Moody's confirms PCCW-HKT

Moody's Investors Service said it confirmed PCCW-HKT Telephone Ltd.'s Baa2 issuer rating and Baa2 senior unsecured bank credit facility and the Baa2 senior unsecured debt ratings of PCCW-HKT subsidiaries PCCW-HKT Capital Ltd., PCCW-HKT Capital No.2 Ltd., PCCW-HKT Capital No.3 Ltd. and PCCW Capital No.2 Ltd.

The outlook is stable.

Moody's said recent results indicate that PCCW-HKT's telecommunications revenue base is stabilizing, and the rating agency is looking to see whether this trend proves sustainable over 2006.

Leverage indicators that may reflect such pressure include adjusted net debt to adjusted EBITDA below 3x on a group basis and a group ratio of adjusted retained cash flow to adjusted gross debt over 20%, without any material increase in contingent or associated liabilities.

On the other hand, downward pressure on the ratings may emerge if any decay in revenues and operating cash flows at PCCW-HKT are not offset by growth in broadband-based revenue and operating cash flows, such that core telecommunications revenue returns to a deteriorating trend in 2006.

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