PCCW to pay $2.43 billion for CSL

Hong Kong’s PCCW has announced plans to buy Telstra’s 76% stake in local rival CSL for the sum of $2.43 billion.

The deal will put PCCW (Hong Kong) in control of assets it sold more than ten years ago, reports Bloomberg, and help to reduce the level of competition in Hong Kong’s saturated phone market, where there are approximately twice as many subscriptions as people.

"We are pleased to be able to make a proposal to bring CSL back into the HKT family,” said Alex Arena, managing director of HKT, the PCCW unit leading the takeover. “This transaction will enable us to grow HKT and also enable us to provide better service to customers of both HKT and CSL.”

PCCW says its share of the Hong Kong mobile market will be about 31% after the transaction goes through.

The operator has tried to allay regulatory concerns by insisting that its merger poses no “competition concerns”, but it has offered to maintain wholesale services as they currently are, and to return an additional 2x5MHz of 3G spectrum to authorities.

The concession is over and above the 2x10MHz the government has already proposed to take back from HKT and CSL when licenses expire in 2016.

HKT also says it will not participate in bidding for 3G spectrum being returned by market players if regulators approve the merger.

Analysts cited by Bloomberg reckon the merger will help PCCW to attract more high-end users to its service.

For Telstra (Melbourne, Australia), the deal will allow it to quit the Hong Kong market, where it has lost more than AUD2 billion ($1.8 billion) from writing down assets after acquiring wireless and cable businesses, according to Bloomberg.