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| Ka-Shing in |
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| Friday, 23 March 2007 | |
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It is amazing that a company whose feudal rulers are named after the sound made by an old-fashioned cash register (‘Ka-Shing!’) can be so utterly short-termist. Serial entrepreneurs, like serial killers, are only as good as their last transaction…
It is with some hesitation that I write about Hutchison. Every time I do, jumped-up little squirts leap to accuse me of being in the pay of Colonel Gaddafi, Pol Pot, Vodafone or worse. The jumped-up little squirts tend to come from Australia and yes, you know who you are. Well, bring it on. Ever since Hutchison Whampoa put in its thumb and pulled out a plum with the sale of Orange in the UK, the Hong Kong based conglomerate and its investors have been convinced that the firm has a ‘Midas touch’ where stock sales are concerned. This is crap. Clever advertising and a self-conferred reputation for ‘thinking outside the box’ saw it end up owned by… er… France Telecom. Radical it ain’t. The focus now is on HTIL, the Hutchison developing market cellular portfolio floated in October 2004 (in a lacklustre way, click here). Under the HTIL banner, Hutchison pooled its emerging market cellular interests in countries like Ghana, Hong Kong, India, Israel, Macau, Paraguay, Sri Lanka and Thailand. HTIL has been in the news due to the US$11bn sale of its 67% stake in Hutchison Essar of India to Vodafone. Given its world view, Hutchison may seek to dress this up as a mega-deal, but it is more likely that it is just replaying a strategy that is homophonic with its ‘charismatic’ founder. So let’s look more closely at this. This week HTIL announced a profit. That profit was based largely on an upturn in revenues in its Indian operations. Dennis Lui, Chief Executive Officer of Hutchison Telecom said: “We work every day to build value in the dynamic markets in which we operate and are confident that we will further improve our businesses and profitability in 2007.” Of the Essar sale, Mr Lui said. “We built one o f the most successful, respected and valuable businesses serving India’s growing telecom market and we were able to lock-in that value for shareholders and achieve a substantial return on the Group’s investment at a significant premium. We currently expect the transaction to close during the second quarter of 2007 which will leave us as one of the best capitalised telecom companies in the region.” And on that note they sold the Essar stake. As Victor Kiam (or Omar Khayyam) might have said, ‘they loved it so much they sold the company’. Revenue from Hutchison Essar pushed HTIL into profitability for the first time last year. That revenue, from what is arguably the world’s fastest growing cellular market, has now been handed in perpetuity to Vodafone. Meanwhile, Hutchison is left to dwell on its diminished emerging market assets and its bright 3G effort in Europe and other developed markets. Licences in Australia, Austria, Denmark, Hong Kong, Ireland, Israel, Italy, Sweden and the UK are testament to that. Once more the advertising is slick and expansive but you question the reality of this approach. The markets question it, that’s for sure. A proposed float of shares in Italy went belly-up last year. You’d get pennies for the rest of its ‘assets’. This despite a marketing campaign overweight with the sort of brand creation that brought Orange its original success. Its heavily marketed ‘3’ brand has stalled in all but Australia. I hesitate to mention Australia as the deportees who in all probability turned my distant British relatives into ‘victims’ will now be sharpening their e-mails in my direction. Face it. Hutchison is not a telco. It’s a sell-co. Jim Chalmers |
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