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September 19, 1995

ORANGE PARENT SEES NETWORK PROFITABLE BY END OF YEAR

By CBR Staff Writer

Hong Kong-based Hutchison Whampoa Ltd’s loss-making Orange Personal Communications Network in the UK is expected to be profitable by the end of next year, according to the company’s chairman, Li Ka-shing. Hutchison owns about 68.4% of Hutchison Telecommunications (UK) which controls the group’s telecommunications business in the UK. Li added that his investment in Orange was a long-term one, but that, were he to dispose of his interests in the business today, he would still have made a huge profit. But he stressed to the Singapore Business Times that he was not contemplating selling his investments. Orange currently has about 230,000 subscribers, which is well ahead of the firm’s projections, he added. But a Merrill Lynch analyst was not so bullish, telling the South China Morning Post that he did not expect the operation to break even until mid-1997. The network needed to absorb between 250,000 and 300,000 customers more before it would generate profit, he said. Separately, Orange has announced that it may wean itself off project financing from Hutchison with a long-term debt financing deal by the end of the year. The firm said it is in talks with unnamed banks to put together a package, but ruled out an early flotation. Meantime the diversified Hutchison Whampoa, an associated company of Li’s Cheung Kong Holdings, has reported net profit for the six months to June 30 up by 20% to the equivalent of $578.8m boosted mainly by strong property sales and rental income. Earnings per share rose to $0.16 from $0.13.

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