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SCMP Reporter

Hutchison Whampoa has long been criticised for lacking a cohesive telecommunications strategy, with little synergy between group members.

  That could soon change if purchase talks involving German telecoms firm Mannesmann resulted in a tie-up.

 Mannesmann said it was in talks to buy Hutchison's 44.8 per cent stake in Orange, Britain's No 3 mobile-telephone operator, for about US$27 billion.

 Dusseldorf-based Mannesmann, which owns Germany's biggest mobile-telephone network, also has not ruled out possibly making a bid for other Hutchison telecoms operations.

 If Mannesmann does tie up with Hutchison's global telecoms businesses, it will embrace a sprawling portfolio with interests in Europe, Asia, North America, the Middle East and Africa.

 Hutchison's telecoms arms around the world contributed HK$8.47 billion in revenue last year and HK$2.8 billion in operating profit.

 Mannesmann is seen as one of the fastest-growing telecoms companies in the world, with a strong cohesive management that focuses on building connected business.

 The German company, which announced last month it would split its engineering and communications operations into two companies, acquired Omnitel, the second-largest phone company in Italy, earlier this year.

 Buying Orange would put Mannesmann into Europe's three largest phone markets.

 Despite having a large global presence, one constant criticism of Hutchison's telecoms strategy has been that there is little cohesiveness among group members.

 Hutchison's separate telecoms projects are seen as having little synergy and do not offer the seamless global telecoms product that other global telecoms firms frequently talk about.

 Its equipment and technical standards are also different in many markets.

 Without global products, Hutchison cannot tap the lucrative market for providing services to multinational corporations.

 Orange has been expected to become a takeover target since January, when Vodafone said it would buy US-based AirTouch Communications to create the world's largest mobile-phone firm.

 Orange emerged in 1992 from the ashes of Rabbit, a cellular-cum-cordless telephone network that allowed a subscriber only to make calls near certain designated locations and not receive calls.

 Rabbit - which had been a joint-venture between Hutchison and British Aerospace - resulted in a GBP250 million (about HK$3.24 billion) write-off at Hutchison Whampoa, while Orange required a further GBP500 million investment to create its personal communications services, or PCS, network.

 The failure of Rabbit precipitated the departure of two key Hutchison executives who were responsible for fast-tracking British telecoms investments - Rick Siemens, who now heads telecoms investor Distacom and Simon Murray, an ex-Hutchison managing director.

 At the end of last year, Orange said it had 2.2 million subscribers and a 16.6 per cent share of the British market, making it Britain's fastest-growing cellular operator.

  Hutchison has also tried to duplicate the Orange brand success in other parts of the world, most significantly in continental Europe, where it has service-provider operations in France and Germany and a 17.45 per cent stake in a cellular network in Austria.

 In Australia, Hutchison Telecommunications Australia raised A$322 million (about HK$1.6 billion) from an initial public offering in August and Hutchison has also filed another for its Israeli-based 46.7 per cent-owned associate.

 In Hong Kong, it re-branded its GSM (global system for mobile communications) cellular network as Orange late last year and owns one of the four fixed-line companies.

 It moved its analogue cellular system from Hong Kong to Ghana last year after it acquired 80 per cent of a cellular operator there and injected almost US$1 billion in US firm VoiceStream Wireless in June, raising its stake to 30 per cent.



Mannesmann link could provide gell for Hutchison