HKTV probe throws spotlight on head of China Mobile HK

Local chairman Lin Zhenhui appears to have been instrumental in sale of mobile TV licence to Ricky Wong, but that does not mean he is doomed

PUBLISHED : Saturday, 11 January, 2014, 1:16am
UPDATED : Tuesday, 28 April, 2015, 11:23am

How has the sale of a mobile television licence to Hong Kong Television Network by China Mobile's Hong Kong unit ended up in an investigation by the phone giant?

I have no inside knowledge of the deal. However, let's try to make an educated guess and wind the clock back to August.

Lin Zhenhui, the chairman of China Mobile Hong Kong (CMHK), was eager to prove himself by reviving the sleepy Hong Kong business.

The 40-year-old was once a rising star at China Mobile's Guangdong subsidiary, one of its most profitable arms.

But his career took a sharp turn for the worse in 2005, months after Wang Jianzhou became the telecoms giant's chairman, when he was moved to Yunnan, an economic backwater.

In 2008, Lin was sent to Hong Kong to head the business the parent had acquired two years earlier for HK$3.3 billion. He was assailed by competition the likes of which he had never experienced back home.

Lin laid low for three years until 2011, when Wang lost his job as the firm's Communist Party chief. With a new boss, Lin's time had finally come.

From 2012 onwards, CMHK launched a series of competitive offers, making itself a real player. These would not have been possible without the full support of the parent company, Lin said in a rare interview with a local newspaper.

Lin would have had little problem getting approval from headquarters for the HKTV deal

About to launch a new logo at the end of last year, CMHK was not just planning new business but also house cleaning.

Its mobile TV operation had always been a sore point. Lin brought the licence for HK$175 million in 2010 but it was going nowhere. It lost HK$3.6 million in 2011 and HK$17 million in 2012.

Hong Kong TV's Ricky Wong approached him, offering to buy the business at cost. It didn't sound very appealing to many, given that it was the only mobile TV licence in town. Yet, the fact is HKTV was the one and only potential buyer. No one else would find it useful.

Another appeal was that an at-cost sale would also mean no investment write-down by CMHK and therefore an untainted track record for Lin.

Even if it was not within his power to approve the deal, he would have had little problem getting approval from headquarters.

The cost would be recouped. The loss-making mobile TV was adding little value to its phone business, so let the company focus on the core business.

After all, the mobile TV unit had a net liability of only HK$22.3 million by 2012, peanuts for China Mobile in the light of its 754.3 billion yuan (HK$966.4 billion) asset base.

Yes, mainland law does require a change in control of "important business" to be vetted by the State-owned Assets Supervision and Administration Commission. Yet, how could a barely-operating business qualify as an important one?

What about the politics? The public has always pictured a system where every state-owned enterprise in Hong Kong checks with the central government's liaison office or the Hong Kong and Macau Affairs Office on the dos and don'ts - making sure every transaction is in line with state policy.

In fact, the two offices have little control over the business of state-owned enterprises here. CMHK, whose parent is higher up the mainland hierarchy, was not obliged to tell them about the deal.

Anyway, back in August, HKTV was not yet a political hot potato. And nor was Wong a known no-no among mainland enterprises in town, as is the case with Apple Daily.

On August 16, Lin granted HKTV an option to purchase the mobile TV operation from CMHK, pending the transfer of some legal titles, assets and equipment. It is understood to have included a no-exit clause for CMHK.

When the Hong Kong government's refusal to give a free-to-air TV licence to HKTV gradually evolved into a political avalanche for the Leung Chun-ying administration, Lin had two choices. He could provide his boss with an update and call for a verdict on whether to proceed or walk out at hefty cost. Or, he could proceed as if nothing had happened until an official ban on any dealing with HKTV arrived from the very top.

Any mainland cadre will go for the latter because pushing your superior to make a call and therefore take responsibility is a sin. The official ban never arrived; the deal went ahead and with it came more political speculation targeting Leung.

Of course, feathers were ruffled at some levels. What better way to dampen down the criticism and speculation than making a public announcement of an investigation into the deal.

It dispelled any suggestion that the deal was an endorsement of HKTV and Wong. However, let's not forget that investigations that could kill off someone's career are never made public.