Hong Kong Telecom IMS Buys Rival, Controls Over 70% Of ISP Market

After a week of speculation, Hong Kong Telecom’s ISP Unit, IMS Netvigator, bought its competitor, Hong Kong Star, for approximately US$32 million.

Completed on Friday afternoon, the acquisition will result in Netvigator increasing its portion of the market from 40 percent to 70 percent, nearly a half a million subscribers.

Industry analyst speculate the purchase will result in large layoffs of former Star employees, as Hong Kong Telecom’s ultimate goal was to buy Star’s customers, not its work force.

Earlier on Friday, Allan Ma, the CEO of IMS Netvigator, hinted during a Internet ad conference, “there certainly is room for consolidation in Hong Kong’s Internet industry.”

Some observers believe that HK Telecom acquired Star to counter other movements in the Hong Kong ISP market including the recent launching of Hutchison Telecom’s unit and PSINet’s purchase of LinkAge in July.