HKT eyes smooth takeover of CSL New World Mobility
HKT confident of smooth merger with CSL New World Mobility, making it the city's biggest wireless network services provider
HKT Trust and operating arm HKT, which posted strong gains in revenue and net profit last year, expects a successful integration of CSL New World Mobility after the US$2.43 billion acquisition receives all the necessary approvals.
Alex Arena, HKT's group managing director, yesterday declined comment on the strategy for that merger as parent PCCW will hold an extraordinary general meeting to vote on the deal.
PCCW holds 63.07 per cent of the share stapled units of HKT Trust and HKT, which represent the telecommunications assets of Richard Li Tzar-kai's corporate flagship.
Arena pointed out that HKT, through its international operating division PCCW Global, has already gained valuable experience in the integration of the carrier unit of Gateway Communications, which the company bought in 2012 for a reported US$26 million from South African-based Vodacom.
"We integrated the Gateway business, which has headquarters in London and facilities in Brussels and in Africa. Surely, if we can successfully integrate a business which is outside of Hong Kong, we should be able to do a good job for a business within Hong Kong," Arena said.
"Historically speaking, we know a few things about CSL. I seem to remember selling the CSL business a few years ago. It hasn't fallen far from the tree, right?"
PCCW divested its interest in mobile service unit CSL to Australian telecommunications giant Telstra through two transactions in 2001 and 2002. CSL merged with New World PCS in 2006 to form Hong Kong's largest wireless network operator, with about 3.9 million subscribers as of June last year.
HKT, Hong Kong's largest fixed-line network operator and pay-television provider, will again become the city's biggest wireless network services provider after it buys CSL New World Mobility. The deal is under review by the Communications Authority.
In its filing with the Hong Kong stock exchange, HKT Trust and HKT reported a 53 per cent jump in net profit last year to HK$2.46 billion, up from HK$1.61 billion in 2012, driven by the performance of its fixed-line telecommunications services and improvement in its mobile business.
Total revenue rose 8 per cent to HK$22.83 billion from HK$21.08 billion. Its adjusted funds flow, which is the measure on which the cash distribution of HKT's share stapled unit holders is based, increased 8.6 per cent to HK$2.9 billion.
A Barclays report said the HKT-CSL New World merger would be "a meaningful positive catalyst" in the telecommunications sector on prospects of higher margins and lower marketing costs for the remaining players