The move continues BT's strategy of buying minority stakes in Asian telecoms operators as governments begin to open up markets. It also gives BT a way in to the potentially huge Chinese market when foreign companies are allowed in.
SmarTone has more than half a million customers and an 18 per cent share of the Hong Kong market, ranking it third behind operators owned by Hong Kong Telecom, which is owned by Cable & Wireless, and Hutchison Whampoa. Penetration of mobile phones in Hong Kong is among the highest at 40 per cent, and is predicted to hit 60 per cent by 2001.
Alfred Mockett, chief executive of BT's overseas operations, said the deal took the group's spending in Asia-Pacific to more than pounds 800m in recent years. Last year BT took a 23.5 per cent stake in the South Korean mobile operator LG Telecom and bought a third of Binariang, the Malaysian group.
"Until two years ago Asia was locked up like a drum," he said. "We believe it is the future engine of growth for our industry."
Mr Mockett said BT had identified Hong Kong as one of its eight key target markets in the region, and SmarTone had proved to be one of the best opportunities BT could find. However, he refused to comment on rumours that BT planned to take a stake in Japan Telecom.
The cash injection in SmarTone will ensure the company can fund the development of its business in Hong Kong, although Mr Mockett said more funds may be needed when licences for the third generation of mobile phone services are auctioned in a few years' time. Last year SmarTone made a profit of HK$1bn (pounds 81m) on turnover of HK$4.1bn.
Mr Mockett said BT was attracted by SmarTone's ownership of licences to run both 900 megaherz and 1,800 megaherz networks, allowing it to offer dual-band services attractive to business customers.
Other major shareholders in SmarTone include Sun Hung Kai Properties, a property development group controlled by the Kwok family; an investment vehicle run by Hong Kong's ministry of information; and Templeton, the US fund management group.
BT will have three directors on SmarTone's board and will have nomination rights for the post of finance director.Reuse content