Telecom Gains Help Hutchison Quadruple Profit

Sales of mobile phone assets as well as strong results from its Hong Kong telecommunications operations helped boost Hutchison Whampoa Ltd.'s results for the first half of 2000, as the company quadrupled its net profit over the first half of 1999.

Hutchison reported profit after tax of HK$31.7 billion (US$4.06 billion) for the half year ended June 30, a gain of 301 percent over after-tax profit of HK$7.9 billion in the same period of 1999, according to a company statement issued Friday. The Hong Kong-based conglomerate, which includes property, ports, telecommunications, energy and retail operations, derived about 80 percent of its net profit from overseas operations.

Revenue from continuing operations grew only 16 percent, to HK$28 billion from HK$24.2 billion.

The company profited significantly from the sale of Germany's Mannesmann AG to Vodafone AirTouch PLC of the U.K., making HK$50 billion from the exchange of its stake in Mannesmann to Vodafone and HK$1.6 billion from the subsequent sale of about 1.5 percent of Vodafone for cash.

Hutchison also profited from the sale of part of its Hong Kong fixed-line telephone operations to Global Crossing Ltd. and the sale of a 19 percent interest in its Hong Kong mobile division to Japan's NTT DoCoMo Inc., according to the statement.

Hutchison shares were down HK$1 to HK$109.50 in late-afternoon trading Friday.

The company made a larger-than-expected provision for a decline in Vodafone's share price since Hutchison took its stake in the company.

"[Chairman Li Ka-Shing] seems to have taken about the lowest price Vodafone has traded at to set for his provision," said Howard Gorges, managing vice chairman of South China Online Inc., a Hong Kong-based brokerage. "It's just being conservative."

Hutchison earlier this year bought radio spectrum in the U.K. for third-generation (3G) wireless data services, and as part of a consortium with NTT DoCoMo Inc. and the Netherlands' Koninklijke KPN NV to bid for capacity in other European markets. However, the company last week pulled out of a consortium with KPN which had won a 3G license in Germany, saying the US$7.7 billion price was too high.

The company still plans to offer 3G services in markets around the world, by either owning or leasing spectrum.

The Hong Kong mobile operation, Hutchison Telephone Co., increased its subscriber base by 12 percent to 1.6 million subscribers, a market share of 34 percent, the company reported.

Hutchison's telecommunications and e-commerce division, which includes global interests in mobile phone services as well as a number of online startups, posted a 31 percent gain in earnings before interest and taxes. Those results do not include the gains from assets sales.

In addition to the telecom operations, the division includes stakes in Hong Kong Internet startups including consumer portal Tom.com Ltd., business-to-business e-commerce site Bigboxx.com and transportation and shipping exchange Global Transport Exchange.

Hutchison, in Hong Kong, can be reached at +852-2128-1188, or via the Web at http://www.huchison-whampoa.com.

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