Bidders gear up for Li Ka-shing’s fixed-line network business

Tycoon may walk away from deal if hefty price tag for Hutchison Global Communications, valued as high as US$1.9b, is not met, says source

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Jennifer Tan Yuen-chun, the chief operating officer at Hutchison Telecom, which owns more than 1.4 million kilometres of fibre optic cable. The network covers more than 90 per cent of commercial buildings across the city, almost 2 million Hong Kong households, cross-border links to mainland China and overseas cable connections. Photo: Dickson Lee

Published: 5:15pm, 30 Jun 2017Updated: 8:57pm, 3 Jul 2018

As Hong Kong ratcheted up preparations for the 20th anniversary of its return to Chinese sovereignty on Saturday, a number of major enterprises quietly moved to make a deal with tycoon Li Ka-shing to buy his 22-year-old fixed-line telecommunications network business.

Private equity companies TPG Capital and MBK Partners, operator Hong Kong Broadband Network (HKBN) and two so-called infrastructure funds were expected to submit non-binding proposals on Friday to purchase Hutchison Global Communications (HGC), a unit of Li’s Hutchison Telecommunications Hong Kong, according to sources.

San Francisco-based TPG, one of the world’s largest private equity firms, and Seoul-based MBK look to be the front-runners in the contest, following their HK$9.5 billion (US$1.2 billion) acquisition last year of fixed-line network provider Wharf T&T from property giant The Wharf (Holdings).

That previous transaction showed the strong funding base TPG and MBK can marshal, as they secured a HK$4.8 billion financing package from a syndicate of more than a dozen banks to pay for Wharf T&T, which was relaunched earlier this month as WTT.

A number of major enterprises have quietly moved to make a deal with tycoon Li Ka-shing to buy his 22-year-old fixed-line telecommunications network business. Photo: Reuters

A Reuters report earlier this month, which cited several sources, said HGC could be valued from US$1.5 billion to as much as US$1.9 billion.

Hutchison Telecom has estimated that there were more than 1.4 million kilometres of fibre optic cable used in HGC’s network, enough to circle the earth over 36 times. This network covers more than 90 per cent of commercial buildings across the city, almost 2 million Hong Kong households, cross-border links to mainland China and overseas cable connections.