Published August 22, 2009

PCCW denies reports of inability to pay dividends

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(Hong Kong)

PCCW Ltd, Hong Kong's biggest phone carrier, said that it may resume paying dividends, denying reports that the company may be forced to withhold payouts to shareholders because of its indebtedness.

Singapore-listed Pacific Century Regional Developments holds a 22.9 per cent stake in PCCW.

'These press reports are inaccurate,' PCCW said in a statement to the Hong Kong stock exchange yesterday. 'The company is able to pay dividends in the future if directors of the company consider it appropriate to declare or recommend dividends.'

PCCW's liabilities exceeded assets by HK$3.06 billion (S$571 million) at the end of June, rendering the company unable to pay dividends to its investors, Ming Pao Daily News reported yesterday. The carrier's debt climbed after it paid a HK$8.8 billion special dividend in the first half, according to the Hong Kong-based newspaper.

The company has 'positive distributable reserves', giving it the ability to pay dividends, the statement said.

PCCW shares fell 3.8 per cent to HK$2.05 in Hong Kong trading yesterday, the biggest decline since May 7. The city's benchmark Hang Seng Index slid 0.6 per cent.

PCCW on Thursday reported first-half profit fell to HK$654 million from HK$656 million as telecommunications sales declined.

The company said that it won't pay an interim dividend, after net debt rose to HK$30.6 billion at the end of June from HK$22.8 billion six months earlier. -- Bloomberg