IHS Global Insight Perspective | |
Significance | Hutchison Whampoa is considering a possible move to take HTIL private. |
Implications | A privatisation would help reduce financial costs and give Hutchison Whampoa greater control over HTIL's remaining assets. |
Outlook | It remains to be seen whether HTIL will hold on to its remaining assets or divest from them. |
HTIL said in a statement to the Hong Kong Stock Exchange that "the board of directors of Hutchison Telecommunications International Ltd. has received an approach from the company's majority shareholder, Hutchison Whampoa Ltd., regarding a possible general offer to the company's shareholders and optionholders". The company, which is about 60% owned by Hutchison Whampoa, added that an announcement on the matter "may be imminent". The Hong Kong-based telecoms company also suspended the trading of its shares after today's midday break, pending an announcement related to the possible general offer.
Outlook and Implications
- Limited Business Portfolio: The privatisation move comes as no surprise as HTIL has over the past few years sold off most of its major assets, with remaining operations only in Indonesia, Sri Lanka, and Thailand. In 2007, HTIL sold its Indian operation, the largest of its portfolio, to U.K.-based Vodafone Group. In May last year, the company spun off its Hong Kong and Macau operations for a separate listing to release value for shareholders (see Asia-Pacific: 5 March 2009: Hutchison Telecom 2008 Operating Profit Turns Positive, Company to Spin Off Hong Kong, Macau Operations). In October, HITL sold its 51.3% stake in the Israeli mobile operator, Partner Communications, to Scailex Corp (see Asia-Pacific - Israel: 13 August 2009: Hutchison Telecom H1 EBITDA Down 38.9% Y/Y, Will Divest from Partner Communications in Israel). HITL is also in the process of divesting from its business in Thailand. HTIL had said earlier last year it was in talks to sell all of its 66% stake in Hutchison CAT Wireless MultiMedia to CAT Telecom, its partner in the venture. In December, CAT Telecom approved in principle a plan to take over HTIL’s operation in the country.
- Future Strategy: HTIL had earlier put its strategic focus on developing its remaining operations, particularly the start-up businesses in Indonesia and Sri Lanka. It had accelerated network roll-out in the two countries. The Indonesian operation in September last year agreed US$422.2-million worth of orders and a service contract with Huawei Technologies for the expansion of its network. The Vietnamese operation aimed to take the number of base stations to 3,000 by the end of 2009. However, looking forward, it remains uncertain whether HTIL will hold on to these assets or divest from them. Nevertheless, a de-listing, would at least in the short term, reduce financial costs associated with listing on the stock exchange and, in the long term, give Hutchison Whampoa greater flexibility in handling these assets.