China's Tencent raises $6 billion in bond sale; proceeds for general purposes

HONG KONG (Reuters) – Chinese social media and gaming giant Tencent Holdings Ltd said on Thursday it has raised $6 billion in a bond sale, with proceeds earmarked for refinancing and general corporate purposes.

FILE PHOTO: A Tencent sign is seen during the fourth World Internet Conference in Wuzhen, Zhejiang province, China, Dec. 4, 2017. REUTERS/Aly Song/File Photo

The sale was Asia’s largest this year, Refinitiv data showed, exceeding property developer China Evergrande Group’s $2.8 billion issue in January.

Tencent sold $2 billion in fixed and floating rate five-year notes, $500 million in seven-year notes, $3 billion in 10-year notes and $500 million in 30-year notes, it said in a filing to Hong Kong’s stock exchange.

The bonds will carry coupons of 3.280 percent, 3.575 percent, 3.975 percent and 4.525 percent on the fixed rate five-year notes, seven-year notes, 10-year notes and 30-year notes, respectively.

The floating rate five-year note will have an interest rate of LIBOR plus 0.910 percent.

The tech firm earlier this week said its board had increased its Global Medium Term Note Programme limit to $20 billion from $10 billion, with proceeds going towards general corporate purposes.

Tencent had a $6 billion offshore issuance quota from China’s state planner, the National Development and Reform Commission (NDRC), two people with knowledge of the deal said on Tuesday.

Deutsche Bank, HSBC, Goldman Sachs and Morgan Stanley were joint global coordinators for the sale, Tencent said in an earlier filing.

Tencent suffered a rough 2018, as China’s gaming regulator’s nine-month hiatus in approving games for monetization prevented the firm from capitalizing on some of its most popular titles.

Net profit for the last quarter of 2018 fell the most since the firm went public in 2004, by 32 percent, in part due to one-off losses at portfolio companies.

Reporting by Donny Kwok and Julia Fioretti; Editing by Christopher Cushing

South Korean, U.S. telcos roll out 5G services early as race heats up

SEOUL (Reuters) – South Korea’s three mobile carriers and top U.S. telco Verizon Communications commercially launched 5G services on Wednesday, ahead of their initial schedules, as they rushed for first spot in the race to roll out the latest wireless technology.

People take photographs during a launching ceremony for SK Telecom’s 5G service, in Seoul, South Korea, April 3, 2019. REUTERS/Kim Hong-Ji

SK Telecom and two smaller carriers had planned to initially launch 5G in South Korea on Friday with Samsung Electronics’ new 5G-enabled smartphone Galaxy S10.

Verizon was due to roll out the technology in Chicago and Minneapolis on April 11, and said last month customers could use 5G on Motorola’s Z3 and a “Moto Mod”, a physical magnet-like attachment for the phone.

Countries including South Korea, United States, China and Japan are racing to market 5G, hoping the technology will spur breakthrough in fields such as smart cities and autonomous cars.

The technology can offer 20-times faster data speeds than 4G long-term evolution (LTE) networks and better support for artificial intelligence and virtual reality with low latency.

Sometimes it can offer 100-times faster speeds.

South Korea claimed to be the first country to launch 5G, but that was disputed by U.S. carriers who say they rolled out 5G in limited areas as early as last year.

U.S. telco AT&T Inc said it was the first to launch a “commercial and standards-based” 5G network in December 2018. The service, however, was made available to mobile hotspot devices but is not yet on phones.

SK Telecom spokeswoman Irene Kim told Reuters the company had internal discussions and decided to launch the 5G service early as the company had networks and customers ready.

South Korean carriers started offering 5G services at 11 p.m. local time (1400 GMT) on Wednesday.

FANFARE

In South Korea, telcos and smartphone makers are pulling out all stops to market 5G services and devices.

On Wednesday, SK Telecom showed off K-pop stars and an Olympic gold medalist as its first 5G customers.

The company said it was working with its memory-chip making affiliate SK Hynix to build a highly digitized and connected factory powered by 5G technology.

Smaller rival KT Corp said it will offer cheaper 5G plans than its LTE service, with unlimited data and four-year installments to buy 5G devices.

Samsung was the first to unwrap a 5G phone in February when it unveiled the Galaxy S10 5G and a nearly $2,000 folding smartphone, putting the world’s top smartphone maker by volume in pole position in the 5G race, some analysts say.

LG Electronics Inc plans to release its 5G smartphone in South Korea later this month.

SECURITY CONCERNS

While security concerns over 5G networks using telecom equipment made by China’s Huawei Technologies Co Ltd have marred the buildup to the release of these services, South Korean telcos have tried to shrug them off.

“I don’t think we have a security issue in South Korea,” Park Jin-hyo, head of SK Telecom’s information and communication tech research center, told reporters.

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He added the company uses advanced technology to block eavesdropping or hacking into 5G networks.

Among South Korea’s three operators, SK Telecom and KT Corp do not use Huawei equipment for 5G. Smaller carrier LG Uplus Corp uses Huawei gear.

But SK Telecom officials said it was likely there will be an open auction for network equipment makers including Huawei if South Korea needs more base stations for higher frequencies. The country has one of the world’s top smartphone penetration rates.

Reporting by Ju-min Park in Seoul and Kenneth Li in New York; Editing by Diane Craft, Sayantani Ghosh and Himani Sarkar