Hutch, Investor AB to Bid for 3G Sweden Phone License
Hong Kong, June 8 (Bloomberg) -- Hutchison Whampoa Ltd., Hong Kong's biggest conglomerate, and Investor AB, the holding company of Sweden's Wallenberg family, said they will form a venture to bid for one of four third generation (3G) mobile-phone licenses in Sweden.
Hutchison will hold a 60 percent stake in the venture and Investor AB 40 percent, both companies said in a statement.
The partnership will bring Hutchison a step closer to a pan- European mobile-phone network. In April, Hutchison was awarded a 3G license in Britain, together with Canada-based Telesystem International Wireless Inc. for 4.38 billion pounds ($6.7 billion).
Sweden will hold a so-called ``beauty contest'' to award the four permits based on qualitative criteria, such as infrastructure plans and employment opportunities, rather than the biggest cash bid. In contrast to Sweden, several European countries are expected to sell 3G licenses to the highest bidders.
``I think Investor AB will increase the chances of Hutchison getting the license,'' said Joanne Wong, an analyst at Credit Suisse First Boston. ``For a beauty contest, they usually go for the local companies, and Investor AB is a leading company in Sweden.''
The Swedish market for cellular services was valued at 11.3 billion kronor ($1.3 billion) in 1998, according to Oehrlings PriceWaterhouseCoopers.
The U.K., which auctioned its mobile phone licenses in April, may have set a precedent for the highest bidders, after it raked in about 22.5 billion pounds ($34.2 billion) from the auction. Hutchison, in another venture with Telesystem International, won one of the permits. Hutchison said it will back a bank credit facility to pay for the 4.4 billion pound license and take a 90.1 percent stake in the joint venture with Telesystem.
Setting the cornerstone
Separately, the South China Morning Post, a Hong Kong based English-language newspaper, today cited officials of the Hutchison- Telesystem venture as saying they will bid for one of four 3G mobile-phone licenses in France. Hutchison declined to comment.
Telesystem Chief Executive Bruno Ducharme said in April his company plans to bid for licenses throughout Europe. ``France will be a cornerstone,'' he said.
Western Europe's market for the higher-speed 3G phone services is expected to swell to 16.3 million subscribers by 2004 from 116,000 in 2001, according to market research firm IDC. The U.K. is expected to be among the largest markets. Ericsson AB, the third-largest cellular phone maker in the world, said that by 2005 more users will connect to the Web with wireless devices than with computers.
Some 14 European countries plan to sell 62 3G licenses.
Hutchison's focus extends beyond Europe. In March the company joined with Swedish phone group Ericsson AB and Investor AB for a 60 percent stake in Guoco Land for $177 million and refocused the property company on the wireless Internet business.
Third-generation mobile phones, in addition to providing digital voice and data services, promise to bridge the various incompatible mobile-phone standards currently in use around the world, effectively creating new mobile-phone markets. Part of the appeal will be the fact that 3G phones will handle data at 40 times the speed of a conventional mobile phone.
Hutchison shares fell 1 percent to HK$95.50. The stock is down 7 percent this year while the benchmark Hang Seng Index fell 6.4 percent.
Jun/08/2000 6:12 ET
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