On June 26, GuoLongHui reported that Hong Kong Telecom-SS (06823 HK) and PCCW (00008 HK) jointly announced that on June 26, 2024, the seller (Apex Link Communications Holdings Limited, an indirect wholly-owned subsidiary of Hong Kong Telecom) and the investor entered into a sale and purchase agreement for the target equity (accounts receivable with a total amount of HKD 344 million, which is 40% of the HKD 859 million accounts receivable owed by Passive Netco to the seller; and shares equivalent to 40% of the total issued share capital of the target company upon completion), with a total consideration of USD 870 million to be settled in cash. After completion, the target company will still be an indirect subsidiary of Hong Kong Telecom, that is, an indirect subsidiary of PCCW.

On the same day as the sale and purchase agreement, a shareholder agreement was signed among the seller, the investor, and the target company. This agreement shall be conditional upon completion and take effect from the completion date. Passive Netco (a wholly-owned subsidiary of the target company) and HKTL (an indirect wholly-owned subsidiary of Hong Kong Telecom) will enter into the main service agreement upon completion.

The target company (Regional Link Telecom Services Holdings Limited, an indirect wholly-owned subsidiary of Hong Kong Telecom on the date of this announcement) is a limited company registered in the British Virgin Islands. The main business of the target company is investment holding. Passive Netco is a wholly-owned subsidiary of the target company. As of the date of this announcement, Passive Netco has not engaged in any business operation. After completion, Passive Netco will engage in passive network business. The investor (Magic Investment Bidco Limited) is a limited company registered in the Cayman Islands, exclusively managed and controlled by China Merchants Capital, and indirectly invested by multiple parties including Minsheng International Investment (Hong Kong). The main business of the investor is alternative investment.

The announcement stated that this transaction will allow Hong Kong Telecom to release the value of its extensive passive network business through the introduction of investors as long-term partners, and share with investors the future capital expenditures related to the expansion of network infrastructure to support business growth. With the planning of new residential development areas in Hong Kong, the acceleration of enterprise digitization transformation, and the increasingly close integration of the Greater Bay Area, Passive Netco will work with Hong Kong Telecom and the investor to expand its passive infrastructure business to support the launch of new service projects and expand to new regions. In addition, this transaction will enable Hong Kong Telecom to strengthen its resources to enhance and broaden its service offerings to consumers, especially in the field of digital fashion applications, and to provide innovative and advanced technology solutions to enterprise customers.