Subway operator to run rail line

MTR Corp, the operator of Hong Kong's subway system, has won approval from minority shareholders to take over operation of the city's other train company, clearing the final hurdle in a government-backed plan to cut fares.

The tie-up with Kowloon-Canton Railway Corp was backed by 82 percent of minority shareholders at a meeting yesterday, the government-controlled company said in a stock exchange statement. City lawmakers approved it in June.

MTR will cut ticket prices for Hong Kong's 2.8 million daily rail travelers from the first day of the 50-year deal. It plans to cover the drop in fares through cost savings and by boosting passenger numbers and real estate sales.

"The merged entity will benefit from synergies in terms of lower operating costs and reduced competition," Manfred Ho, an analyst at BNP Paribas SA, said before the poll. For customers, "the merger also allows some room for fare reduction. It's a win-win situation."

The Hong Kong government owns 76 percent of MTR, according to Bloomberg News data, and all of Kowloon-Canton.