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Mergers & Acquisitions

PCCW on the lookout for more deals to drive IT services expansion

After revenue of HK$3.59 billion last year, PCCW Solutions unit has secured orders worth HK$5.38 billion

PUBLISHED : Thursday, 30 June, 2016, 9:07pm
UPDATED : Friday, 01 July, 2016, 11:16am

PCCW, the flagship company of media and telecommunications tycoon Richard Li Tzar-kai, is on the hunt for mergers and acquisitions to expand its information-technology services business across Asia this year.

“They could be smaller or bigger than [PCCW’s investment last year in US company] Vuclip. It all depends on the opportunity and the target,” PCCW group managing director Bangalore Gangaiah Srinivas told the South China Morning Post on Thursday.

“We’re now focused on growing [information technology services arm] PCCW Solutions after making that [Vuclip] investment for PCCW Media.”

PCCW agreed to acquire controlling interest in Vuclip for an undisclosed sum in March last year as its PCCW Media unit expanded into the so-called over-the-top (OTT) video services market.

OTT applications, such as Netflix, deliver movies, television shows and other video content over the internet, bypassing traditional commercial distribution via terrestrial broadcast, cable or satellite network operators.

Based in California’s Silicon Valley, Vuclip was operating a mobile video-on-demand service in 10 markets that include India, Indonesia, Malaysia, the United Arab Emirates and Egypt prior to the PCCW acquisition.

Srinivas said planned new investments would support the expansion of PCCW Solutions across mainland China and in Southeast Asia, where it was now establishing a regional information-technology services hub in the Philippines.

PCCW Solutions, which had total revenue of HK$3.59 billion last year, has a license to operate data centres across mainland China. It also has secured orders worth HK$5.38 billion as of December 31.

Ramez Younan, the managing director at PCCW Solutions, pointed out that the company sees growing demand in industries that include telecommunications, financial services, retail, manufacturing, hi-tech and media.

“The demand for high-quality IT solutions in China continues to grow, and PCCW Solutions is well-positioned to be the partner of choice for enterprises there,” Younan said.

The demand for high-quality IT solutions in China continues to grow, and PCCW Solutions is well-positioned to be the partner of choice for enterprises there
Ramez Younan, the managing director at PCCW Solutions

Research firm Gartner has forecast global spending for information-technology services this year to advance 2 per cent to US$929 billion, up from US$910 billion last year.

It estimated information-technology services spending in mainland China to reach 114.99 billion yuan (HK$134.24 billlion) this year, while the market in Hong Kong would amount to HK$29.52 billion.

PCCW Solutions last Friday launched its participation in the D-Infinitum alliance, which would extend its data-centre business into more than 40 cities around the world.

Data centres are facilities used to host so-called cloud computing operations, which enable companies to buy, lease or sell software and other digital resources online.

Srinivas said further investments, in terms of alliances and distribution, will also be made to support the expansion of PCCW Media’s OTT business and ViuTV, the company’s free-to-air service in Hong Kong.

In November, PCCW committed to invest HK$2.7 billion for the first 10 years of ViuTV’s operations.

Srinivas said the group expected ViuTV “to break even in four to five years”.

PCCW’s share price was up 0.97 per cent to close at HK$5.20 on Thursday.