Buy marks lift-off for Neo's telecom plan
Neo Telemedia, a listed seller and distributor of telecommunication products, said it would buy HCH Investments for HK$273 million as the first step of transforming Neo into a telecom operator.
"We'd like to be a light telecom operator whose service is based on the internet and satellites," Neo chief executive Zhang Xinyu said.
He said that unlike "heavy" telecom operators, "light" operators did not need to put large sums of money into fixed assets.
Neo, which is listed on the Hong Kong exchange's growth enterprise market, will acquire satellite service provider HCH with HK$27.3 million in cash; an allotment and issue of 119 million consideration shares at HK$0.72 each at an aggregate value of HK$85.7 million; and an issue of HK$160 million in convertible notes. The conversion price of each note is HK$2.5 per share.
Neo said teaming up with HCH would allow it to combine the benefits of satellite and ground networks.
Neo also plans to launch a broadband satellite, with throughput up to 100 times higher than converntional satellites, in 2014. The company did not say how big the investment would be, saying there is no accurate number yet.
Company secretary William Yuen said Neo might need to raise funds from the stock market for the project but declined to elaborate.
Zhang said the new satellite would target the mainland market, where huge potential demand is anticipated.
He expected satellite business to eventually account half of Neo's total operations.
HCH might generate income by year-end Zhang said, but his top priority was the long-term development of the company.
