Wharf will shut down i-Cable unless it finds someone willing to fund it

Wharf chairman Stephen Ng Tin-hoi

ITEM: Hong Kong’s pay-TV landscape is about to kill off the city’s original cable TV player, i-Cable. I-Cable’s owner – property giant Wharf (Holdings) – said in a statement that it will quit the pay-TV business after failing to find someone willing to either fund it or take i-Cable off its hands, reports the South China Morning Post:

“The possibility to see i-Cable turning around is low,” Wharf’s chairman Stephen Ng Tin-hoi said during a Thursday press conference. “We have tried very hard to talk with many investors, but no one intended to buy.”

Whether i-Cable actually shuts down will depend in part on whether Wharf can find someone else to fund it, as the company has decided not to waste any more money on it.

While the Communications Authority renewed i-Cable’s pay-TV licence for 12 years to 2029 last December, one condition of the license is that i-Cable invest HK$3.4 billion for the first six years. According to SCMP, i-Cable has to fulfil its financial responsibilities before its license matures at the end of May.

If it doesn’t, i-Cable will not only lose its pay-TV license, but also the new free-to-air terrestrial TV license of affiliate Fantastic Television it acquired last year. (It will also forfeit the HK$13 million deposit it paid for that license.)

The move by Wharf to ditch i-Cable isn’t a surprise – the property company has already sold off its other telecoms properties, the most recent being its HK$9.5 billion cash deal in October 2016 to unload its fixed-line business Wharf T&T to private equity firms MBK Partners and TPG Capital. I-Cable is the last man standing in its comms/media portfolio. i-Cable reported a loss of HK$313 million last year.

Part of i-Cable’s problems can be pinned down to Hong Kong’s hyper-competitive pay-TV environment (to include OTT competition from the likes of Netflix and Hooq). Indeed, i-Cable is hardly the first casualty – in January, broadcaster TVB shut down its pay-TV service TVB Network Vision to focus on its OTT set-top box MyTV SUPER.

The other problem was simply lack of an effective strategy to compete in the changing environment, one industry watcher told the SCMP:

“The problem is i-Cable did not make full use of the advantage with its fibre optic broadband network,” said Grace Leung Lai-kuen, a professor in media regulation and policies at Chinese University. “It’s supposed to have a good platform but it could not attract as many subscribers as the Hong Kong Broadband Network. HKBN had a better strategy so i-Cable lost subscriptions to its broadband and TV services, despite its synergies.”

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