Richard Li’s PCCW Agrees to Buy Vodacom’s African Carrier Unit
PCCW Ltd. (8), the Hong Kong-based phone company controlled by billionaire Richard Li, agreed to buy Vodacom Group Ltd. (VOD)’s satellite-services unit as it builds out its African operations.
PCCW Global will pay $26 million to acquire the carrier unit of Gateway Communications from Vodacom, the South African mobile-phone company controlled by Vodafone Group Plc (VOD), according to a Vodacom statement today.
PCCW is expanding its networks business for multinationals and carriers in Africa to counter domestic competition from companies including China Mobile Ltd. and Hutchison Telecommunications Hong Kong Holdings Ltd. (215) The company will retain Vodacom as a customer under the deal.
Vodacom is disposing of parts of Gateway after paying about $700 million for the unit less than four years ago. The company, the largest provider of wireless services to South Africans, is selling the division after traffic volumes slumped to focus on its own wireless operations in southern Africa.
“Gateway covers huge swathes of the continent and doesn’t have a great strategic fit with Vodacom,” said David Lerche, an analyst at Avior Research Ltd. “Why own a carrier business that serves Nigeria, for instance, when you don’t have an operator there?”
Vodacom fell 1.8 percent to 96.98 rand at the close in Johannesburg trading.
Networks Business
PCCW’s HKT Trust (6823) and HKT Ltd. unit offers international telecommunications to businesses and carriers and is the biggest fixed-line operator in Hong Kong. PCCW Global, the international arm of HKT, is buying the assets from Vodacom.
The initial public offering of HKT in November raised HK$9.3 billion ($1.2 billion) for parent PCCW.
The unit’s full-year profit rose 32 percent as mobile-phone revenue increased. PCCW now focuses on pay-television and computer services operations, and retains more than 50 percent of HKT after last year’s listing.
Vodacom acquired Gateway in 2008, adding the seller of telecommunications links to businesses and phone companies across Africa. The company took an impairment charge of 3.2 billion rand ($378 million) on the unit a year later after traffic volumes over satellite declined following the deployment of additional fiber-optic cables into east and west Africa.
To contact the reporter on this story: Jonathan Browning in London at jbrowning9@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net
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