CK Hutchison, parent company of British serial moaner Three, has agreed to sell its fixed network in Hong Kong in order to focus more acutely on the mobile space.
Hutchison Global Communications, a fixed-line service provider in Hong Kong, will be sold to I Squared Capital, an infrastructure investment manager for HK$14.5 billion, or roughly €1.58 billion. It is believed Hutchison will collect a profit of HK$5.8 billion (about €630 million), which will be reinvested into the mobile business.
“As a premier global hub for commerce and telecommunications, Hong Kong benefits from innovative products and world class services,” said Gautam Bhandari, Partner at I Squared Capital.
“With I Squared Capital’s investment, HGC will continue to provide the same quality of service that mobile telecommunication providers, corporate and residential customers have come to expect. Fresh capital will also enable the company to develop new solutions to meet the ever-increasing demand for high-speed information infrastructure throughout the region and beyond.”
The business unit operates a 1.4 million kilometre fibre-optic network connecting to more than 14,000 buildings as well as 25,000 Wi-Fi hotspots throughout Hong Kong, while also serving international businesses. The rationale behind the divestment would appear to be down to cash. Hutchison has stated the sale will allow it to provide greater returns to shareholders through funding alternative investments, as the value has not been realized through share price returns.
While it should not be considered unusual, the move completes a busy couple of months for Hutchison in the M&A space. Only last week, Hutchison’s Austrian business announced the acquisition of Tele2 Austria. In its own words, the team described the move as the ‘perfect match: Austria’s number one in the area of mobile data acquires the number two in the landline business client segment’. The team is now able to challenge in the ‘quad-play’ market, as this team seem to be taking the shotgun approach in a slight contradiction to the Hong Kong laser focus on mobile.
Hutchison’s Three brand in the UK is another which has been broadening its ambitions, as it announced the acquisition of UK Broadband from PCCW for approximately £250 million back in May, but this makes a bit more sense. Three has plans to cover around 40% of the UK using fixed wireless technology, to offer 1Gbps home broadband services. It would appear Three does not have the ambitions to take on the big boys in the broadband market, but it is a useful little value add to have.