In addition to the existing shares, HKNet has also issued HK$142 million in new shares, of which CCT acquired HK$12 million and NTT Communications HK$130 million, bringing the Japanese company’s total stake to 79%.
“We are very pleased to complete the deal,” says Masanobu Suzuki, president and CEO of NTT Communications. “We believe HKNet can make another step in the fastest growing and expanding internet world, supported by the synergy among HKNet, NTT Com and Verio, which we recently acquired in the United States.”
Following four months of US Government scrutiny, in early September NTT Communications was given the go-ahead for a $5.5 billion acquisition of the US ISP Verio. Washington was concerned that the deal could present a foreign espionage risk by giving NTT, which is still majority owned by the Japanese government, access to US wiretapping activities, but those fears were obviously allayed and the deal was approved by US President Bill Clinton.
Not surprisingly given its ‘pro-business at all costs’ reputation, the Hong Kong government had no objections at all to NTT Communications taking a majority stake in HKNet.
HKNet was established as a wholly-owned subsidiary of CCT Telecom in 1994 and was one of Hong Kong’s first licensed ISPs. In July 1999 NTT Communications paid HK$105 million for a 49% stake in the company. Since then the company has moved into the data centre business as well as launching an International Direct Dial (IDD) service.
NTT Communications, HKNet and CCT Telecom are also partners in NTT Com Asia, a venture licensed as an External Fixed Telecommunications Network Service (E-FTNS) in Hong Kong. NTT Com Asia is 70% owned by NTT (Hong Kong), 20% by HKNet, and 10% by CCT Telecom. Through NTT Communications’ position as a capacity owner in the submarine cable projects of the China-US Cable Network and the Japan-US Cable Network, NTT Com Asia acts as a provider of international bandwidth to HKNet.
“We have already acquired cable capacity on a new cable called Asia Pacific Cable Network 2, or APCN2, which is scheduled to begin service in the middle of next year. Using this cable we’d like to provide lots of capacity and linkage from Hong Kong to various Asian countries as well as North America and Europe,” says Suzuki.
“HKNet will be utilising this international gateway provided by NTT Com Asia, but we’re hoping to have it utilised not only by HKNet, but also other service providers.”
