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SCMP Reporter

Second-largest investor tipped to cash out in time despite chief's assurance to stay on
Orascom Telecom Holding, the second-largest shareholder of Hutchison Telecommunications International Ltd (HTIL), sold  a 2 per cent stake in the emerging-markets operator yesterday, the second time in less than three weeks, a source close to the deal said.
The Egyptian-listed Orascom launched a private share placement on Monday night, offering 94.18 million HTIL shares at a strike price of HK$10.70 each to at least six independent institutional investors, the source said.
The latest offer  was at the same price as  the  HTIL stake the vendor sold on October 26.
The two  placements allowed Orascom to cash in HK$2.5 billion  in a month, after  holding a 19.3 per cent stake in HTIL since late 2005.
With the placements, Orascom's stake in HTIL  is now down to 14.3 per cent.  Orascom chief executive Naguib Sawiris said the company was comfortable with  its current shareholding in HTIL and had no plans to sell more  shares in the near term.
'I am not surprised  at the [latest] offering  and I think Orascom will further  sell its entire stake in HTIL  eventually  due to the lack of synergy,  especially after HTIL sold  its entire stake in Hutchison Essar, which  Orascom hoped to tap,' said a fund manager.
Indian-based Hutchison Essar, which accounted for 67 per cent of HTIL's turnover, was sold to Britain's Vodafone Group in March for HK$86.4 billion.
Market watchers said Orascom was unhappy with HTIL over the sale of  Hutchison Essar to Vodafone early this year.
Meanwhile, some Israeli politicians are also uneasy about Orascom's indirect stake in Partner Communications, in which  HTIL has majority control, for apparent potential security risks.
'We believe in the long-term development  of the markets that HTIL is serving right now,' said Mr Sawiris, adding that Orascom was seeking co-operation with Hutchison Whampoa over its 3G  network  agreement.
According to a research report from Goldman Sachs, Orascom is unable to sell further stakes before December 12 but  may continue to sell to the market afterwards, capping HTIL's strong performance since the middle of August.
The investment bank also removed HTIL from its 'buy list'  on increasing risk that Hutchison Whampoa may not buy Orascom's 16 per cent stake in HTIL in the medium term.
'It is not easy for Hutchison Whampoa to find a single investor to take the stake from Orascom,' the fund manager added.
'Most assets owned in HTIL are greenfield and we see no significant profit contribution in the near term.'
After the sale of the Indian business, Israel and Hong Kong became HTIL's major contributors.
The operator also expects Vietnam and Indonesia to contribute solid profit growth in the medium term.
HTIL will use between HK$6.5 billion and HK$7.5 billion as capital spending this year, mostly on network building in the two countries.



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