HUTCHISON CONSIDERS TELECOMS BUYOUT PLAN

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Hutchison Whampoa, the Hong Kong ports-to-retail conglomerate controlled by billionaire Li Ka-shing, is considering making a possible buyout offer to take its lossmaking telecoms subsidiary private.

Hutchison Telecommunications International (HTIL), an emerging markets-focused telecoms group that was spun off from Hutchison six years ago, has made a string of disposals in recent years.

But the sale of assets, most notably of its star Indian telecom joint venture, left it with a much thinner portfolio.

When HTIL first listed in Hong Kong and New York in 2004, it had operations in eight markets. Now, the company only operates in four countries.

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Shares of HTIL, which has a market value of about $1.02bn, were suspended from trading yesterday.

The shares last traded at HK$1.65 each. HTIL said a bid from Hutchison, its controlling shareholder with a 60 per cent stake, “may be imminent”.

Analysts said news of the possible buyout offer was not surprising as HTIL has raised a large amount of funds in recent years from selling units, while opportunities to invest the proceeds have been limited.

They said HTIL has also had difficulty finding buyers for its remaining operations, which are unpro- fitable.

“There is a lot of cash in the company. They don't know what to do with it. Hutchison may want to privatise it and put the cash to better use. This is a good way out for investors,” said a Hong Kong-based analyst who declined to be named.

In 2007, HTIL pocketed a $8.9bn profit after selling its controlling stake in Hutchison Essar, India's fourth-largest mobile operator, to Vodafone for $10.9bn

The disposal allowed HTIL to hand out about $8.45bn as special dividends after the company failed to find any acquisition opportunities in emerging markets

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Two years ago, HTIL sold its Ghana operation for $75m. In May 2009, HTIL spun off its operations in Hong Kong and Macao into a separate company that was listed in the territory. The listing did not raise additional capital.

Then in October HTIL realised a $1.08bn pre-tax gain from the sale of its 51 per cent stake in Partner Communications, its Israeli operation, for $1.38bn.

HTIL's four remaining operations in Indonesia, Sri Lanka, Thailand and Vietnam all lost money in the first half of 2009.

The company made a net loss of HK$285m (US$37m) in the six months to the end of June 2009 before the sale of the Israeli unit.