Vanda acquires telecom units to strengthen business

System integration and service provider Vanda Systems & Communication Ltd. on Friday announced its acquisition of Hutchison Whampoa Global Communication Ltd. (HGC) and PowerCom Network Hong Kong Ltd., for a total of HK$7.49 billion (US$964 million), from its parent companies Hutchison Whampoa Ltd. (HWL) and Cheung Kong Holdings (CKH).

Under the agreement, Vanda will acquire the fixed line telecommunication operator HGC from its HWL for HK$7.1 billion. Meanwhile, the company will also purchase a provider of broadband service through power sockets, PowerCom, for HK$390.9 million. PowerCom is a joint venture between the subsidiary of CKH and CLP Telecommunication Ltd.

The proposed merger is expected to allow the company to provide integrated telecommunications and IT services. The company noted HGC has one of the largest building-to-building optical fibre network in Hong Kong and is a significant player in the provision of bandwidth between the territory and Mainland China, while PowerCom will provide an alternative “last mile” access technologies.

PowerCom has established a strategic partnership with HGC for 18 months to provide last mile access technology for installing broadband service in residential estates, hotels and service apartments. It is expected to strengthen the merged company with a competitive advantage by providing Internet access using existing power cables.

“We have decided to merge the three companies because of the synergies which arise from their strong positions in both the telecommunications and IT sector,” said HWL Group managing director and Vanda chairman Canning Fok.

“We believe that the combination of Vanda’s computer hardware and software related expertise with HGC’s and PowerCom’s networking and telecommunications expertise will give Vanda an edge as a telecom and systems integration company in order to capture the growing demand from clients for total solutions packages” said Vanda Group CEO Loh Tiak Koon.

He also noted that the acquisition allows Vanda to widen not only its service offerings, but also geographical coverage to include Hong Kong, Mainland China and Southeast Asia.