China Mobile explores acquiring Hong Kong telecom firm HKBN -sources

China Mobile

18/04/2023 09:42

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      China Mobile invited banks to pitch for buyout of
HKBN-sources
    

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      Deal would mark China Mobile's major foray into Hong Kong
    

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      HKBN's top shareholders TPG and MBK to fully exit in any
buyout-sources
    

  
 (Adds HKBN response, top shareholders, updates company share
price at market close)
    By Kane Wu and Julie Zhu
       HONG KONG, April 18 (Reuters) - State-owned China Mobile
Ltd  0941.HK  is exploring a buyout of Hong Kong's leading
telecoms company HKBN Ltd  1310.HK , four people with knowledge
of the matter said, which could spark a bidding war for the firm
currently valued at $1 billion.
    China Mobile in recent weeks sent a request for proposal
(RFP) to a small group of banks to advise on acquiring and
taking-private the Hong Kong telecom provider, which offers
services including broadband and Wi-Fi management, said the
people. 
    The Beijing-based company is still receiving pitches from
investment banks and has yet to decide on making a formal offer,
said the people, declining to be identified as the information
is confidential.
    HKBN shares jumped more than 17% after the Reuters report
and closed at HK$6.57 a piece Tuesday, valuing the company at
HK$8.6 billion ($1.1 billion).
    HKBN declined to comment. China Mobile did not respond to a
request for comment.      
    China Mobile's potential takeover interest in HKBN comes
after infrastructure investor I Squared Asia Advisors submitted
a non-binding letter of interest for the Hong Kong telecoms
services provider in March.
    HKBN said at that time the infrastructure investor would
make an offer via its portfolio company HGC Global
Communications and or one of its affiliates, should it proceed
with the deal. 
    There could be other potential suitors for HKBN, said one of
the people and a separate person with knowledge of the matter,
including Hong Kong-based private equity firm PAG.
    PAG declined to comment. 
    North Asia-focused private equity firm MBK Partners and
buyout firm TPG Capital, which are among the top shareholders of
HKBN, will seek to fully exit in any potential buyout of the
company, separate sources have told Reuters. 
    MBK and TPG declined to comment.
    China Mobile, the world's largest mobile operator by total
number of subscribers, is hoping to bolster its presence in Hong
Kong by acquiring HKBN, which provides internet connections to
households and corporates, said one of the people.
    If China Mobile proceeds with an offer to acquire HKBN, it
would mark a major foray by a Chinese telecoms operator into the
Asian financial hub and regional home to many global financial
institutions.
    China Mobile is a large telecoms services provider in the
world's second-largest economy but has a limited footprint
outside its home country.  
    China Mobile launched a Hong Kong business in January 1997,
months before the city's handover to China from the UK. It
offers mainly mobile communications and internet services to
both households and businesses.
        HKBN posted 1% revenue growth to HK$11.6 billion in the
financial year to Aug. 31, 2022, while its adjusted net profit
surged 20% to HK$905 million.
    It had a market share of 37% in Hong Kong's enterprise
broadband business and 34% market share in the city's
residential broadband business, according to its 2022 annual
report.
    HKBN in 2018 acquired fixed-line operator WTT HK in a deal
that valued the business at $1.34 billion. WTT HK's joint
owners, TPG and MBK partially exited in that takeover.
    The two companies now each hold 11.05% of HKBN, according to
Refinitiv's Eikon. Canada's pension fund CPP Investment Board is
the company's top investor with a 13.91% stake, Eikon shows. 
        Singapore's sovereign wealth fund GIC is HKBN's fourth
largest shareholder with a 8.02% stake.
  

($1 = 7.8495 Hong Kong dollars)

 (Reporting by Kane Wu and Julie Zhu in Hong Kong; addiitonal
reporting by Donny Kwok; Editing by Sumeet Chatterjee, Sonali
Paul and Louise Heavens)
 ((kane.wu@thomsonreuters.com; +85228436590; Reuters Messaging:
kane.wu.thomsonreuters.com@reuters.net))