Hutchison Whampoa, which saw its net profit more than halve last year, said it would not rule out a legal challenge to the Hong Kong government's decision to seize part of its 3G mobile spectrum for sale to new competitors.
Canning Fok Kin-ning, Hutchison group managing director, yesterday slammed the government's decision to take a third of the used spectrum from each of the existing four operators for newcomers such as China Mobile (Hong Kong), a subsidiary of the largest mainland telecommunications company. The government plans to auction off the spectrum.
Fok said existing operators were dwarfed by China Mobile's hundreds of billion yuan in net profit and massive market capitalisation. "They can come down to compete with us for spectrum but not vice versa, it's not a level playing field," he said.
Fok also warned that the new arrangement would come at a price, with compromises to the level of service in the city. "The download speed through mobile phones will be lengthened by one-third, if not more," he said.
The government aims to reassign the spectrum to maximise usage and increase competition in the market.
A Legislative Council panel will look into the issue today.
Net profit of the conglomerate, which is involved in retailing, ports, property and telecommunications businesses, slid 53 per cent to HK$26.13 billion last year from HK$56.02 billion in 2011. That was in line with market expectations.
Underlying profit, minus the one-off gain from the spinning off of its port operations to Singapore in 2011 and others, rose 19 per cent to HK$26.82 billion.
Sales increased 4 per cent to HK$398.39 billion. Earnings per share were HK$6.13 and the board recommended a final dividend of HK$1.53 per share.
Its 3G business in Europe reported HK$3.14 billion in earnings before interest and tax, double that in 2011, despite the continent's lukewarm economy.
"Unless the global economy has very exceptional challenges, I expect our European business will continue to grow this year," Hutchison chairman Li Ka-shing said.
However, its telecommunications joint venture with Vodafone in Australia hit headwinds as its losses doubled to US$800 million last year because of network problems and loss of customers.
"We will see how it goes and still pin hopes on a turnaround of its business," Fok said.
The company has become a passive investor in the joint venture, so the profit and loss of the venture will only be realised as other items in its profit and loss account.
Hutchison Telecommunications Hong Kong saw its earnings increase 20 per cent to HK$1.23 billion.
Port operations registered a 3 per cent increase in revenue to HK$32.94 billion, with 76.8 million 20-foot equivalent units moved by its ports worldwide last year. Earnings before interest and tax were slightly down by 1 per cent to HK$7.79 billion.
Earnings before interest and tax at European operations rose 29 per cent to HK$19.56 billion. Operating profit for its mainland China arm rose 19 per cent to HK$11.02 billion while that for Hong Kong rose 19 per cent to HK$9.09 billion.