Is Hutch Focusing On The Wrong Market?
from the questions-of-value... dept
Recently, most of the focus on Hutchison Whampoa has been on their less-than-spectacular (to put it mildly) launch of 3G service in various locations. While some are claiming that they’ve turned the corner after making just about every mistake possible along the way, others believe they still have a long way to go (and calling their customers “nuts” probably doesn’t help matters). However, Hutch is now getting set to IPO subsidiary Hutchison Telecommunications International (HTI), which is making a killing in developing markets such as India. The idea, of course, is to use the cash from an HTI IPO to finance the struggling 3G operations in more mature markets, which has some wondering if Hutch is selling off holdings in developing markets, to throw more good money after bad elsewhere. This wouldn’t be the first time companies sold off developing markets to support struggling ones. Look at how AT&T sold off their wireless and broadband offerings only to be left wondering what to do when they realized the traditional telephone business was losing steam. However, the question of whether or not to do the IPO may depend more on the way others value the different segments of their business. From the way it looks now, Hutch believes that HTI is overvalued relative to the 3G offerings — and that shifting money from one to the other will bring greater returns. Of course, for that to be true, the 3G offerings need to start delivering.