HONG Kong conglomerate CK Hutchison is reviewing options for its European telco unit with a view to reducing its holdings in the overall business, six people with knowledge of the situation said.
The company – reviewing its options as recently as this year – has discussed a potential spin-off with a view that its European telecoms assets could be put up for an initial public offering (IPO), three of the sources said.
The ports-to-telecoms conglomerate is also considering a sale of the unit as a bloc, a fourth person noted. A fifth source added that it was also open to selling controlling stakes in some countries.
CK Hutchison operates the Three networks in Italy, the UK, Sweden, Denmark, Austria and Ireland.
Its current main focus has been country by country solutions to enhance the group’s returns, said two of the sources. An IPO of the European business is also seen as difficult due to market conditions, another clarified.
The deliberations over the assets are at an early staged, the sources cautioned.
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One of the people added that the company is trying to revive an aborted deal to spin off and cede control of its wholesale mobile and fixed network operations in Italy.
It has also been looking to divest its business in Denmark and Sweden by forming mergers with third parties but none of the negotiations have resulted in a deal yet, the person said.
All six sources spoke on condition of anonymity because the talks are private.
“We do not comment on market speculation. As management mentioned recently at our annual general meeting, the group will continue to pursue value accretive transactions,” CK Hutchison said.
The deliberations have occurred as European telecoms operators grapple with lower returns partly linked to the high investment needed to upgrade their network infrastructure in a crowded market in which players are looking to consolidate.
In the past couple of years, the group has told investors in-market consolidation and “asset-light” remains its strategy for its telecommunications business.
CK Hutchison last year announced a £15 billion (S$25.9 billion) merger with Vodafone’s British mobile operations, in which the Hong Kong-headquartered company would own 49 per cent.
The deal is still being scrutinised by the local antitrust regulator, which is expected to reach a decision by the end of year.
CK Hutchison’s Europe telecom business reported a 9 per cent drop in earnings before interest, taxes, depreciations and amortisation last year to 2.5 billion euros. Its revenue rose 1 per cent to 9.4 billion euros.
The people said no deal appeared to be imminent over its European assets, with some of them saying CK Hutchison will likely wait for the outcome of the antitrust review of the Three-Vodafone merger in the United Kingdom before taking any action. REUTERS
