CK Hutchison (0001) is considering further sales of telecom assets after selling its UK telecom business, VodafoneThree, recently, as it seeks to exit the increasingly competitive and costly telecommunications industry, Bloomberg reported, citing people familiar with the matter.
The report said the founder, Li Ka-shing, is unlikely to rush into a deal in the near term, as CK Hutchison aims to maximize asset value and may adjust its strategy depending on market conditions, while listing its telecom assets remains an option.
The company recently sold a 49 percent stake in VodafoneThree for 4.3 billion pounds (HK$45.8 billion). It was reported to expect a HK$4.7 billion gain, allowing it to monetize the investment at an attractive valuation.
CK Hutchison still operates telecom businesses in several European markets, including Italy, Sweden, and Denmark, holds a controlling stake in Hutchison Telecom Hong Kong (0215), and also has operations in Australia and Southeast Asia through joint ventures.
The report noted that although the telecom business remains CK Hutchison's second-largest source of revenue, it has been weighed down by high depreciation and amortization charges, which have dragged on the company's profits.
According to its annual report, after accounting for depreciation and amortization, the unit's earnings plunged more than 80 percent last year. Additionally, the telecom industry faces intensifying competition and will require billions of dollars in investment over the next few years to keep pace with the development of next-generation mobile networks.
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