Fitch takes PCCW-HKT off negative watch

Fitch Ratings said it has removed from rating watch negative PCCW-HKT Telephone Ltd.'s (HKTC) BBB+ long-term issuer default rating following confirmation that Pacific Century Regional Developments Ltd. - a substantial shareholder in HKTC's parent, PCCW Ltd. - has agreed to sell 22.66% of PCCW's issued share capital to Fiorlatte Ltd.

The rating is affirmed with a negative outlook, which takes into account the challenging domestic telecom market and the impact it is having on HKTC's core revenues and cash flows.

HKTC's senior unsecured debt instruments' ratings of BBB+ have also been affirmed.

In Fitch's view, the change in ownership of PCCW, as it is proposed, has no immediate impact on HKTC. However, should there be any further meaningful developments with respect to changes in control of PCCW, its core assets or changes in its business/financial profile, then Fitch will consider them in light of their potential to affect HKTC's ratings.

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