China Mobile explores buyout of Hong Kong telecom firm HKBN
China Mobile Ltd is exploring a buyout of Hong Kong’s leading telecoms company HKBN Ltd, four people with knowledge of the matter said That could spark a bidding war for the firm currently valued at $1 billion.
China Mobile in recent weeks sent a request for proposal (RFP) to a small group of banks to advise on acquiring and taking-private the Hong Kong telecom provider, which offers services including broadband and Wi-Fi management, the people said.
HKBN shares jumped more than 17% after the Reuters report and closed at HK$6.57 a piece Tuesday, valuing the company at HK$8.6 billion ($1.1 billion). HKBN declined to comment. China Mobile did not respond to a request for comment.
China Mobile’s potential takeover interest in HKBN comes after infrastructure investor I Squared Asia Advisors submitted a non-binding letter of interest for the Hong Kong telecoms services provider in March.
HKBN said at that time the infrastructure investor would make an offer via its portfolio company HGC Global Communications and or one of its affiliates, should it proceed with the deal.
There could be other potential suitors for HKBN, said one of the people and a separate person with knowledge of the matter, including Hong Kong-based private equity firm PAG who declined to comment.
North Asia-focused private equity firm MBK Partners and buyout firm TPG Capital, which are among the top shareholders of HKBN, will seek to fully exit in any potential buyout of the company, separate sources have told Reuters.
HKBN reported it had a 34 per cent share of Hong Kong’s residential broadband market and 37 per cent of the enterprise market at end-2022. In late March, HKBN’s board said it was approached about a potential take over by I Squared Asia Advisors, the same asset management company that owns Hong Kong ISP HGC Global Communications.
Others showing interest include global investment company PAG, Bloomberg wrote, noting potential buyers may team with HKBN management for a buy out.
A sale in 2022 was halted by potential buyers including KKR and PAG due to concerns over the valuation.
HKBN was sold to CVC Capital Partners in 2012 in a management buy out and was listed in 2014.
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China Mobile and ZTE complete commercial trial of optical network co-routing detection
ZTE and the Yunnan Branch of China Mobile have completed the commercial trial of co-routing detection in China Mobile’s existing optical network in Yunnan Province, China.
The trial involves two scenarios: co-cable routing detection and co-ditch routing detection. The trial result shows that there will be an early warning of active/standby paths in the same optical fiber or route so that it can be avoided in time based on fiber sensing. Besides, the originally dumb fiber resource will be visualized. Thus, the operator’s service reliability and network O&M efficiency can be greatly improved.
As digital transformation is developing rapidly in all industries, the optical network is facing intelligence challenge. Intelligent OA&M emerges as one of the focus areas, while the problem of low service survivability caused by co-routing becomes serious.
China Mobile cooperated with ZTE to verify the feasibility of co-cable and co-ditch routing detection of service paths on the existing optical network, including active/standby service routing detection and inbound/outbound service route detection at specific sites.
According to the verification, ZTE’s optical network co-routing detection function can exactly detect co-cable routing of 14 optical cables and 54 fiber cores by dynamic parameter optimization, AI algorithm and experience threshold adjustment. Also, ZTE takes analysis, contrast and on-site specialist inspection to exactly detect co-ditch routing of 12 optical cables and about 20 ditches in 4 core equipment rooms. The verification proves that ZTE can provide the operator with flexible optical network co-routing detection methods, along with real-time, accurate and reliable intelligent O&M measures, which well guarantees service survivability and alleviates the difficulty in dumb fiber resource management.
“The function can effectively solve actual problems in production and operation. Before this, active/standby routes are planned on the resource management map, and routing is determined manually, which leads to high error rate. Additionally, the accuracy of resource management information is hardly under control, thereby increasing routing risks,” said the leader of Network Management Center of China Mobile Yunnan.
“In the original routing detection, people pulled or pushed the cable underground manually, which resulted in low efficiency and service interruption. However, the co-routing detection now leverages dumb fiber resources without service switching. The innovative function remarkably reduces manpower and ensures service survivability while allowing resource management information modifications and route re-planning to avoid service interruption losses,” he added.
The trial will further promote the growth of the operator’s autonomous optical network and lay a strong foundation for its intelligent network in the “east-data-west-computing” project. Moving forward, ZTE will continue in-depth research and exploration on autonomous optical networks, and work together with global operators to build new intelligent networks to boost the development of digital economy.
This announcement comes just six days after ZTE said that it has ranked No.1 with a share of 50% in China Mobile’s centralized procurement 2022-2023 of Optical Transport Network (OTN) devices. ZTE’s selected devices will help the operator increase the coverage and bandwidth of its provincial networks to satisfy all-optical network development in the era of computing-network convergence.
This centralized procurement involves provincial backbone, core, aggregation and access, covering all network layers in the provinces. AIso, it imposes high requirements upon device types, transmission performance, and cross-connect capabilities.
At provincial backbone, core and aggregation layers, ZTE’s OTN products provide a single-device cross-connect capacity of up to 64T and a single-fiber capacity of up to 96T. With industry-leading 200G/400G transmission performance, they can provide sufficient network bandwidth for new service growth of China Mobile in the 5G era. At the access layer, ZTE’s compact OTN products based on the ODUk/PKT/VC/OSU unified cross-connect platform can provide access of various services such as 4G/5G/home broadband/enterprise network/edge cloud, significantly decreasing operator’s CAPEX and OPEX.
According to the latest assessment released by GlobalData, ZTE maintains the “Leader” rating in “Core Packet-Optical Transports”, with the “Leader” ratings in “cross-connect capacity and functions” as well as “port capacity”. Also, ZTE is rated as “Very Strong” in “Packet-Optical Access” assessment. In addition, ZTE has received high scores from Lightwave Innovation Reviews in February this year.
Moving forward, ZTE will adhere to technological innovation, step up product R&D, and work with global operators to build new intelligent optical networks and boost the digital transformation of the entire industry.