Hutchison's 3G plans prompt ratings cut


Hong Kong tycoon Ka-shing is known for his investment track record

Staff and wires

HONG KONG, China -- Shares in conglomerate Hutchison Whampoa slipped into the red Tuesday after ratings agency Standard & Poor's cut the outlook on its credit rating to "negative" from "stable."

S&P cited Hutchison's exposure to third-generation mobile telecoms.

Hutchison, which is controlled by Asia's richest tycoon Li Ka-shing through his Cheung Kong Holdings, had been up 0.7 percent to HK$71.75 before the S&P report. It then dipped more than 1 percent to HK$70.00.

"Net debt levels are rising and there are significant concerns about future demand for 3G (third-generation) services, revenue per user, and the costs of attracting subscribers in a highly competitive market," S&P said in a statement.

Hutchison, which plans to launch multimedia-enabled 3G mobile services in Britain and Italy this year, is among the most bullish investors in 3G, Reuters news agency reported.

When he unveiled a $1.55 bilion net profit in Hutchison's 2001 annual results two months ago, Li said the group was keen to gain "first to market" advantages for its European 3G rollout.

Big spending on 3G

Hutchison has said it will spend $16.7 billion on 3G in Europe through 2005 -- not counting the outlays its partners will make.

Still, equity analysts said Hutchison's 3G exposure has long been priced into the stock.

"They (S&P) should have done it a long time ago. Nothing has changed in (Hutchison's) capex plans," analyst K.Y. Ng of Nomura International, which has a "hold" rating on the counter, told Reuters.

S&P also lowered ratings on a number of blue chip Hong Kong property developers.