The race is on for HKBN

China Mobile has been the most candid participant in the race for the Hong Kong broadband provider so far, disclosing that it is willing to pay HK$5.23 per share for all of the HKBN that it does not already own; that gives us a valuation of HK$6.86 billion (US$881 million).

However, the figure could rise higher. Taking into account restricted share units and vendor loan notes – China Mobile details these in a stock market filing on the deal – the purchase price could be as high as HK$7.8 billion, or just over US$1 billion.

And that's without taking into account the fact that there is a rival bidder who could yet push the price higher.

As well as sharing China Mobile's regulatory filing, HKBN supplied details of a non-binding offer from I Squared Capital.

Some details, that is. We don't have anything close to a valuation; talks are still ongoing when it comes to the T&Cs, including the price, HKBN said. But it explained that the infrastructure investor is interested in buying 100% of its shares through existing portfolio company HGC Global Communications, formerly known as Hutchison Global Communications and also a supplier of fixed broadband services in Hong Kong.

So essentially what we have here is two Hong Kong telcos battling it out for some in-market consolidation.

China Mobile appears to be further through the process, having submitted a formal offer, but clearly I Squared Capital is still in the race.

While the takeover bids appear to be coming thick and fast, this is very much a marathon and not a sprint for the companies involved.

Speculation over the future ownership of HKBN has been gathering pace in recent weeks, but the would-be buyers, and others, have been eyeing up the company for longer than that.

Reuters reported that China Mobile was mulling a bid for HKBN as long ago as April 2023. Then almost a year later HKBN's major shareholders MBK Partners and TPG revived a strategic review of the company with a view to offloading some or all of their holdings. Investors like IDG Capital, I Squared Capital and others were increasingly linked to the company, but rumour has it – Bloomberg being one major source – that no suitor was able to reach agreement with MBK Partners and TPG on valuation.

When China Mobile stuck its head above the parapet again in November, the newswires were talking about a HK$5-per-share deal. Its offer has exceeded that level by a reasonable margin and the telco is busy outlining all the various premiums that represents over HKBN's closing price on different – relevant – dates in recent months.

Shortly before the China Mobile announcement, Bloomberg sources claimed that I Squared Capital would offer somewhere between HK5 and HK6, which seemed like a pretty safe bet, given what we were expecting from China Mobile. It's still a fair assumption; I Squared Capital might not have to beat its rival's offer by much – or indeed at all, other considerations being a factor – to secure a deal.

China Mobile says it has secured the support of HKBN's two largest shareholders, Canada Pension Plan Investment Board and TPG Wireman, which hold stakes of 13.91% and 11.05% respectively. That seems like a vote of confidence in its suit, but could well become a moot point of another bidder comes in with a higher offer.

The speed of recent comms from HKBN suggests it may not be too long before we find out who wants it more.