The new telecommunication infrastructure company, CK Hutchison Networks, will be a separately managed wholly-owned subsidiary of CK Hutchison Telecom, a newly set up telecoms holding company.
This company would be able to seek incoming investment, in the way that companies such as Telefónica has done with Telxius, or set up joint ventures with other tower companies, such as last week’s alliance between TIM and Vodafone in Italy.
But Hutch is being tight-lipped about the new unit, which has been set up at the same time as a new holding company for all the 3 Group operations in Europe and Hutchison Telecommunications Hong Kong Holdings (HTHKH) in Hong Kong and Macau. The operational companies will all belong to a new holding company, CK Hutchison Telecom.
Hutch says this will provide “a diversified telecommunication asset platform across eight geographical locations”.
Arianna Neri, managing director for Americas and Asia at TowerXchange, part of the same group as Capacity Media, said: “Hutch is following a trend adopted by many mobile network operators globally, to carve out tower assets rather than selling them.” Notable examples of carve-outs include Telefónica's Telxius, América Móvil’s Telesites, China Tower Corporation and Deutsche Funkturm, among others.
Neri added: “My understanding of the Hutch’s move is that it plans to transfer its European 28,500 towers first and possibly the 9,300 Asian ones at a later stage. The move is usually done to deleverage the operator’s balance sheet, professionalise the assets and make them ‘shareable’.”
However, she pointed out “the valuation of operator-led towercos is hardly comparable to that of independent tower companies”.
CK Hutchison Telecom “will refinance all the existing external debt of Wind Tre [in Italy] of approximately €10 billion and be separately rated with an expected investment grade rating from all three credit rating agencies”.
The new structure for the telecoms interests of the group, headed by Hutch chairman Victor Li (Li Tzar Kuoi in Chinese), “will allow the group to generate significant financing cost savings from 2020 onwards, as well as rationalise its investments in light of the expected need for harmonisation of network, IT platform, and infrastructure configurations to meet new transnational business opportunities”.
Hutch said it has an active customer base in Europe of 41.7 million, a 7% drop against the same period last year – mainly from a lower Wind Tre base. However revenue was 20% higher across Europe. “Overall 3 Group Europe continued to report a healthy EBITDA margin of 44%, a 2%-point growth compared to the same period last year.”
