Hong Kong-based residential broadband services provider HKBN will merge with fixed-line operator WTT, jointly owned by private equity firms MBK Partners and TPG, in a deal valued at HK$10.5 billion ($1.34 billion), the companies announced on Tuesday.
According to an official statement, MBK Partners and TPG will each own an 11.66 percent stake in HKBN upon closing of the transaction in the first quarter of 2019. In addition, MBK Partners and TPG will both hold a vendor loan note valued at HK$970.5 million, while HKBN will assume the existing debt and cash of WTT group.
MBK Partners and TPG also get to nominate a director each to the HKBN board.
WTT, which was acquired by MBK Partners and TPG Capital in 2016, is an enterprise-focused fixed telecommunication services operator. The company, formerly known as Wharf T&T Limited, has already invested over HK$7 billion to create a fibre optic end-to-end network in Hong Kong covering more than 5,400 commercial buildings.
HKBN, meanwhile, is the second largest provider of residential broadband services in Hong Kong. The company’s array of enterprise solutions for small and medium enterprises complement WTT’s pure-play solutions focused on larger corporate and wholesale clients, the statement added.
“WTT and HKBN make for a powerful combination that is strategically compelling for both companies Combining the two businesses will allow us to achieve even more for our customers, employees and business partners through a comprehensive suite of solutions,” said TPG Partner Ricky Lau.
Among WTT and HKBN’s competitors in the Hong Kong enterprise market, which covers broadband and IT services, is Hutchison Global (HGC), owned by Hutchison Telecommunications Hong Kong Holdings. Amid tight competition in the market, HKBN recently announced special switch-over offers to lure WTT and HGC customers to switch to its enterprise services.