SmarTone, Buyout Group Said to Vie for $1 Billion Wharf Unit

Updated on
  • HKBN also makes final bid for corporate internet provider
  • Hong Kong tycoon Peter Woo to pick winner by end of month

SmarTone Telecommunications Holdings Ltd. and a private-equity consortium are among final bidders for the internet provider owned by Hong Kong billionaire Peter Woo’s Wharf Holdings Ltd., people familiar with the matter said.

North Asian buyout firm MBK Partners and TPG Capital submitted a joint offer by last week’s deadline for Wharf T&T Ltd., which provides fixed-line services to mostly corporate clients in Hong Kong, according to the people. They are competing with HKBN Ltd. for the business, which could fetch about $1 billion, the people said, asking not to be identified as the information is private. 

Wharf, which said in March it’s reviewing businesses including Wharf T&T and pay-TV operator i-Cable Communications Ltd., plans to select a winner by the end of the month, the people said. Hong Kong-listed Nan Hai Corp. has submitted a proposal to acquire i-Cable, among other options, according to one of the people. The assets have also drawn a final offer from at least one mainland Chinese bidder, the person said.

Woo is seeking to unload telecom businesses he started in the run-up to the dot-com bubble in the 1990s as his main property business slows. Billionaire Cheng Yu-tung’s family, which runs Chow Tai Fook Enterprises Ltd. and New World Development Co., sold some assets to HKBN earlier this year for HK$650 million ($84 million).

Shares of i-Cable gained 17 percent to HK$0.95 at the close Wednesday in Hong Kong, bringing this year’s gains to 90 percent.

CSL Purchase

Buyers are discussing a valuation of around 11 times Wharf T&T’s full-year earnings before interest, taxes, depreciation and amortization, the people said. Should the deal be completed, it would be the biggest acquisition in the Hong Kong telecom industry since billionaire Richard Li’s HKT Ltd. bought wireless carrier CSL New World Mobility Ltd. from Telstra Corp. for $2.4 billion in 2014, data compiled by Bloomberg show.

Representatives for Wharf, SmarTone and HKBN declined to comment. External spokesmen for MBK and TPG also declined to comment. A representative for Nan Hai couldn’t immediately be reached for comment.

Owners of Hong Kong TV operators like i-Cable must comply with tests ensuring they are “fit and proper” to hold a broadcasting license, while control of such companies should be exercised from Hong Kong by directors who have lived in the Chinese territory for at least seven years.

Unprofitable Broadcaster

SmarTone, one of Hong Kong’s four mobile operators, is controlled by the city’s largest developer Sun Hung Kai Properties Ltd. Nan Hai runs the Dadi cinema chain in China and develops residential property in the southern province of Guangdong. The Hong Kong-based company agreed in December to buy control of the Crabtree & Evelyn skin care brand in a $165 million deal, and earlier this year it started the weekly “hk01” newspaper in the city.

For MBK and its founder, former Carlyle Group LP executive Michael Kim, a deal would follow a long track record of investing in Asian telecom and cable assets, including Taiwan’s China Network Systems Co. and South Korea’s C&M Co.

First-half Ebitda at Wharf T&T climbed 10 percent to HK$415 million. The Wharf unit says it accounts for 17 percent of the market for broadband services to corporate clients, lagging behind HKT, which has more than half of the market.

I-Cable, which has a market value of $246 million, posted its eighth consecutive annual loss last year as revenue from subscriptions and advertising slumped. The company obtained a free-to-air television license in May.