Two private equity groups submit bids for Hutchison fixed-line unit -sources

[HONG KONG] A consortium of private equity firms TPG Capital Management LP and MBK Partners, and investment manager I Squared Capital Advisors LLC have put in separate bids for the fixed-line phone unit of Hong Kong's richest man, Li Ka-Shing, said people involved in the matter.

Hutchison Global Communications Ltd (HGC), a unit of Hutchison Telecommunications Hong Kong Holdings Ltd, provides a range of fixed-line telecommunications services in Hong Kong and overseas for corporate and residential users.

HGC, which had earnings before interest, tax, depreciation and amortisation (EBITDA) of US$161 million in 2016, is likely to be valued at US$1.2 billion to US$1.5 billion, three people told Reuters.

A final decision on the sale process is likely to be taken by HGC as soon as next week, said the people, who requested anonymity because the transaction details have not been released publicly.

The HGC sale process had earlier drawn bidding interest from Hong Kong broadband and telecoms service providers HKBN Ltd and SmarTone Telecommunications Holdings Ltd , said the people.

Both the companies have now decided to drop out of the race to acquire HGC because of concerns over valuations and potential anti-trust regulatory hurdles, two of the people said, declining to give details.

Hong Kong-based CITIC Telecom International Holdings Ltd , however, is still weighing a bid for the HGC business and is expected to take a final decision by end of this week, they said.

Representatives for MBK, HGC and HKBN declined to comment.

TPG, I Squared Capital, SmarTone and CITIC Telecom did not immediately respond to requests for comment.

MBK Partners has a long track record of investing in Asian technology, media and telecommunications assets, including Taiwanese network TV operator China Network Systems, cable television network Gala TV and Japanese software maker Yayoi.

TPG has also invested in a wide range of telecom companies in Asia, including telecommunications service provider Asia Netcom, now known as Pacnet, and Japan Telecom, now known as SoftBank Telecom.

HGC offers "wholesale services" to support mobile operators, global carriers, multinational firms, internet content providers and application service providers in Hong Kong, the Americas, Europe, the Middle East and Africa, along with the rest of Asia.

It owns and runs an extensive optical-fibre network, coupled with four cross-border routes integrated with three of mainland China's tier-one telecoms operators and an international network, according to its website.

REUTERS