General Announcement::Announcement Relating to PCCW Limited

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

PCCW Limited

電訊盈科有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 0008)

DISCLOSEABLE TRANSACTION

SALE OF DATA CENTER BUSINESS

SALE OF DATA CENTER BUSINESS

The Company is pleased to announce that, on July 26, 2021, the Seller and the Buyer entered into the SPA, pursuant to which the Seller agreed to sell, and the Buyer agreed to purchase, the Company's Data Center Business for the Purchase Price of US$750 million (equivalent to approximately HK$5,850 million), subject to adjustment as described below in this announcement.

Completion of the Transaction is conditional upon the satisfaction, or waiver by the Buyer, of the Conditions to Completion specified in the SPA and summarized below in this announcement.

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios in respect of the Transaction is 5% or more but all of the applicable percentage ratios are less than 25%, the Transaction is a discloseable transaction for the Company under Chapter 14 of the Listing Rules.

Shareholders of the Company and potential investors should note that Completion of the Transaction is subject to the Conditions. Therefore, there is no assurance that the Transaction will be completed. Shareholders of the Company and potential investors should, accordingly, exercise caution when dealing in the shares of the Company.

SALE OF DATA CENTER BUSINESS

The Company is pleased to announce that, on July 26, 2021, the Seller and the Buyer entered into the SPA, pursuant to which the Seller agreed to sell, and the Buyer agreed to purchase, the Company's Data Center Business for the Purchase Price of US$750 million (equivalent to approximately HK$5,850 million), subject to adjustment as described below in this announcement.

SUMMARY OF PRINCIPAL TERMS OF THE SPA

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Parties	: The Seller and the Buyer.
Subject matter	: The SPA provides for the sale by the Seller and the purchase by the
	Buyer of the Company's Data Center Business by way of the sale
	and purchase of the entire issued share capital of DC HoldCo.
Purchase Price	: US$750 million (equivalent to approximately HK$5,850 million),
	subject to adjustment as follows:
	(a) plus an amount equal to the cash shown in the Completion
	Accounts;
	(b) minus an amount equal to the indebtedness shown in the
	Completion Accounts; and
	(c) plus or minus variations of the working capital of the DC
	Group at Completion, as shown in the Completion Accounts,
	from an agreed amount of target working capital.
	Cash, indebtedness and working capital for this purpose are the
	respective amounts to be shown in the Completion Accounts,
	calculated in accordance with the detailed provisions of the SPA.
	The Purchase Price is based on the enterprise value of the Data
	Center Business, adjusted for cash, indebtedness and working
	capital, and was determined after arm's length negotiations between
	the parties to the SPA following a formal sale process.
Payment terms	: The Purchase Price is payable by the Buyer to the Seller in cash. An
	amount of US$750 million (equivalent to approximately HK$5,850
	million) plus or minus estimated adjustments for cash, indebtedness
	and working capital is payable on Completion under the SPA. An
	amount equal to 4% of the Completion payment is subject to an
	escrow arrangement. The balance of the Completion payment is
	payable to the Seller on Completion. The terms of the escrow
	arrangement provide for the full or partial release of the escrow
	amount to the Seller if certain post-Completion reorganization steps
	are completed on or prior to the first anniversary of Completion,
	failing which the escrow amount would be released to the Buyer
	following such first anniversary. The definitive adjustments for
	cash, indebtedness and working capital will be determined when the
	Completion Accounts are finalized, which is expected to be within
	four months after Completion.
Conditions	: Completion of the Transaction is conditional upon the satisfaction
	or waiver by the Buyer of the following conditions ("Conditions"):
	(1) customary conditions precedent including the warranties
	being true and correct in all material respects and the Seller
	having performed and complied with its obligations under the
	SPA which are required to be performed or complied with by
	the Seller at or prior to Completion; and
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(2) completion of an agreed pre-sale reorganization of the business and assets comprising the Data Center Business in all material respects (except for those aspects of the reorganization which by their nature or in accordance with the agreed terms of the pre-sale reorganization are only to be completed simultaneously with Completion), and obtaining agreed material consents required for completion of the pre-

	sale reorganization.
	The parties to the SPA have agreed to use their respective reasonable
	endeavors to procure that the Conditions are satisfied within six
	months after the date of the SPA, or such extended period as may be
	agreed by the Seller and the Buyer in writing. The Seller and the
	Buyer each has a right to extend the period for satisfaction of the
	Conditions by an additional three months, if the only conditions that
	have not been satisfied at the end of the initial six months period
	relate to completion of the pre-sale reorganization.
Completion	: Completion of the Transaction is expected to take place on a date
	which is not less than twelve (12) Business Days following the date
	on which the last Condition is satisfied and/or waived by the Buyer
	and which is the last day of a calendar month (or if such day is not a
	Business Day, on the immediately following Business Day), or such
	other date as may be agreed in writing between the Seller and the
	Buyer (the "Completion Date").
Non-Competition and	: The SPA includes a three year non-compete covenant in respect of
Non-Solicitation	the Data Center Business, or any business that is competitive with
	the Data Center Business, in favour of the Buyer, which applies to
	the Seller and members of the Group. The SPA also includes mutual
	covenants of the Seller and the Buyer prohibiting solicitation of
	employees.

REASONS FOR AND BENEFITS OF THE TRANSACTION

The sale by the Group of its Data Center Business to the Buyer continues the Company's strategy of unlocking shareholder value in the Group.

Specifically, the Transaction is expected to benefit the Company through:

1. Streamlining operations to focus on technology, IP development and services. Carrier neutral colocation services is a distinct business from our HKT, Media and Solutions businesses. The proposed divestiture of the Data Center Business will allow the Company to better focus and strengthen its core service and product offerings and create more value for its customers and shareholders.
2. Crystalize value of the Data Center Business. Previously operating as part of the Company without separately disclosed financials, operational and growth plan details, the value of the Data Center Business was not fully recognized by investors. Through this

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Transaction with an independent third party, the Company is able to crystalize value of the Data Center Business and unlock further shareholder value.

1. Preserve capital allocation flexibility for the Company. The future growth and expansion of the Data Center Business will require significant capital expenditure. Through the Transaction, the Company will have the flexibility to allocate its capital and resources more efficiently to drive growth.

USE OF PROCEEDS AND FINANCIAL EFFECTS OF THE TRANSACTION

The proceeds from the Transaction will be deployed to create shareholder value through various uses, including but not limited to strategic investments in growth areas such as financial services, buyback of the Company's shares, repayment of debt and other general corporate purposes.

Based on the estimated net asset value of the DC Group on Completion, as well as the direct attributable costs to be incurred for the Transaction and fulfilment of related obligations, it is currently anticipated that the Group will recognize a gain of not less than US$180.0 million (equivalent to approximately HK$1,404.0 million) from the Transaction.

The Directors consider that the terms of the Transaction are normal commercial terms and are fair and reasonable and in the interests of the Company and its shareholders as a whole.

Following Completion, the DC Group companies will cease to be subsidiaries of the Company.

INFORMATION IN RELATION TO THE COMPANY AND THE SELLER

PCCW is a global company headquartered in Hong Kong which holds interests in telecommunications, media, IT solutions, property development and investment, and other businesses.

The principal activity of PCCW is investment holding, and the principal activities of the Group are the provision of telecommunications and related services which include local telephony, local data and broadband, international telecommunications, mobile, enterprise solutions, and other telecommunications businesses such as customer premises equipment sales, outsourcing, consulting, and contact centers; the provision of interactive pay-TV services, over-the-top (OTT) digital media entertainment services in Hong Kong, the Asia Pacific region, and other parts of the world; investments in, and development of, systems integration, network engineering, and information technology-related businesses; and development and management of premium-grade property and infrastructure projects as well as premium-grade property investments. Through HK Television Entertainment Company Limited, PCCW also operates a domestic free television service in Hong Kong.

The Seller is an indirect wholly-owned subsidiary of the Company and is an investment holding company, directly and indirectly holding the DC Group companies.

INFORMATION IN RELATION TO THE BUYER

DigitalBridge Group, Inc. (NYSE: DBRG) ("DigitalBridge") is a leading global digital infrastructure REIT. The principal activities of DigitalBridge relate to investing in, building, and operating businesses across the digital infrastructure sector including cell towers, data centers, fiber, small cells, and edge infrastructure. The DigitalBridge team manages a US$32

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billion portfolio of digital infrastructure assets on behalf of its limited partners and shareholders. DigitalBridge, is headquartered in Boca Raton, Florida, with key offices in Los Angeles, New York, London and Singapore.

The Buyer is an investment holding company controlled by funds managed by affiliates of DigitalBridge.

To the best of the knowledge, information and belief of the Directors and having made all reasonable enquiries, the Buyer and its ultimate beneficial owners are third parties independent of the Company and its connected persons.

INFORMATION ON THE DC GROUP

As at the date of the SPA, Powerbase HK and DC Malaysia are indirect wholly-owned subsidiaries of the Company, engaged in the provision of data center services for customers in Hong Kong and Malaysia.

DC HoldCo will be newly incorporated, as an indirect wholly-owned subsidiary of the Company, to serve as the holding company of the DC Group. Following completion of the pre-sale reorganization described above in this announcement, DC HoldCo will hold the entire issued share capital of Powerbase HK and DC Malaysia.

Based on the pro forma financial statements of the Data Center Business, assuming completion of the pre-sale reorganization described above in this announcement, which have been reviewed by PricewaterhouseCoopers in accordance with Hong Kong Standard on Related Services 4400, "Engagements to Perform Agreed-Upon-Procedures Regarding Financial Information" issued by the Hong Kong Institute of Certified Public Accountants:

1. The consolidated net profits of the DC Group in respect of its financial year ended December 31, 2020 were approximately US$3.0 million (equivalent to approximately HK$23.7 million) before taxation and approximately US$2.6 million (equivalent to approximately HK$20.1 million) after taxation.
2. The consolidated net profits of the DC Group in respect of its financial year ended December 31, 2019 were approximately US$3.1 million (equivalent to approximately HK$24.4 million) before taxation and approximately US$0.02 million (equivalent to approximately HK$0.1 million) after taxation.

Based on the pro forma financial statements of the Data Center Business, assuming completion of the pre-sale reorganization described above in this announcement before Completion, the consolidated net asset value of the DC Group is approximately US$258.3 million (equivalent to approximately HK$2,014.7 million).

LISTING RULES IMPLICATIONS

As one or more of the applicable percentage ratios in respect of the Transaction is 5% or more but all of the applicable percentage ratios are less than 25%, the Transaction is a discloseable transaction for the Company under Chapter 14 of the Listing Rules.

Shareholders of the Company and potential investors should note that Completion of the Transaction is subject to the Conditions. Therefore, there is no assurance that the

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