Hutchinson sinks $400Mm into Unicom stock
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]http://www.scmp.com/
Thursday, June 1, 2000
TELECOMS
Hutchison gives
Unicom issue a
US$400m boost
CHRISTINE CHAN
China Unicom's flotation has received a
strong boost with Li Ka-shing's
heavyweight conglomerate Hutchison
Whampoa spending US$400 million to
take up about 2 per cent of the company's
enlarged share capital.
The deal, hammered out on Tuesday night
following a series of negotiations, is
expected to increase support for the initial
public offering by mainland China's
second-ranked telecommunications
carrier.
Talks also have reached advanced stages
with some leading telecoms players
outside Asia seeking to be a part of China
Unicom, according to sources.
The announcement comes as China
Unicom began a two-week roadshow on
Monday to tap between US$3.62 billion
and US$4.57 billion from the market as
part of an attempt to become a credible
competitor to China Mobile - the
mainland's dominant carrier.
In a joint statement on Wednesday,
Hutchison said it would subscribe for
US$400 million worth of China Unicom's
shares.
China Unicom's offer of 25 per cent of the
company would be worth US$4.1 billion
at mid-point, so Hutchison's stake at that
amount would represent about 10 per cent
of the offer and about 2 per cent of China
Unicom's enlarged share capital.
As part of the move, China United
Telecommunications Corp - China
Unicom's mainland parent - announced it
had forged a strategic alliance with
Hutchison to co-operate on all fronts on
the mainland's telecoms markets.
A business co-operation framework
agreement had been reached to that end,
the companies said without going into
specifics.
In particular, the pair have agreed to form
a "technical support and consultancy
co-operative joint venture" to provide
telecoms-related consultancy and training
involving network planning, design and
optimisation, operation maintenance and
customer services.
Apart from taking a small strategic
investment in China Mobile (Hong Kong)
at its 1997 listing, a Hutchison spokesman
said the alliance was its first telecoms
foray on the mainland.
Hutchison has strong footholds on the
mainland - ranging from container
terminals to infrastructure projects and
retailing.
Analysts said the deal would enable
Hutchison to extend its telecoms presence
to the lucrative markets in the mainland
which the world's leading players had set
their sights on.
Beijing's entry into the World Trade
Organisation, expected this year, will
allow foreign companies greater access to
these markets, including the
highly-protected telecoms sector.
One analyst said: "Hutchison's telecoms
strategy is to aggressively expand in
undervalued and high-potential markets to
gain first-mover advantage.
"China Unicom will be a good partner for
Hutchison because it provides a more
equal status . . . than the more established
China Mobile is willing to offer."
On the other hand, China Unicom will also
benefit from teaming up with a strong
partner to provide it with the technology,
funding and expertise required to help it
expand its domestic coverage amid fierce
competition from new entrants.
Trading in China Unicom's shares will
begin in New York on June 21 and Hong
Kong the following day. |
