High level of 3G investment prompts S&P to cut Hutchison’s rating

13 Jun 2003

Hong Kong’s third-generation (3G) mobile pioneer Hutchison Whampoa [HK: 0013] has had its credit rating cut by Standard & Poor (S&P) on the back of its increasing investments in 3G services. The cut, from A to A-minus, brings S&P’s view of Hutchison in line with fellow ratings agency Moody’s and reflects analysts’ worries over the firm’s USD16.7 billion outlay on establishing its 3G portfolio. The downgrading comes at the end of a troublesome week for Hutchison that has included the launch of a lawsuit against Dutch investment partner KPN [NYSE: KPN] and the introduction of a number of price cuts following the slow take-up of its services. Despite its concerns, S&P says it predicts solid growth for Hutchison, but with weaker earnings due to its high level of investment. S&P also downgraded Hutchison’s sister company Cheung Kong (Holdings) [0001.HK] to A-minus.

Hong Kong