OFCA launches consultation on HKT’s takeover of CSL

24 Dec 2013

Hong Kong Office of the Communications Authority (OFCA) yesterday issued a public consultation paper on the recently proposed acquisition of 100% of the shares of cellco CSL New World Mobility (CSLNWM) by rival full-service operator Hong Kong Telecommunications (HKT), part of PCCW. The regulator stated that an examination of the proposed deal was necessary in regards to section 7P of the Telecommunications Ordinance, which regulates merger and acquisition activities involving a carrier licensee. On 4 October 2013 HKT sought the prior consent of its acquisition of CSL, and subsequently, in a deal which went public last week, HKT submitted a revised application clarifying that the acquisition will be of CSLNWM, the parent company of CSL.

Amongst the submissions contained in the document for public consultation, HKT said that it while it does not consider that the proposed transaction raises any significant issues under section 7P, it submits that the purchasing operator is nevertheless prepared to make the following commitments if so required by OFCA:

(a) HKT would continue to provide wholesale services now provided by CSL and HKT (e.g. MVNO, resale and network sharing arrangements);

(b) HKT/CSL would acquire not more than a total of 2×15 MHz of spectrum in the 1.9–2.2GHz band (‘3G Spectrum’) upon expiry of the existing assignment of the 3G Spectrum in October 2016. HKT and CSL would not participate in the auction for the 3G Spectrum. More specifically, HKT and CSL commit that each would not seek to renew the assignment of 2×5MHz of 3G spectrum respectively in the 1930.2–1935.1MHz paired with 2120.2–2125.1MHz, and 1935.1–1940.0MHz paired with 2125.1–2130MHz upon expiry of the existing assignment in October 2016; HKT further commits that it would not seek to renew the assignment of/acquire 2×5MHz of 3G spectrum in the 1920.3–1925.3MHz paired with 2110.3–2115.3MHz bands; and HKT and CSL commit that they would not participate in the auction for the 3G Spectrum; and

(c) HKT would fulfil all CSL’s licence and customer contract obligations.

CSLNWM is ultimately owned by Telstra of Australia (76.4%) and Hong Kong’s New World Development Company (23.6%). HKT is approximately 63% owned by PCCW Limited (PCCW Group).

Responses to the consultation must reach OFCA by 24 January 2014.

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