Hong Kong-based telecom operator PCCW—controlled by billionaire Richard Li—has agreed to sell its data centre business to DigitalBridge for $750 million, cashing in on the rising demand for cloud computing as it pivots to new businesses.
Proceeds from the divestment will be used to fund the group’s investments into new growth areas such as technology and financial services, as well as repay debts or buyback company shares, PCCW said on Monday in a filing to the Stock Exchange of Hong Kong. The company will book an exceptional gain of $180 million from the transaction, which is expected to close by the fourth quarter of 2021 subject to regulatory approvals .
The acquisition gives DigitalBridge, a New York-listed real estate investment trust, a regional platform with data centers spread across China, Hong Kong and Malaysia. PCCW’s digital centers serve global hyperscale and large enterprise customers via a rapidly growing network of facilities based principally in Hong Kong, a key financial center and connectivity hub for Asia, DigitalBridge said in a separate statement.
“This is a terrific platform for DigitalBridge to expand its regional presence while supporting a strong management team focused on serving many of the same hyperscale and large enterprise customers that DigitalBridge works with on a global basis,” Marc Ganzi, DigitalBridge president and CEO, said in a statement.
For over 25 years, DigitalBridge has been investing in and operating businesses across digital assets including cell towers, data centers, fiber, small cells, and edge infrastructure. It manages a $32 billion portfolio on behalf of its limited partners and shareholders.
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PCCW, Hong Kong’s largest telco, is exiting the data center business despite a cloud computing boom brought on by the pandemic-induced demand for services such as e-commerce, video conferencing and digital payments.
“The future growth and expansion of the data center business will require significant capital expenditure,” the company said. “Through the transaction, the company will have the flexibility to allocate its capital and resources more efficiently to drive growth.”
PCCW is one of the key businesses owned by Li, a son of Hong Kong’s wealthiest person Li Ka-shing. The younger Li’s interests also include financial services, technology and property. He was ranked the 28th richest person in the city with a net worth of $4.5 billion when the World’s Billionaires List was published in April.