Asia’s richest businessman, Li Ka-shing, and Telefonica will spend $1.04 billion buying stakes in PCCW, Hong Kong’s dominant telco and operator of NOW Broadband TV.
NOW, the world’s most successful Internet-based pay TV platform, has some 600,000 subscribers to its IPTV service and has become a major challenger to the cable TV incumbents in the pay TV sector.
With NOW and mobile firm Sunday Communications under its wing, PCCW is one of the few congloms anywhere able to offer consumers the quadruple play of fixed and mobile telephony, broadband Internet and TV.
Li and Telefonica are buying stakes, respectively 12% and 8% of the group, from Francis Leung, a former banker who in July agreed to buy the 23% stake in PCCW owned by Richard Li Tzar-kai, a flamboyant businessman and Li’s son.
Richard Li paid some $25 billion for PCCW in 1999, only to see its value crumble and its debts mount. The last few years have seen the business knocked into saleable shape.
Li’s first exit plan, which involved breaking out the media assets, was scuppered in June when it became clear he did not have the support of No. 2 shareholder China NetCom. Original plan also would have enraged mainland Chinese authorities, as control would pass out of Chinese hands.
New plan hatched in July foresaw Leung buying Li’s stake for $1.17 billion. But deal, which had the virtue of keeping PCCW essentially Chinese, was always going to become more complicated as Leung did not have the personal wealth to pull it off.
Latest configuration is a victory for Chinese interests. Telefonica said it will cooperate closely with China NetCom and put their combined 28% holding into a jointly administered vehicle.