China Mobile's Acquisition Talks for HKBN: A Game-Changer in the Telecommunications Sector

China Mobile's Acquisition Intentions

China Mobile, the largest mobile-phone carrier in the world by subscriber count, is engaging in discussions regarding a buyout offer for broadband service provider HKBN. The Hong Kong unit of China Mobile has presented a cash proposal to acquire all issued shares of the company, as confirmed in a statement to Hong Kong's stock exchange.

Details of the Offer

• HKBN’s board has acknowledged the proposal and discussions are ongoing.
• The potential buyout offer has caused HKBN shares to be suspended from trading.
• HKBN’s shares have appreciated 32% this year, outperforming the Hang Seng Index.

Market Reactions

The announcement has resulted in a 6.7% rise in HKBN shares to HK$4.60, while China Mobile shares increased by 0.4% to HK$71.30. With a market valuation of HK$6.03 billion (approximately US$774.8 million), HKBN operates in a highly competitive telecom industry.

Future Announcements

HKBN has committed to making monthly announcements regarding the progress of the acquisition discussions until a definitive decision is reached. China Mobile is reportedly in talks with major shareholders including MBK Partners and TPG, aiming for a bid of at least HK$5 per share, which could exceed HK$6.5 billion.

HKBN's Market Position

Operating since 1999, HKBN provides internet, telecommunications, data center, and Wi-Fi services to around 2.57 million families in Hong Kong. Recent financial reports indicate a net income turnaround to HK$10.3 million, following a substantial loss in the previous year.

As investment firms like IDG Capital express interest in HKBN, market analysts project a price target of HK$4 for the stock, hinting at a potential downturn of 13% from its current valuation.