| The Hong Kong-based Hutchison Telecommunications International (HTIL) would record a profit of around HK$70 billion, once the sale of 67 per cent stake in Hutch-Essar is completed.
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| The sale is likely to take place at over 10 times than that of its price-to-book (P/B) ratio of HK$9.5 billion as on 2005 end, according to a study by Chinese investment bank BOC International Research (BOCI).
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| This would be at a per-share price of around HK$15, with an indicated enterprise value (EV) of $19 billion. It will also clear HTIL’s debts and put the company in a net cash position of around HK$60 billion or HK$14 per share.
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| The research agency, quoting newspaper reports said, the indicated EV of Hutch-Essar stood at $19 billion. This represents about 77 per cent of the Hong Kong-based company’s total EV, based on the net debt of HK$33 billion as by the end of June 2006.
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| At least three parties are said to be interested in the Indian GSM operator. British telecom major Vodafone and Reliance Communications, along with a host of private equity funds are in the race, while Hutch-Essar’s Indian partner Essar Group is also weighing its options.
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| Essar Group has a first right of refusal (FROR) regarding any Indian bids for Hutchison’s stake in the joint venture. At the same time, Indian law prevents a foreign investor from holding more than 74 per cent of telecom licensees.
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| On special dividends, the research agency said, “whether there will be a generous special dividend remains to be seen, as the company (HTIL) will be facing start-up losses in Indonesia and Vietnam over the next few years,” it said.
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| BOCI, which is a subsidiary of Bank of China, has also reiterated its ‘underperform’ rating on HTIL.
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| One US dollar is equal to 7.8 Hong Kong dollars. |
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