Focus on Ireland immigration, focus on Irish facts:
Li Ka-shing's European footprint is set to expand further.
On June 4, foreign media reports indicated that Hutchison Whampoa (0013.HK), owned by Li Ka-shing, intends to acquire the Irish telecommunications business O2 from Telefónica. The business is valued at as much as 7 billion euros.
For Hutchison Whampoa, Ireland is not an unfamiliar market. Currently, Hutchison Whampoa's 3 Group Europe already operates in Italy, the United Kingdom, Sweden, Denmark, Austria, and Ireland. In Ireland, as of 2011, Hutchison Whampoa already had a total of 804,000 registered customers.
Looking back at its 2012 annual performance report, Europe is already the group's main source of revenue. Last year, it contributed a total of 168.95 billion HKD in revenue, accounting for 42% of the total revenue. Among this, the revenue generated by 3 Group Europe increased by 3% year-on-year to 58.7 billion HKD, which is nearly five times the revenue of Hutchison Telecommunications Hong Kong Holdings.
Regarding its European layout, the market has been rumored since the beginning of this year that Hutchison Whampoa intends to merge its 3 Italy unit with Telecom Italia, in a way that merges 3 Italy with the fixed-line business and assets spun off from Telecom Italia, to improve the efficiency of its European operations and capture the local market. Some media outlets have suggested that Hutchison Whampoa intends to acquire approximately 30% equity in the new merged company.
In recent years, the impact of the European debt crisis has provided an excellent opportunity to acquire European assets. In fact, the financially adept Li Ka-shing has already made several moves. In February of last year, 3 Austria entered into a binding agreement to acquire 100% of the equity of Orange Austria, and then sold the acquired Yesss! brand and certain other assets to Telekom Austria Group. Through this transaction, the total number of 3 Austria customers reached 2.8 million. In September of last year, a consortium led by another institution under Li Ka-shing—Cheung Kong Infrastructure (1038.HK)—which included Cheung Kong Infrastructure, Power Assets Holdings, Cheung Kong Holdings, and the Li Ka Shing Foundation, spent 645 million GBP to acquire the British gas distribution company Wales & West Utilities Ltd, with an enterprise value of 1.957 billion GBP. Earlier this year, Cheung Kong Infrastructure also acquired the New Zealand waste management company Enviro Waste for 3.2 billion HKD.
In 2005, Telefónica acquired 90% of O2 for 26 billion euros, making Telefónica's user base the second largest in Europe and the fourth largest in the world. The acquisition became the largest corporate acquisition in Spanish history at the time, and the second largest in Europe, while Telefónica's debt scale doubled to 54 billion euros due to the acquisition.
Six years later, the glory has faded. Currently, the heavily indebted Telefónica has to consider reducing its total debt by spinning off non-core assets like O2. Previously, Telefónica had already sold a 40% stake in its Latin American operations for 500 million USD. The company hopes to reduce its total debt from the original 51 billion euros to below 47 billion euros by the end of this year.
