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HKBN expands into mobile services market after receiving new license

PUBLISHED : Monday, 18 July, 2016, 4:25pm
UPDATED : Monday, 18 July, 2016, 11:05pm

Hong Kong Broadband Network (HKBN), the city’s second-largest fixed-line residential broadband operator, will start offering mobile services from next month after getting the go-ahead from the government.

The company said on Monday that the Office of the Communications Authority has granted it a mobile virtual network operator license, which also allows it to sell smartphones and other mobile devices.

“This is a strong move to maximise shareholder value by offering a full suite of fixed and mobile services, leveraging our quickly expanding broadband customer base of over 800,000 households,” HKBN chief executive William Yeung Chu-kwong said.

A mobile virtual network operator is a communications service provider that leases wireless network capacity from an existing telecommunications operator at wholesale prices and resells it to consumers at reduced prices under its own brand.

According to HKBN, it has signed a memorandum of understanding with local 4G mobile network operator China Mobile Hong Kong.

It said discussions are ongoing with two other local mobile network operators, with a view to serve both the residential and corporate markets.

“Replicating our success in the fixed broadband market, our mobile service will come with ... the best customer experience at highly competitive prices,” Yeung said.

HKBN’s entry into Hong Kong’s crowded mobile services market followed its HK$650 million cash purchase in February of New World Telephone Holdings’ fixed-line broadband network and online marketing operations.

That merger was estimated by HKBN to result in a telecommunications operation with over HK$3 billion in total revenue, of which more than HK$1 billion would be from enterprise customers.

Capital expenditure for HKBN in the past 14 years has reached HK$4.1 billion, which established one of the most extensive fibre-optic networks in Hong Kong.

In a report, Nomura analysts Gopa Kumar and Sachin Gupta said HKBN’s entry into the mobile services market via a mobile virtual network operator license “could be a capex-light approach”.

“HKBN could look to lease mobile capacity in exchange for wholesale broadband capacity,” the analysts said.

The company currently leases out wholesale fixed-line network capacity to SmarTone Telecommunications, the city’s No 3 mobile network operator.