Citic Pacific

Citic Pacific unit eyes Macau CTM takeover

Cable & Wireless stake of 51 per cent in CTM the target of a bid by Citic Telecom in a deal that would take its interest to 71 per cent

PUBLISHED : Thursday, 18 October, 2012, 12:00am
UPDATED : Thursday, 18 October, 2012, 4:47am

Citic Telecom International, a subsidiary of Hong Kong conglomerate Citic Pacific, plans to acquire a controlling interest in Macau's main telecommunications network operator.

In a joint filing with the Hong Kong stock exchange yesterday, Citic Telecom and Citic Pacific said talks had started with Cable & Wireless Communications to buy its 51 per cent stake in Companhia de Telecomunicações de Macau (CTM).

The proposed acquisition, the amount of which was not disclosed, would increase Citic Telecom's shareholding in CTM to 71 per cent. In February, it bought its parent's 20 per cent interest in CTM for HK$1.4 billion.

In a separate statement, Cable & Wireless Communications confirmed that it was involved in talks with Citic Telecom, which provides enterprise services to telecommunications network operators and internet service providers.

"At this point, there can be no certainty that the discussions will lead to a transaction," the British firm said.

London-listed Cable & Wireless Communications has operations in the Caribbean, Macau, Panama, Monaco and numerous small island nations. It was formed from the demerger of parent Cable & Wireless into two companies in March 2010. The other firm, Cable & Wireless Worldwide, was acquired in July by Vodafone Group.

Established in 1981, CTM provides mobile, fixed-line and broadband services in Macau. It is also a major supplier of telecommunications-related services to businesses in the world's largest casino market.

CTM, which posted record revenue of 3.98 billion patacas last year, also has Portugal Telecom and Macao Post as shareholders.

Citic Telecom said it expected to fund the proposed acquisition of Cable & Wireless Communications' CTM stake with "available internal resources, bank or debt financing, and equity financing".

That deal may also result in some changes for Citic Pacific, which is controlled by state-owned investment firm Citic Group.

According to Citic Pacific, it has been contemplating a restructuring that involves selling part of its interest in Citic Telecom to their larger mainland parent.

Such a move would be in line with Citic Pacific's focus on its three core businesses: special steel, iron-ore mining and property development on the mainland.

That restructuring would mean Citic Telecom ceases to be a subsidiary of Citic Pacific, which would then not treat the proposed acquisition as a major transaction.

Shares of Citic Pacific advanced 1.04 per cent to finish at HK$9.72 yesterday, while those of Citic Telecom climbed 6.13 per cent to HK$1.73.