City Telecom exits telecoms in Hong Kong

It will be Asia's largest private equity-backed deal so far this year.

City Telecom (H.K.) Limited, Hong Kong’s second largest provider of broadband Internet, is selling its telecom and broadband operations for some US$644 million to CVC Capital Partners, one of the world’s top five private equity firms.

City Telecom intends to use the proceeds from the sale to exit the telecoms business in Hong Kong and Canada and focus solely on its free-to-air television service and multimedia business currently offered under its Hong Kong Broadband Network (HKBN) brand.

HKBN offers diversified products that service over 1.2 million subscriptions for broadband, local telephony and IPTV services.

Part of the sale proceeds will be returned to City Telecom shareholders with the rest being invested in the multimedia business.

City Telecom said the sale will allow it to concentrate on its TV broadcast business, which it described as a long-term development project requiring investments of some US$322 million over the next four years. City Telecom said it expects to be one of three new recipients of free-to-air licences in Hong Kong.

Based in London and Luxembourg, CVC also owns Australian TV network, Nine, and last year bought a 49% stake in the cable TV and Internet businesses of Indonesian firm, First Media.