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August 11, 2009

Hutchison Telecom reports 20% drop in revenue, to sell Partner stake

To focus on developing its existing operations in Indonesia, Vietnam and Sri Lanka

By CBR Staff Writer

Hutchison Telecommunications International (Hutchison Telecom) has agreed to sell its 51.3% share in Israeli wireless carrier Partner Communications to Scailex for around HK$10.7 billion ($1.38 billon). The company said that it would continue to focus on developing its existing operations in Indonesia, Vietnam and Sri Lanka

Reportedly, Scailex would buy 78.94 million shares of Partner for $17.5 per share. The purchase price is comprised of cash of around $1.08 billion or HK$8.38 billion and a secured debt instrument of $300m (approximately HK$2.32 billion).

The transaction is expected to close in the fourth quarter of 2009 conditional on Israeli regulatory approvals and Hutchison Telecom’s shareholders’ approval. Upon completion of the transaction, the company is expected to realise an estimated gain before tax of around $1 billion or HK$7.750m.

Canning Fok, chairman of Hutchison Telecom, said: This transaction brings to realisation the significant value that we have created in Israel. We are proud to have built Partner into a respected and valuable company and we believe this is the right time to monetise the gain from our investment for the benefit of the company and its shareholders.

Hutchison Telecom also reported a loss of HK$285m for the first half of 2009, compared to a profit of HK$1.17 billion in the first half of 2008, due to a drop in its turnover from Israeli operations and currency depreciation. However, the company remains positive about the second half of 2009.

For the first half ended June 30, 2009, the company posted revenue of HK$6.41 billon, down 20%, compared to revenue of HK$7.99 billion for the same period last year.

The group’s total mobile customers grew 36.5% to around 11.6 million, compared to the same period last year.

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Dennis Lui, chief executive officer of Hutchison Telecom, said: “In face of the challenging economic conditions in the markets during the period, we continued to improve operational efficiencies and reduce costs. The Group also successfully released value for shareholders with the spin-off of its Hong Kong and Macau operations.”

“We are optimistic that the momentum in Indonesia and Vietnam will carry into the remainder of 2009 and the measures taken in Sri Lanka to strengthen its competitive position will produce an improved performance in the second half.”

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