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January 6, 2005

Hutchison Telecom cuts 12% of workforce

A competitive local marketplace for Hutchison Telecommunications International Ltd, the mobile arm of Hong Kong conglomerate Hutchison Whampoa Ltd, has been blamed for the decision to axe 11.6% of its workforce.

By CBR Staff Writer

A total of 1,160 positions are to go at Hutchison Telecommunications International: 750 jobs in Hong Kong (or 19.2% of its employees in the former British colony), 260 jobs in Thailand, and 150 in Israel.

The company said 480 employees will leave to join outsourcing companies or other companies within the Hutchison Whampoa Group. Another 270 positions have become redundant as the result of automation and improvement in processes.

Hutchison Telecommunications International provides mobile and fixed-line telephone services in Europe, Asia, and Africa. It said the layoffs would help it save about $32 million to $38.5 million a year.

Hutchison Whampoa managing director Canning Fok said that while it is still achieving strong subscriber growth in the third quarter and user spending was broadly maintained, the cuts were necessary. It was triggered, he said, by the Chinese government’s proposal to reduce the frequencies given to the company for its CDMA network service and redistribute them to a new license holder by 2008.

While at the moment CDMA accounts for a very small amount of revenues at Hutchison Telecommunications International, the company is said to be concerned that the introduction of a new license will make the already tough Hong Kong market even tougher. The city already has six mobile operators and a mobile penetration rate of 117%.

Meanwhile, Hutchison Telecommunications International’s 3G business continues to perform well. It has roughly 6.8 million 3G customers worldwide, compared to 6.3 million before Christmas. Its 3G operation in Italy is seeking a listing on the Milan Stock Exchange.

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