Hutchison Whampoa has received yet another kick in the financial teeth as an initial public offering (IPO) for around a quarter of its Hutchison Telecommunications International Limited (HTIL) unit received a tepid reception during pre-marketing. Hutchison was initially hoping to raise between USD1.5 billion and USD2 billion by selling up to 30% of its 2G mobile holding company HTIL on the New York and Hong Kong exchanges, but concern among investors over Asian telecom stocks has led the group to revise its target down to USD1.13 billion. That means that Hutchison is offering as much as a 25% discount on the shares based on the bottom end of its new USD3.9 billion to USD4.5 billion HTIL valuation. The price cut has been warmly received by analysts and investors alike, despite the new price remaining more than 50% higher than HTIL’s book value.
Li Ka-shing’s Hong Kong-based enterprise is hoping to post a sizeable one-off gain from the sale to help offset the massive losses it is incurring from the rollout and operation of 3G services around the world. HTIL – which holds stakes in fixed line and 3G operations in Hong Kong and 2G businesses in Hong Kong, India, Macau, Thailand, Israel, Sri Lanka, Paraguay and Ghana – is unlikely to realise any benefit from the listing as the share offer will see Hutchison selling off old shares. Whampoa’s 3G business lost USD1.57 billion before tax, depreciation and amortisation in the first half of the year while, in contrast, its 2G businesses reported a doubling of earnings to USD48.5 million on revenues of USD1.25 billion. It is widely believed that the unit’s Indian assets, seen by many as the jewel in its crown, will act as the major incentive for buyers. Whampoa also plans to sell off part of its fast growing Indian operations separately, probably in the first half of 2005.