Fundraising

HKBN buys New World Telecoms for $84m

The CPPIB-backed Hong Kong broadband firm has expanded its enterprise solutions network by acquiring its rival.

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Hong Kong Broadband Network (HKBN) has acquired the entire equity interest in the telecommunications and online marketing solutions business owned by New World Development for a cash consideration of HKD650 million (€75 million; $84 million), according to a filing with the Hong Kong Stock Exchange. 

The two businesses, New World Telecommunications (NWT) and New World iMedia Solutions, are engaged in the provision of fixed line and broadband telecommunications services and online marketing solutions respectively in Hong Kong. 

The acquisition represents a complement to HKBN’s existing business, as NWT is an enterprise solutions-focused business with more than 94 percent of telecommunication services revenue generated from commercial customers.

The combination, HKBN said, will result in a business with more than HKD3 billion in total revenue and more than HKD1 billion in enterprise solutions revenue.

Running through a network covering approximately 491 commercial and 267 residential buildings in key commercial districts in Hong Kong, NWT’s fixed line and broadband telecommunication services business generated HKD613 million of revenue for the year ended 30 June 2015. 

“The combined scale will strengthen the Group’s presence and capabilities in the enterprise solutions market and create necessary scale to compete effectively with incumbent players of the broader enterprise telecommunications market,” the buyer said in a statement. 

The acquisition is expected to lower HKBN's operating costs by 5 to 10 percent per year from 30 June 2017 onwards.

JP Morgan is underwriting the purchase via a five-year bullet term loan facility of up to HKD700 million. 

The Canada Pension Plan Investment Board (CPPIB), the Toronto-based pension fund, acquired an approximately 18.14 percent stake in HKBN for $200 million in March 2015. 

HKBN is principally engaged in the provision of high-speed fibre-optic broadband, while New World Development invests in a broad spectrum covering property, infrastructure, hotels, telecommunications and technology.