HKBN aims to increase hot spots by a third
Hong Kong Broadband Network (HKBN) aims to aggressively invest in expanding its Wi-fi coverage, services portfolio and marketing efforts, following its HK$5.1 billion acquisition by the Asian unit of British buyout firm CVC Capital Partners.
'We have a very solid five-year business plan,' William Yeung, the chief executive of HKBN, said in an interview. 'This is based on a strategy of value creation and revenue growth, rather than just grabbing market share.'
HKBN, the city's second-largest broadband services provider, was sold by City Telecom last month to Metropolitan Light, a company owned by the general partner of funds advised by Hong Kong-based CVC Asia-Pacific.
After the May 30 deal, some 80 senior HKBN managers agreed to invest about HK$160 million of their own money in a management buyout (MBO) arranged by CVC Asia-Pacific to acquire a 14 per cent stake in the broadband network operator.
'It is the management and employees who will drive everything,' said Roy Kuan, the managing partner at CVC Asia-Pacific.
HKBN, which owns and operates a fibre-optic network that is connected to 2 million homes and 1,700 commercial buildings in the city, plans to invest up to HK$50 million to expand its Wi-fi hot spot coverage from nearly 6,000 to 8,000 in a year.
Yeung said HKBN's goal was to broaden the reach of its content and range of services from a subscriber's personal computer and internet-connected television at home to the smartphone and media tablet used outside the home.
'Right now, we have already more than 600,000 broadband customers, or close to 30 per cent market share,' Yeung said. 'These are loyal and committed customers, who I am confident are willing to pay more to try other services from us.'
He said HKBN would swiftly implement extensive 'fixed-and-mobile network coverage' supported by new applications to allow movies, music and other digital data to be accessed anywhere.
'We can bundle and price our services and content more aggressively, because we don't have the baggage of running a mobile network,' he said.
HKT, the telecommunications arm of PCCW and the city's largest broadband services provider, has a Wi-fi network coverage of more than 10,000 hot spots at present. It also operates 3G and 4G mobile networks.
'In terms of quantity, our main competitor has more Wi-fi locations,' Yeung said. 'But we can take the lead by having better-quality hot spots that will encourage greater usage, including at coffee shops, fast-food chains, shopping arcades and food courts. We are starting to line up these partners to develop our Wi-fi network.'
CVC Asia-Pacific hopes to follow the success of the MBO at HKBN with similar transactions in Hong Kong and the mainland.
The HKBN deal, CVC Asia-Pacific's seventh in Hong Kong, was rare because of the number of managers who were invited and agreed to buy an equity stake in the firm. Kuan said in a typical MBO, only a handful of the top managers would be included.