China Mobile explores acquiring Hong Kong telecom firm HKBN -sources

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HONG KONG — State-owned China Mobile Ltd. is exploring a deal to buy Hong Kong’s leading telecom operator HKBN Ltd, four people with knowledge of the matter said, which could lead to a bidding war for the company currently valued at $1 billion.

In recent weeks, the people said, China Mobile sent a Request for Proposal (RFP) to a small group of banks advising on acquiring and acquiring the Hong Kong telecoms provider, which offers services including broadband and Wi-Fi management.

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The people, who declined to be identified because the information is confidential, said the Beijing-based company is still receiving offers from investment banks and has not yet decided to make a formal offer.

Shares of HKBN jumped more than 17% after a Reuters report, valuing the company at HK$9 billion ($1.15 billion).

China Mobile and HKBN did not immediately respond to a request for comment.

China Mobile’s potential interest in acquiring HKBN comes after infrastructure investor I Squared Asia Advisors submitted a non-binding letter of interest to the Hong Kong telecoms service provider in March.

HKBN said at the time that the infrastructure investor would place an offer via its portfolio company, HGC Global Communications, or one of its affiliates, should the deal go ahead.

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There may be other potential suitors for HKBN, said one person and a separate person familiar with the matter, including the Hong Kong-based private equity firm PAG.

PAG declined to comment.

Separate sources told Reuters that North Asia-focused private equity firm MBK Partners and acquisition firm TPG Capital, two of HKBN’s major shareholders, will seek a full exit from any potential buyout of the company.

MBK and TPG declined to comment.

One of the people said that China Mobile, the world’s largest mobile operator by total number of subscribers, hopes to boost its presence in Hong Kong by acquiring HKBN, which provides internet connections to households and businesses.

If China Mobile proceeds with its bid to acquire HKBN, it would be a major foray by the Chinese telecom operator into the Asian financial hub and regional home to several global financial institutions.

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China Mobile is a major telecom service provider in the world’s second largest economy but has a limited footprint outside its home country.

China Mobile launched commercial operations in Hong Kong in January 1997, months before the city was handed over to China from the United Kingdom. It mainly provides mobile communications and internet services to both homes and businesses.

HKBN reported revenue growth of 1% to HK$11.6 billion in the fiscal year to August 31, 2022, while its adjusted net profit rose 20% to HK$905 million.

It had 37% market share in the enterprise broadband business in Hong Kong and 34% market share in the city’s residential broadband business, according to its 2022 annual report.

In 2018 HKBN acquired fixed-line operator WTT HK in a deal that valued the business at $1.34 billion. The co-owners of WTT HK, TPG and MBK partly pulled out in this takeover. ($1 = HK$7.8495) (Reporting by Ken Wu and Julie Chu in Hong Kong; Additional reporting by Donnie Kwok; Editing by Sumit Chatterjee and Sonali Paul)