Hutchison nears deal with rival Vodafone
Hutchison Whampoa, the flagship conglomerate of Li Ka-shing, saw its shares rise sharply yesterday on news that it was nearing a deal with British telecommunications giant Vodafone to merge their mobile networks in Ireland into a joint venture.
The combination would be the latest example of efforts by rival mobile network operators to pool resources to cut costs and make the best use of their infrastructure investments, without compromising service to customers.
Shares of Hutchison were up 3.9 per cent to finish at HK$70.60, the blue-chip stock's highest close since reaching HK$70.82 on May 9, after earlier rising almost 5 per cent to a nine-month high during the session.
Details of the proposed 50-50 joint venture between Hutchison's Three Ireland unit and Vodafone had been drawn up, but nothing has been signed, according to separate sources cited by Reuters and Bloomberg.
That infrastructure-sharing arrangement would result in the biggest mobile network in Ireland, where Dublin-based Eircom Group's Meteor Mobile and Telefonica Ireland's O2 also compete.
Three Ireland and Vodafone, however, will maintain their respective radio spectrum licences, sales teams and marketing operations to serve their own subscribers.
Savings for each mobile carrier are estimated to be worth more than GBP200 million (HK$2.43 billion) over five years, the Financial Times said, citing a person with knowledge of the negotiations.
Both Hutchison Whampoa spokesman Hans Leung and Three Ireland spokeswoman Rachel Channing declined to comment on the reported deal.
Three Ireland had earlier sought to expand operations in its market through a Euro2 billion cash offer to buy the troubled Eircom, which had been in supervised credit protection. The Hutchison unit's bid was rejected in May after authorities accepted a restructuring plan.
Management consultancy Booz Allen Hamilton said telecoms firms started adopting network-sharing arrangements in Europe as early as 2001, when the cost of acquiring 3G licences in the region soared. That put pressure on many mobile network operators to share infrastructure deployment and operating expenses.
In Hong Kong, Hutchison also has an infrastructure-sharing deal with a rival operator. Its subsidiary, Hutchison Telecommunications Hong Kong, formed a joint venture called Genius Brand with PCCW telecommunications arm HKT that won a government licence in 2009 to deliver high-speed 4G mobile services on a block of radio spectrum in the 2.6-gigahertz band.
Value, in euros, of Hutchison's purchase of wireless carrier Orange Austria in February, as it steps up investments in Europe