Third generation mobile deal cornerstone for Hutchison plans

Hutchison Whampoa believes its partner's successful bid for Britain's largest third generation (3G) mobile phone licence will form the cornerstone of its investment in Europe, and has revealed that it plans to participate in other licence auctions in Germany and France.

Hutchison Whampoa managing director Canning Fok Kin-ning announced ambitious expansion plans after Canadian telecommunications operator Telesystem International Wireless (TIW) was confirmed as the winner of the coveted Licence A by Britain's Radiocommunications Agency.

Under the terms of a deal between Hutchison and TIW, Hutchison will now take a 90.1 per cent stake in the newly formed mobile virtual network operator, with TIW taking the remaining 9.9 per cent.

TIW will then build a national universal mobile telecommunications system network, injecting its capacity into the Hutchison-TIW operator.

A knock-out GBP4.4 billion (about HK$54.11 billion) bid by TIW - more than four times the price first expected - secured the licence, and TIW and Hutchison plan to spend a further GBP5 billion in developing the network. But Mr Fok forecast the service would be profitable in five years.

'We believe that this business will be more valuable than what we achieved in second generation services,' he said.