Hutchison sells stakes to cover 3G

May 12, 2004

Hutchison Whampoa has agreed to sell its 20% stake in the Mainland China joint venture with Procter & Gamble to offset losses from its 3G mobile business. The sale, to be completed next month, would raise £1 billion.

The Hong Kong conglomerate has been under pressure to turnaround the performance of its 3G operations in Europe, Australia and Hong Kong. Despite early rollout of the new mobile technology, the company failed to gain its initial target of 1 million customers in each the UK and Italy by the end of 2003. The heavy handset subsidies have crippled the firm's profits.

Hutchison's 3G business booked an after-tax loss of HK$9.7 billion for the full year. The company has already sold assets at the end of the last fiscal year to cover some of the 3G losses, notably the sale of its Hong Kong fixed line phone business to affiliate Vanda Systems.

Chairman Li Ka-shing said in March that "3G would have a loss in 2004".

Analysts believe the sale would take pressure off the company to spin off assets for profits for a while.