Shares of Citic Telecom International jumped 12.9 per cent yesterday following news it will buy 79 per cent of Macau's main telecommunications operator for US$1.16 billion.
The benchmark Hang Seng Index rose 0.64 per cent.
Citic Telecom shares have gained 46 per cent since October last year, when the company, a subsidiary of conglomerate Citic Pacific, announced it planned to take a controlling interest in Companhia de Telecomunicacoes de Macau (CTM).
The acquisition, pending the approval of the central and Macau governments as well as of the companies' shareholders, will increase Citic Telecom's shareholding in CTM to 99 per cent.
In February, it bought a 20 per cent interest for HK$1.4 billion from its parent company.
"It is a trend for strategic assets in Macau like telecommunications to be acquired by mainland-backed companies," Guosen Securities (HK) Financial analyst Bill Fan said.
Citic Telecom has agreed to buy 51 per cent of CTM from London-listed Cable & Wireless Communications for US$750 million and 28 per cent from Portugal Telecom for US$411.6 million. The government-controlled Macau Post will retain the remaining 1 per cent.
Fan said CTM had close to a monopolistic position in Macau, with 100 per cent of the fixed-line business and about 47 per cent of mobile services.
He said US$750 million was a "reasonable" price for a 51 per cent stake.
"CTM has strong bargaining power and can raise the price of its services pretty easily," Fan said.
He believes the purchase will improve Citic Telecom's profitability.
Fan said it was a safe bet that the gaming industry would keep growing, so the telecommunications business would prosper.
Even if gaming slowed, telecommunications would still grow as "people need to make telephone calls and send messages".