Bank of America Merrill Lynch gave Hong Kong Broadband (01310.HK) and Hong Kong Telecom (06823.HK) purchase ratings, with target prices of $10.2 and $12.3 respectively; Hetel Hong Kong (00215.HK) and Digitcom (00315.HK) gave “neutral” ratings, with target prices of $2.9 and $13.4 respectively.

Bank of America Merrill Lynch pointed out that Jiucang (00004.HK) sold all of Jiucang Telecom's shares to the private equity fund consortium at a cash cost of 9.5 billion yuan. The cost was equivalent to 12 times the corporate value, similar to Hong Kong Broadband, but 10 times higher than New World Telecom (acquired by Hong Kong Broadband in February 2016).

Bank of America Merrill Lynch believes the transaction will have a positive impact on the Hong Kong fixed network market. Since private companies tend to improve management, operating expenses and capital raising efficiency to bring maximum profit to investors, they believe they will maintain rational competition in the future. Bank of America Merrill Lynch continues to be optimistic about integrated and fixed network telecom operators, such as Hong Kong Broadband and Hong Kong Telecom. Since it believes that the combined market share of the two will rise, competition in the fixed network market has abated, and Hong Kong Broadband has also shifted its focus from expanding its market share to increasing the average revenue per user.