TPG, MBK to buy Hong Kong telecoms business for $1.22bn

The two investors will acquire the entire equity interest in Wharf T&T, Hong Kong’s largest enterprise-focused telecoms service provider.

Global alternatives manager TPG and MBK Partners, a north Asian independent buyout firm, will jointly acquire Wharf T&T for HK$9.5 billion ($1.22 billion; €1.09 billion).

Wharf T&T has an extensive fibre optic network covering approximately 90 percent of Hong Kong’s commercial market, with a portfolio of local data connectivity and ICT services. 

Wharf Holdings, the owner of the telecoms provider, said in a filing with the Hong Kong Stock Exchange that the market had changed drastically since it started the business over 20 years ago. After a strategic review, the company decided to sell Wharf T&T to maximise value to the shareholders of the Wheelock Group and Wharf Holdings. Wharf Holdings is a subsidiary of the Wheelock Group. 

“The attributable gain arising from the disposal accrued to Wheelock and Wharf is estimated to be HK$4.5 billion and HK$7.4 billion respectively. Upon completion, Wharf T&T will cease to be a subsidiary of Wheelock and Wharf,” Wharf Holdings said in the filing. The proceeds from the sale will provide additional cashflow to Wharf Holdings for future business development and investment opportunities, the company added. 

A special purpose vehicle will be set up and equally owned by MBK Partners Fund III and TPG to carry out the acquisition, which is expected to close by 23 November. 

MBK has a long history of investing in Asian telecom assets, including China Network Systems, Gala TV, Invoice, C&M and Yayoi, while TPG has also invested in a wide range of telecom companies across the globe. TPG’s telecom portfolio includes Hanaro Telecom, Asia Netcom, Softbank Telecom, Avaya and Apollo Towers. 

Focusing on investments in Japan, Korea, China, MBK is led by former Carlyle Group executive Michael Kim and has about $10.1 billion in capital under management while TPG, investing globally, has over $70 billion of assets under management.