HW denies Vodafone sell-off

August 24, 2001 Posted: 0713 GMT

LONDON (CNN) -- Hutchison Whampoa has denied reports it is seeking to sell its stake in Vodafone, the world's biggest mobile-phone company.

The Financial Times reported on Friday that the Hong Kong conglomerate had told analysts it was keen to sell its shares in both Vodafone and Deutsche Telekom to help cover debts accumulated by its mobile units in Europe.

Any such move could further undermine the already depressed share prices of both firms.

But referring to the Vodafone reports, spokeswoman for the ports-to-telecoms conglomerate Laura Cheung told Reuters news agency: "It's absolutely groundless, absolutely untrue."

Nomura International analyst K.Y. Ng told Reuters: "Even if they [Hutchison] want to sell the Vodafone shares, I don't think they would be stupid enough to tell everyone."

Vodafone's share price (VOD) has come under pressure after it spent billions of pounds buying cellular phone companies worldwide.

Hutchison acquired its stake in Vodafone as the result of a series of asset trades, ultimately selling its shares in German telecom operator Mannnesmann to the UK company last year, in return for Vodafone shares.

Hutchison burdened by 3G telecom holdings

Hutchison's own share price has been battered, partly because of its hefty spending on ventures seeking to establish themselves as providers of third-generation mobile-phone services in Europe. The declining value of its holdings in the two listed European phone giants has also contributed to the shares' slump.

The company said on Thursday its first-half earnings sank by over 76 percent to HK$7.2 billion ($0.9 billion), dragged down by heavy provisions on its European telecom investments. But Hutchison's core earnings beat market forecasts.

Hutchison, controlled by Asia's richest tycoon, Li Ka-shing, said on Thursday it had made a "forward sale" of 36 million of its Deutsche Telekom shares. But Li added the German carrier's share price was now too low for his company to consider more sales.

The forward sale – a transaction handled by Deutsche Bank – triggered a decline of more than 25 percent in the price of Deutsche Telekom shares in less than two weeks, and sparked off a row between Telekom and Deutsche Bank, which had recently described the phone company's stock as a "buy".

Hutchison received a 4.9 percent stake, or 207 million shares, in the German telecoms giant after Deutsche Telekom (FDTE) bought U.S. mobile-phone operator VoiceStream Wireless, in which Hutchison had a sizeable holding.

Its sale of the Telekom shares was also controversial because it had previously agreed to wait until September 1 before selling any of the shares received in payment for VoiceStream. However, both Telekom and Hutchison have said that the forward sale did not amount to a breach of that agreement.

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