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Hutchison ready to fund 3 UK
LONDON (Reuters) -- Hong Kong conglomerate Hutchison Whampoa has thrown its weight behind fledgling British-based mobile phone venture 3 UK, vowing to stump up cash if other shareholders refuse. Hutchison owns 65 percent of 3 UK, which said Thursday its bankers had agreed to sweeten the terms of key loans that will see it through to 2005 as it sells Europe's first, high-speed, third-generation multimedia phones. The start-up, which two weeks ago asked shareholders for a £1 billion ($1.56 billion) cash injection to persuade lenders it could meet business targets despite a two-year 3G launch delay, said it now had the full support of its 16 banks. Amid market skepticism about the viability of costly 3G services, which have been delayed by software glitches and handset shortages, Hutchison is taking on a European establishment led by Vodafone, Deutsche Telekom's T-Mobile and Orange. In Hong Kong, Hutchison Whampoa said the British-based venture had only persuaded 10,000 customers to pre-order the new high-tech phones, which boast video call capabilities. In Italy, Europe's top mobile phone market, 3 UK's sister company has received 50,000 orders for 3G phones. 3 UK said only that it was early days, that deliveries of the phones -- which customers have been able to pre-order online -- had begun and that it and its sister companies were sticking to targets to sell two million 3G phones in Europe this year. Cash call3 UK, which is also 20 percent by Japan's NTT DoCoMo and 15 percent by KPN, surprised KPN in particular with its cash call. The Dutch group is on a debt and cost-cutting drive, has already written down the full value of the 3 UK holding and wants to sell the 15 percent stake. Both KPN and DoCoMo, who have been asked to stump up £150 million and £200 million respectively, have had lawyers poring over the loan demand to determine whether it is valid under their shareholder agreement. They plan to announce their decision by the middle of April. "KPN Mobile (KPN's cellphone arm) would like to stress that it is still carefully studying the request for the shareholders loan," the group stated. But Hutchison's Managing Director Canning Fok told reporters in Hong Kong that the conglomerate, which is controlled by business tycoon Li Ka-shing, was prepared to bridge the funding gap if KPN decided against a cash injection. "We will fill the funding gap, of course," Fok said. Hutchison has already committed to providing the lion's share of 3 UK's loan advance -- 650 million pounds—in proportion to its stake in the venture. Equipment suppliers NEC of Japan, Finland's Nokia and Germany's Siemens have also agreed to back the group along with the 16-bank syndicate, which included ABN Amro, HSBC, JP Morgan, Merrill Lynch and Citigroup. Meanwhile, Hutchison beat expectations with a 19 percent jump in 2002 net profit of HK$14.28 billion ($1.83 billion). The group also plans to sell phones under the "3" brand in Sweden, Hong Kong, Australia, Austria, Israel, Denmark and Ireland. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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