3 UK gains 1-year repayment extension
Smoothes network rollout
3 UK has secured an agreement with lenders to finance the next stage of its 3G mobile network rollout.
Under the terms, 3 UK has secured its "non-recourse financing through to March 2005", extending the current terms by one year.
The facilities are provided by a consortium of 16 international banks, including ABN Amro, HSBC, JP Morgan, Merrill Lynch, the Royal Bank of Scotland, Citigroup and West LB together with equipment suppliers, NEC, Nokia and Siemens and 3 UK's majority shareholder Hutchison Whampoa Limited. According to Hutchison Whampoa's accounts, published today, the agreements mean that the £3,252 million project financing facilities of Hutchison 3G UK are extended one year to mature in March 2005.
Commenting on the agreement, 3 UK finance firector Tim Pennington said: "In a difficult financial market the package of measures we put together, combined with the recognition of 3 UK's full compliance with all existing banking covenants and the support of our shareholders and suppliers, meant the proposals were extremely well received."
Hutchison Whampoa Limited Group Finance Director Frank Sixt said it "fully supported" the revised financial agreements.
"3 UK has made significant inroads in reducing project cost to date as well as overall anticipated project funding requirements going forward," he added.
Last week Hutchison 3G UK announced a £1bn cash call from its three major investors. KPN and NTT Docomo account for 35 per cent of the shareholding have not yet decided if they will stump up the cash. But today, Hutchison Whampoa MD Canning Fok confirmed that it will fund the difference if KPN should fail to pay up.
"'Of course,' Fok told reporters when asked whether Hutchison would pay KPN's share. 'We'll fill the funding gap,'" Bloomberg reports today.
Hutchison Whampoa (3 UK's majority shareholder) today announced its results for the year ending 31 December 2002.
Group turnover for the year came in at HK$111bn (£9.08bn), an increase of 25 per cent over last year, mainly reflecting increased turnover in the ports and related services, property and hotels, and retail and manufacturing divisions of the corporation. Earnings before bad stuff (interest expense and taxation) came in at HK$24.4bn (£2bn), an increase of 13 per cent.
The Group's audited profit for the year was HK$14.3 bn (£1.17 bn), an increase of 19 per cent compared to 2001. Declines in the value of the the Group's stake in Vodafone Group and Deutsche Telekom, due to declines in the equity market, hit Hutchison Whampoa's balance sheet.
Hutchison Whampoa's telecommunication division's turnover came in at HK$13.4 bn (£1.09 billion) with Earnings before Bad Stuff of HK$818 million (£66.9 million), an increase of 17 per cent and 14 per cent respectively, according to the company.
Turnover increased mainly due to continued strong subscriber growth in the 2G operations in India and Israel. Improved results in Hong Kong also helped its balance sheet. Hutchison Whampoa says. Currently, the Group's Hong Kong, Australia, India, Israel and other 2G operations have over 6.1 million subscribers, a growth of 34 per cent from the beginning of the year.
The Group's 3G operations in the UK, Italy, Sweden, Denmark and Austria along with the CDMA-1X operation in Thailand were in development phase in 2002 and the related pre-operating expenses of HK$1.87 billion (£153 billion) were charged to Hutchison Whampoa's profit and loss account.
Hutchison Whampoa says its 3G development is completed and it is ready to start business in 2003.
On 3 March this year, the Group informed the market that the delivery of handsets would begin in both the UK and Italy in mid-March and suppliers have committed to deliver 700,000 units by the end of May. 3G services in Sweden, Denmark and Austria are scheduled to commence later this year.
The Group's total borrowings at 31 December 2002 were HK$180 billion (£14.8billion) of which HK$26.1 billion (£2.134 billion) "relates to the mainly non or limited recourse borrowings" of the 3G UK and Italy operations. ®
Sponsored: Navigating the threat landscape