China Telecom (Hong Kong) Group Ltd is to pay the equivalent of $1.6bn to raise its minority stake in Hong Kong Telecommunications Ltd, in a move that brings China’s interests in Hong Kong’s biggest phone company under the sole control of its communications ministry. China Telecom bought the 7.8% stake for HK$14.20 a share in cash from China Everbright Holdings Co, an investment venture controlled by China’s General Council. The price was set at a 7.7% discount over Hong Kong Telecom’s average price the past month. China Telecom now holds 13% of Hong Kong Telecom compared with 5.4% previously. Cable & Wireless Plc hold the controlling interest in Hong Kong Telecom with its 54.25% stake and HKT represents a major part of C&W’s business. In its last financial year HKT contributed approximately 44% of the company’s turnover and 65% of operating profits. The company is currently working to win preferential access to the rapidly expanding Chinese telecoms market. In June, China Telecom bought a 5.5% in Hong Kong Telecom from C&W for $1.18bn. At the time C&W said it would further reduce its holding by selling its shares to China Telecom until the two became equal shareholders. Although talks between the two companies are reported to be continuing, China Telecom has gone elsewhere to increase its interest. China Everbright only acquired its interest in Hong Kong Telecom in May last year from CITIC Pacific which sold all its shares to China Everbright for $1.47bn (CI No 3,158).
