis and was concerned about the potential negative impact from the parent's proposed privatization.

The confirmation reflects an expectation that the deal, as currently proposed, will not result in a material change in the operating and financial profiles of the group that will immediately pressure the rating, Moody's said.

The presence of Netcom BVI as a key strategic investor also eases concerns over strategic direction and shareholders policies with regard to leverage and dividend polices, the agency added.

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