$2.4 Billion Deal for Hong Kong Wireless Business

HONG KONGâ€"The Hong Kong billionaire Richard Li is raising his bet on telecommunications, agreeing on Friday to pay $2.4 billion to acquire one of Hong Kong’s biggest mobile phone networks.

Mr. Li’s company HKT said that it would acquire 76.4 percent of CSL New World Mobility from Telstra, the Australian telecommunications company, and the remaining 23.6 percent stake from New World Development, a conglomerate controlled by the family of the Hong Kong billionaire Cheng Yu-tung.

For Mr. Li, the son of Asia’s richest man, Li Ka-shing, the deal will deepen his stakes in telecommunications and make him one of the biggest players in Hong Kong’s small but lucrative mobile sector.

Mr. Li’s HKT is currently the smallest of the city’s five mobile carriers.  But when combined with CSL, it estimates it will have a 31 percent market share in Hong Kong. At the same time, Mr. Li’s PCCW Ltd. is one of the city’s biggest providers of fixed-line telephone and broadband Internet services.

Buying CSL is also a return to familiar territory for Mr. Li.

The company was set up in the early 1980’s as the city’s first mobile carrier. Mr. Li’s PCCW acquired the mobile business when it bought Cable & Wireless HKT, the city’s former monopoly provider of fixed-line telephone services, in 2000. The next year, PCCW sold a 60 percent stake in CSL to Telstra for about $1.7 billion.

“We are pleased to be able to make a proposal to bring CSLNW back into the HKT family,” Alex Arena, group managing director of HKT, said Friday in a statement. “This transaction will enable us to grow HKT and also enable us to provide better service to customers of both HKT and CSLNW.”

For Telstra, the sale is the second time in a week that the Australian company has cashed in on investments in greater China. Last week, it earned proceeds of about $133 million when Autohome, Chinese auto website, completed an initial public offering in New York.

“We have seen significant growth in different parts of our business in Asia, including Autohome and Telstra Global, and our plans to grow our business in this region remain firmly in place,” Telstra chief executive David Thodey said Friday in a statement.

“CSL has been a strongly performing business,” Mr. Thodey said. “However, there are a number of dynamics in the Hong Kong mobiles market that means this is the right opportunity for Telstra to maximize our return on this successful asset.”

The deal is subject to regulatory approval in Hong Kong, which has a dedicated competition authority for the communications industry. As part of the transaction, HKT has agreed to maintain services to CSL’s existing re-sellers, and to continue existing network sharing agreements.