i-Cable Communications (01097.HK), the struggling Hong Kong pay-television broadcaster, is seeking a new partner for its television content business.
Over one year after a new owner Forever Top, a consortium led by New World Development chairman Henry Cheng Kar-shun and tycoon David Chiu Tat-cheong, took control, the company has announced that it entered into a memorandum of understanding with China Mobile Hong Kong (CMHK) in relation to provision of television content to the telecoms carrier.
i-Cable shares surged as much as over 79 percent in early trading on Monday following news of the deal with the unit of mainland telecoms giant China Mobile (00941.HK).
As of mid-morning, the stock was changing hands at HK$0.13, up 47 percent from its previous close.
According to a regulatory filing, i-Cable and CMHK have expressed intent to negotiate a binding agreement for certain commercial arrangements, which would lead to payment of certain fees by CMHK to the Hong Kong cable TV operator.
The payments will be for services that would include consultancy for network construction and maintenance, and provision of television content to CMHK.
Also, the two sides will explore prospective business opportunities by tapping into the combined networks of CMHK and i-Cable.
The agreement, if it materializes, is expected to cover a period of twenty years, with the possibility that it could be extended further for another five years.
Once owned by Hong Kong property giant The Wharf Holdings (00004.HK), i-Cable had been put up for sale since mid-2016, after Wharf refused to inject fresh capital into the firm following years of losses at the cable TV operator.
White knight consortium Forever Top came to the rescue and became the majority shareholder in i-Cable after a share sale last year in which Wharf did not participate.
As a way to diversify its business, the subscription-based pay TV network has launched a free-TV unit, Fantastic Television, which started broadcasting in May last year.
After reporting an accumulated loss of HK$2 billion (US$254.9 million) for the financial year ended March 2018, the company said it hopes to break even in the next three to five years, by ramping up efforts on internet content such as developing over-the-top (OTT) services.
As per a feature update posted on Google Play and Apple’s App Store in late August, the mobile application of UTV, an OTT TV service launched by CMHK, announced that CMHK customers would get live-streaming content from three i-Cable channels including i-Cable News, Finance info Channel and HD Entertainment Channel.
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