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Mergers & Acquisitions

TPG Capital, MBK Partners' potential bid for Li Ka-shing’s Hutchison Global Communications clouds WTT relaunch

Speculation mounts that private equity firms TPG and MBK, which own WTT, may make a bid for Li's fixed-line telecoms business, which could fetch up to US$1.9 billion

PUBLISHED : Friday, 16 June, 2017, 7:00am
UPDATED : Friday, 16 June, 2017, 8:28am

Hong Kong tycoon Li Ka-shing seemed to cast a large shadow at the relaunch on Thursday of Wharf T&T as WTT, the city’s largest enterprise-focused fixed-line telecommunications services provider.

The unspoken focus was the widely speculated plan by Li to divest Hutchison Global Communications (HGC), a subsidiary of Hutchison Telecommunications Hong Kong that is part of Li-controlled conglomerate CK Hutchison Holdings.

Private equity companies TPG Capital and MBK Partners, which own WTT, have recently been rumoured to be potential bidders for HGC.

WTT chief executive Vincent Ma acknowledged the elephant in the room by quickly saying “no comment” before any of the reporters in attendance at the relaunch could ask questions about that bid.

There were no representatives from either TPG or MBK at the event, which featured Hong Kong high jump record-holder Cecilia Yeung Man-wai as WTT’s new brand ambassador.

Sources said on Thursday that TPG and MBK could soon make a formal offer for HGC, bolstering their strong investment track record in the technology, media and telecommunications sector.

Succeeding in that bid, however, may lead to an unwieldy merger between WTT and the much-larger, HGC business, which includes fibre-optic network, high-speed Wi-fi, data centre and cloud computing services to enterprises.

As part of Hutchison Telecom, the HGC organisation had spent more than HK$10 billion over the past 21 years building an extensive fibre-optic network across Hong Kong.

HGC could be valued from US$1.5 billion to as much as US$1.9 billion, according to a Reuters report last week that cited several sources.

San Francisco-based TPG, one of the world’s largest private equity firms, teamed up with Seoul-based MBK last year to purchase the former Wharf T&T for HK$9.5 billion (US$1.2 billion) from property giant The Wharf (Holdings).

That acquisition marked the latest big-ticket corporate buyout in Hong Kong’s telecommunications industry since PCCW-controlled HKT bought CSL New World Mobility for US$2.4 billion in 2014.

Hong Kong Broadband Network (HKBN), the city’s second-largest fixed-line residential broadband services provider, is also believed to be gearing up for a bid on HGC.

Last year, HKBN acquired the fixed-line broadband network and online marketing operations of New World Telephone Holdings for HK$650 million to expand its enterprise operations.

Unfazed by all the speculation, WTT’s Ma said the company’s rebranding ushers in “a new era of success and innovation” by growing its sales force and distribution partnerships.

WTT, which has about 55,000 corporate customers, saw its total turnover last year advance 2.5 per cent to a record HK$2.04 billion, up from HK$1.99 billion in 2015, on the back of steady business growth amid the weak economic environment in Hong Kong.

The company, which has invested more than HK$6 billion in its infrastructure since 1995, covers about 5,300 commercial buildings with fibre-optic connection direct to office desks.