HKBN cleared to merge with WTT

HKBN has secured approval from the Communications Authority to complete its acquisition of WTT Holding after making new commitments to the regulator.

HKBN and WTT revealed plans in August last year to merger through an all stock deal valuing WTT at HK$10.5 billion.

But the Communications Authority subsequently announced that it had identified a number of competition issues that could arise under the merger, and warned it may conduct a formal investigation into the merger.

These issues included concerns that competing operators could face difficulty accessing buildings that are not exclusively for residential use where both companies already have equipment in order to compete with the combined company.

The authority also raised concern that downstream rivals may become locked into wholesale agreements with the combined company, making them captive customers.

To address these concerns, HKBN and WTT made additional commitments in January, and subsequently revised them in response to feedback from the regulator.

Under the revised commitments, the combined company has agreed to facilitate access to any elements of its in-building communications systems in relevant buildings that will be required for rivals to serve non-residential customers.

The merged company would also agree to provide wholesale services on existing or no less favorable terms to downstream rivals for three years after the date of the revised commitments rather than two.

With these commitments, the authority said it is satisfied that its competition concerns have been effectively addressed, and now does not intend to commence an investigation into the deal.

HKBN said the company is now on track to complete the acquisition by the end of the month. The company has appointed two new directors that will represent the new major shareholders it will be acquiring through the transaction. Zubin Iraini will represent TPG Capital Asia, and Teck Kong will represent MBK Partners.

Meanwhile HKBN has selected current HKBN Enterprise Solutions COO Billy Yeung to assume the dual role of CEO of HKBN Enterprise Solutions and CEO of WTT and lead the integration of the companies.

Current WTT CEO Vincent Ma will retire from the role immediately upon completion of the transaction.