11 December 2018

HKTV business plans hit fresh snag

The troubles surrounding the planned TV broadcast business of Hong Kong businessman Ricky Wong Waikay {黃維基} appear to be far from over.

After local regulators rejected a free-to-air TV license bid of Wong’s firm, Hong Kong Television Network (HKTV, 01137.HK), last October, the company is now facing obstacles in its proposed mobile broadband TV operation using the assets of a unit of China Mobile (00941.HK).

China Mobile said on Sunday that it has launched an internal investigation into subsidiary China Mobile Hong Kong Corp’s asset transfer deal with HKTV amid concerns that the pact could have violated China’s rules.

China’s stated owned enterprises have to get approval from the State-owned Assets Supervision and Administration Commission of the State Council before they transfer or sell any assets to overseas firms.

After the Hong Kong government refused a free-to-air TV broadcast license to HKTV last year, Wong subsequently announced new business plans for mobile TV services using China Mobile Hong Kong’s network. Under the plan, HKTV would invest HK$142 million (US$18.3 million) to acquire China Mobile Hong Kong, paving the way for HKTV to operate broadband TV channels.

HKTV had a grand blueprint for its TV broadcast business. It said it plans to launch three to five internet channels by July this year, and that it would rehire 320 staff that were let go earlier after the free-to-air license setback. The company added that it could even expand its workforce by a thousand within a couple of years.

Following the announcement of the new business plans on Dec. 20, HKTV shares surged as much as 92 percent on the Hong Kong bourse.

But now the company is facing renewed uncertainty due to China Mobile’s apparent rethinking. The bad news came even as the deal was cleared by the local regulator. Hong Kong’s Communications Authority said last Friday that it has no concerns over the deal as the regulator does not believe it will reduce competition in the city’s telecommunication market.

With HKTV having insisted that its agreement with China Mobile Hong Kong had been sealed, analysts say it is surprising for China Mobile to initiate the new investigation. It is highly unlikely that the parent company was unaware of the deal of the subsidiary when it was announced last year, they say.

Following the latest development, there are fears that some political factors could be in play, and that the deal could be in jeopardy. Amid these worries, HKTV shares slumped over 3 percent in morning trading Monday.

– Contact the writer at [email protected]


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