The market for mobile telecoms promises growth but teems with competition. So infrastructure investors are increasingly pegging their hopes on the greater stability of “wired” broadband businesses. An example: I Squared Capital has agreed to buy HGC, the fixed-line subsidiary of Li Ka-shing’s Hutchison Telecom, for HK$14.5bn ($1.9bn). Shares in Hong Kong-listed Hutchison jumped 6.8 per cent to two-year highs.
Online TV offerings have helped demand for broadband connections delivered through fixed lines. The International Telecommunications Union estimates the number of fixed broadband customers grew 11 per cent to 884m in the year to 2016. The Asia-Pacific region is half the total, and grew faster.
The fixed-line business is less competitive than mobile and comes with higher margins. This reflects subscribers’ inertia and a slower upgrade cycle. The difficulty of providing “last-mile” infrastructure provides a barrier to entry, too.