• Thu
  • Apr 24, 2014
  • Updated: 5:16am

Richard Li Tzar-Kai

Richard Li Tzar Kai is the younger son of Li Ka-shing, a rags-to-riches tycoon known as “Superman” in Hong Kong, his adoptive home. Li Ka-shing in 2012 anointed his elder son, Victor Li, to follow him at the helm of flagship property developer Cheung Kong (Holdings) Ltd, and Hutchison Whampoa Ltd, a conglomerate whose activities span ports, telecoms retailing, energy and infrastructure. But he also vowed to support the business ventures of Richard Li, who is the chairman of phone, pay-television and Internet company PCCW Ltd, formerly Hongkong Telecom.

BusinessCompanies

HKT's acquisition of CSL makes Richard Li telecoms kingpin again

PCCW chief Richard Li repurchases wireless service provider CSL he sold to Telstra and goes back to being city's top industry player

PUBLISHED : Friday, 20 December, 2013, 11:03am
UPDATED : Saturday, 21 December, 2013, 8:22am

Richard Li Tzar-kai is back on top of Hong Kong's telecommunications industry after the tycoon's PCCW-controlled HKT agreed yesterday to acquire CSL New World Mobility, a subsidiary of Australian network operator Telstra, for HK$18.8 billion.

CSL runs the premium 1010 and mainstream One2Free brands.

It is a strategic move that allows HKT to build up its resources ahead of the expiry of 3G spectrum licences in October 2016. It means HKT will have a 31 per cent share of the city's mobile communications market once the transaction is completed early next year.

The deal, which is being funded by a bridging loan, also shows the kind of big bet for which PCCW chairman Li is known.

That's because HKT, the smallest of the five mobile network operators in Hong Kong, is buying an operator that has been the city's largest wireless services provider since 2006.

In 2000, Li's internet investment start-up, Pacific Century CyberWorks, took control of Cable & Wireless HKT for US$38 billion in what was then Asia's largest corporate takeover.

PCCW immediately became the largest wireless and fixed-line network operator in Hong Kong. The tycoon's new transaction will make HKT the biggest wireless and fixed-line network operator in the city, years after PCCW divested its interests in mobile service provider CSL to Telstra.

In a statement yesterday, Li said the proposed CSL takeover was "in line with HKT's objectives of investing in businesses which provide holders of share stapled units with stable and regular distributions as well as long-term distribution growth".

VC Brokerage director Louis Tse Ming-kwong said Li's move would "likely spur more consolidation in the industry next year".

Alex Arena, the HKT group managing director, described the proposed CSL acquisition as "a brilliant way to grow the business and to create a true Hong Kong champion".

HKT said the CSL acquisition would provide "sufficient usable bandwidth" across the 850MHz, 900MHz, 1.8 gigahertz, 2.1GHz and 2.6GHz bands.

Commenting on HKT's proposed acquisition, New World Development chairman Henry Cheng Kar-shun described the terms as "fair and reasonable".

The transactions involved include the purchase of Telstra's 76.4 interest in CSL and the 23.6 per cent stake held by New World Development.

Telstra chief executive David Thodey said yesterday the company had enjoyed considerable success in Hong Kong, but the sale was a great opportunity to maximise shareholder value.

Telstra had paid a total of US$2.3 billion to acquire PCCW's entire stake in CSL through two transactions in 2001 and 2002. CSL merged with New World PCS in 2006.

Thodey said there were "a number of dynamics in the Hong Kong mobiles market that means this is the right opportunity for Telstra to maximise our return on this successful asset".

Industry regulator the Communications Authority announced last month that the government would take back and auction off a third of the 3G spectrum held by the city's four incumbent 3G network operators in the fourth quarter of next year.

But the government will grant the operators - SmarTone Telecommunications, CSL, Hutchison Telecom and HKT - the right of first refusal to be reassigned two-thirds of the 3G spectrum in the 1.9 gigahertz to 2.2GHz band that each one now holds.

In its regulatory filing with the Hong Kong stock exchange yesterday, HKT said it believed that no significant competition concerns would arise from the company's acquisition of CSL.

"Nevertheless, as part of HKT's application to the Communications Authority for the necessary regulatory approval, HKT has voluntarily offered certain pro-competition measures," it said. Those include a commitment to maintain the wholesale services provided by HKT and CSL to resellers and mobile virtual network operators, as well as network-sharing arrangements.

HKT has offered to return to the government an additional block of 3G spectrum and a commitment not to participate in next year's auction of the 3G spectrum that the government aims to take back.

"This means there will be plenty of 3G spectrum [blocks] available in the market," Arena said. "The reason we're doing it is that we don't need all of the combined 3G spectrum [from the CSL takeover]. We will be able to manage our cost base very effectively.

"If we can keep our costs down, we can keep our charges to consumers down."

Share

Related topics

7

This article is now closed to comments

Dao-Phooy
If this proceeds we know we will be offered really poor service - this is horrible news.
johnyuan
I hold no animosity against Richard Li despite his once PCCW had colluded with Hong Kong government and practiced very tardily in controlling junk mail through fix line telephone. My home office then burned up two big fax rolls monthly that mainly consumed by junk advertisements that went through PCCW ‘s operation. My generosity towards PCCW’s urgency in gauging money from my pocket because LKS, Li’s father most likely had upon the request by central government to take over the Cable and Wireless that owned by the Brits for security reason. The timing was bad. C & W was a lemon with all outdated machineries especially at the dawn of new technology was just around the corner. What my fax rolls had spent on really was helping Li to pay up the debt incurred by a forced takeover of that lemon. Sure the acquisition was financially structured through a bank but who wants to be associated with a lemon as a career. That is why in balance I feel sorry for Li.
.
.Here I must caution you all if history is repeating. .
village2206
So you think he may be on top again...... but many of us havent forgotten our losses... Daddys little boy!!
anthonygmail
Is this a case of selling low and buying high? If so, Richard still has a lot to learn from daddy.
balony
You need to learn what is inflation.
cc88
This is disastrous. This is why we need an competition law in HK. The whole reason I use CSL is so that I don't have to deal with the absolutely appalling customer service at PCCW. I have no option but to use this dreadful company for broadband and telephone in the part of HK where I live, and now I'm going to have to up-sticks and leave my mobile provider so that I don't have to deal with these idiots. Aghhhhhhhhh.
honkiepanky
The Communications Authority has the power to block the merger on competition grounds. They should use it.

Login

SCMP.com Account

or