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SCMP Reporter

Hongkong Telecom yesterday announced its long-rumoured acquisition of Star Internet from Star Telecom for $245.5 million.

 The deal merges the SAR's two largest Internet service providers (ISPs) and consolidates Hongkong Telecom's grip on the booming Internet market.

 The agreement was signed on Friday by Hong Kong Telecom IMS - wholly-owned Internet arm of Hong Kong Telecommunications - which will acquire Star Internet's assets and goodwill relating to the provision of Internet services.

 Rumours of the buyout have been circulating since July.

 Hong Kong Telecommunications said the consideration, payable in cash, would be subject to post-completion adjustment.

 The agreement also was subject to the necessary governmental or regulatory consents and approvals being obtained by December 31 at the latest.

 It expected the acquisition would be completed within three business days after receiving such approvals.

 There are worries that the acquisition will lead to an extensive layoff of Star Internet employees, because the two companies differ in corporate culture and business practice.

 IMS' Netvigator is Hong Kong's largest ISP, with about 250,000 subscribers, followed by Star Internet, with 150,000 subscribers.

 When combined, they will dominate the local Internet dial-up market, with 70 per cent share, but not the interactive TV market because the acquisition does not include the video-on demand business. There are two video-on-demand licence holders in Hong Kong, with one to IMS and other to Star Internet, which has not yet launched its services.



Telecom unit buys ISP rival for $245m