U.S. set to block one of Hong Kong’s largest telco companies from networks, citing China risk

In a significant move, U.S. regulators have taken steps to prevent one of Hong Kong's largest telecom companies from linking to American networks, raising alarms about national security. The Federal Communications Commission (FCC) announced on Wednesday that it has launched proceedings to potentially prohibit HKT Trust and its parent company, HKT Ltd, along with its subsidiaries, from interconnecting with U.S. networks due to worries over its connections to China. The FCC has requested that HKT, a subsidiary of the technology firm PCCW, provide a rationale for why its existing authorizations should not be revoked. Currently, HKT's status allows it to directly exchange calls and data with U.S. telecommunications carriers. This action follows a similar fate for China Unicom, which lost access to U.S. networks last year amid comparable concerns. FCC Chairman Brendan Carr stated, "The FCC's action on HKT today is an appropriate step towards ensuring the safety and integrity of our communications networks." He reaffirmed the agency's commitment to protecting American networks from foreign threats, particularly from China. In response to the news, HKT's shares plunged over 5%, while PCCW experienced a decline of 3.6% in trading. According to their 2024 annual reports, approximately 13% of HKT and PCCW’s revenues stem from regions outside of greater China and Singapore, although specific countries were not disclosed. Notably, HKT constitutes around 90% of the total revenue for the group. Neither PCCW nor HKT has provided an immediate comment to CNBC regarding the FCC's announcement. Under Chairman Carr’s leadership, the FCC has intensified efforts to remove Chinese state-affiliated entities, such as China Telecom and Pacific Networks, from the U.S. market. This latest action coincides with a broader crackdown on Chinese electronics on major U.S. retail websites, which have removed millions of listings for banned products as part of the U.S. government’s ongoing efforts against perceived threats from China. PCCW is largely owned by Richard Li, a prominent Hong Kong businessman whose ventures have increasingly found themselves in the crosshairs of U.S.-China trade tensions. Recently, Li's FWD Group encountered challenges in expanding into mainland China amid regulatory backlash, as reported by Bloomberg in July. Moreover, in March, Chinese authorities allegedly instructed state-owned enterprises to halt new agreements with businesses associated with Li Ka-shing, following his conglomerate's controversial deal involving stakes in global ports. The FCC's recent decision against HKT also aligns with heightened trade tensions under U.S. President Donald Trump’s administration.