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  • Jul 26, 2014
  • Updated: 9:22am
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TAKEOVERS

Stringent conditions eyed for HKT takeover of CSL New World

PUBLISHED : Thursday, 06 February, 2014, 4:24am
UPDATED : Thursday, 06 February, 2014, 4:24am

Richard Li Tzar-kai's return to the top of Hong Kong's telecommunications industry faces tall hurdles, after market players suggested the government impose certain conditions before the tycoon's PCCW-controlled HKT completes its US$2.43 billion takeover of rival CSL New World Mobility.

The Communications Authority wrapped up on Tuesday the public consultation on the proposed transaction, which HKT announced on December 21, but the submissions filed by interested parties were not made public as of yesterday.

Industry sources said a number of mobile and fixed-line network operators wanted greater government oversight on the expanded HKT operations and the company's return of some 4G mobile spectrum.

HKT, which is the largest fixed-line network operator in Hong Kong, will also become the city's biggest mobile service provider after the acquisition of the CSL New World group from Australian parent Telstra and local property firm New World Development. The group runs the premium 1010 and mainstream One2Free and New World Mobility brands.

One source said greater oversight would be needed because of the dominant position enjoyed by HKT after the acquisition, when four mobile operators would be left in the market. That would help check, for example, "competitive constraints in offering interconnection services or backhaul facility services to other mobile network operators", he said.

The CSL New World deal represents another big bet from Li, whose internet investment startup, Pacific Century CyberWorks, paid US$38 billion to gain control of Cable & Wireless HKT in 2000 in what was then Asia's largest corporate takeover.

PCCW divested its interest in mobile service unit CSL to Telstra through two transactions in 2001 and 2002. CSL merged with New World PCS in 2006.

Barclays Research estimated HKT's share of the wireless services market by revenue after the CSL New World acquisition would reach 40 per cent, compared with about 8 per cent held by its PCCW Mobile operation at the end of June last year.

Another source said HKT should surrender a chunk of its 4G mobile spectrum to the government because it would have the most capacity in the 1.8-gigahertz band. The operator has already offered to return an additional block of 3G spectrum under the government's spectrum reassignment plan.

The company said the acquisition would provide "sufficient usable bandwidth" across the 850-megahertz, 900MHz, 1.8GHz, 2.1GHz and 2.6GHz bands. It would control 38.3 per cent of the city's assigned mobile spectrum.

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