Hutchison payment ends feud with 3 partner

Hutchison Whampoa is paying £90m to buy out KPN, its partner in the UK mobile phone group 3, to settle an acrimonious feud over who should fund mounting losses at the venture. The decision, which averts an embarrassing public clash in the High Court next week, comes as hopes fade that 3 will have a choice of handsets in stores in time for the Christmas rush.

Observers said that Hutchison's decision to pay the Dutch telecom group for its 15 per cent stake signalled its high-stakes financial commitment to getting 3 off the ground, even though the venture's stated target of a million subscribers by New Year is now virtually impossible to meet.

The Hong Kong conglomerate, run by Li Ka-shing, has been in bitter dispute with KPN since the Dutch carrier refused to stump up £150m as its portion of a £1bn loan to 3 at the start of this year. Hutchison was claiming breach of contract.

Canning Fok, Hutchison's managing director, said: "We are happy to put this dispute behind us and increase our interests in Hutchison 3G UK at a very attractive price. This represents an excellent transaction for us. We remain confident that 3 will have a promising prospect and will create long-term value for our shareholders."

KPN has received £60m now and will have the right to receive any dividends paid by 3 until the last of three remaining instalments is paid in 2007. Although the shares will not transfer to Hutchison until then, KPN no longer has voting rights or any further financial commitments to 3.

The deal means that KPN lost £810m on its investment in 3, which it made in July 2000 but has since written off.

Hutchison, which will end up with 80 per cent control of 3, while a 20 per cent share is still held by Japan's DTT DoCoMo, said that the £90m price tag for KPN's stake did not imply that it valued the whole company at £600m.

The value was arrived at against the background of the dispute and court proceedings, it said.

Although 3 has not given any subscriber figures since August, analysts believe it now has around 230,000 UK customers. The chances of meeting its ambitious target are almost certainly doomed, because the likely date for the arrival of vital new handsets from the manufacturer NEC has slipped towards the end of the year.

Despite slashing prices and funding a massive advertising campaign, the company has been plagued by bad publicity for its services. Users have complained of dropped calls and difficulties getting through to customer services.

PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior Analyst - ALM Data - Banking - Halifax

£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...

Java developer - Banking - London - Up to £600/day

£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...

Liquidity Reporting-Basel III-LCR-Bank-£400/day

£400 per day + competitive: Orgtel: Liquidity Reporting - Basel III - LCR - Ba...

Investment Manager – Media and Entertainment

Up to £50,000 per annum + Bonus + Benefits : Sauce Recruitment: We are repre...

Day In a Page

Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?
Boris Johnson's war on diesel

Boris Johnson's war on diesel

11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
5 best waterproof cameras

Splash and flash: 5 best waterproof cameras

Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

Louis van Gaal interview

Manchester United manager discusses tactics and rebuilding after the David Moyes era
Will Gore: The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series

Will Gore: Outside Edge

The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz