Hutchison's Li sees no problems for 3G services in Europe

Li Ka-Shing, the wealthy Asian tycoon and chairman of Hutchison Whampoa, the Hong Kong-based ports to telecoms conglomerate, yesterday expressed his confidence in the company's investments in third-generation mobile phone services in Europe.

While many investors are now shying away from 3G businesses, put off by the costs of building networks as well as the uncertainty over revenue models, the chairman said he saw no problems in securing bank financing for its 3G mobile phone activities in Italy.

The company, along with its partners, is also building 3G networks in Austria, Sweden and the UK, where it holds a 65 per cent stake in Hutchison 3G, a new mobile phone company that expects to launch services in the UK next year.

Mr Li's comments came as the company reported a 72 per cent drop in pre-tax profits to HK$8.96bn (£793m) in the six months ended 30 June as the value of its European telecoms holdings plunged. Total group sales were HK$43.4bn, up from HK$41.4bn last time.

The company made a HK$28.1bn provision in the half year to account for the decline in value of its holdings in both the UK's Vodafone and in Germany's Deutsche Telekom, although it confessed it had sold some of its shares in the latter.

The hefty charge all but wiped out a gain of HK$30bn from the sale of its stake in US telecoms group VoiceStream Wireless to Deutsche Telekom.

It said: "The first half of this year has been characterised by slowing global trade, poor consumer sentiment, the continuing slowdown in the economies of the US and Japan and more recently in Europe and Asia."

While the chairman said Hutchison would not be immune to the performance of the US economy and the effects of slowing global economies, Mr Li said he was "confident" the business would continue to perform "steadily" for the remainder of the year.