China Mobile, the largest wireless carrier globally, is currently in discussions regarding a potential acquisition of Hong Kong broadband provider HKBN Ltd. The goal is to expand its presence in the city. HKBN’s board has received a non-binding proposal from China Mobile Hong Kong Co., a subsidiary of the state-backed carrier. This proposal involves a potential cash takeover bid, as stated in an exchange filing on Wednesday. Both China Mobile and HKBN are still negotiating the terms of the offer, including the price.
China Mobile has conducted due diligence on the potential acquisition and has been in talks with HKBN’s major shareholders, buyout firms MBK Partners and TPG Inc. It was mentioned that China Mobile is willing to pay at least HK$5 per share for their holdings, which would value the company at more than HK$6.5 billion ($835 million). However, MBK and TPG may be holding out for a higher valuation, and there is no guarantee that an agreement will be reached. Other potential buyers, including private equity firms, are also interested in HKBN, so another buyer could still emerge.
HKBN, a key broadband service provider in Hong Kong, has previously attracted interest from investment firm IDG Capital, as well as private equity firms like I Squared Capital. Despite the interest, disagreements over factors such as valuation have prevented a deal from being finalized. HKBN offers various services including internet, telecom, data center, and Wi-Fi services. Its major shareholders include Canada Pension Plan Investment Board and Singapore’s GIC Pte.
If the acquisition goes through, it would allow China Mobile to further establish its presence in Hong Kong. The company is also in talks to purchase commercial property from tycoon Chen Hongtian, as reported by Bloomberg last week. The shares of HKBN, which were halted on November 19, are set to resume trading on Wednesday at 9 a.m. local time. The company’s stock has seen a 24% increase this year, giving it a market value of approximately HK$5.7 billion.
In conclusion, the potential acquisition of HKBN by China Mobile represents a strategic move to enhance the carrier’s position in Hong Kong’s telecommunications market. The negotiations with major shareholders and the interest from other potential buyers indicate a dynamic and competitive landscape for this deal. The outcome of these discussions will likely have a significant impact on the telecommunications sector in Hong Kong.
