Merging Hutchison Whampoa

Tech and telecoms converge

Telecoms operator Hutchison Whampoa is merging its Hong Kong-based IT services subsidiary Vanda Systems & Communications with another telecom division, Hutchison Global Communications Investments. The move is part of a growing trend to instill closer co-operation between such firms to attract network access business and associated IT services.

Under the terms of the deal, Hong Kong-based Vanda will acquire 100% of Hutchison Global Communications Investments (HGC) for a total of HK$7.2 billion (US$910 million). HGC is a fixed line operator also based in Hong Kong. HGC operates one of the largest building-to-building optical fiber networks in Hong Kong, and also provides network access from there to mainland China.

At the same time, Hutchison Whampoa said it would acquire 100% of broadband services provider PowerCom Network Hong Kong (PowerCom), which is a joint venture between Cheung Kong Enterprises and CLP Telecommunications. The three operations will then be merged together.

Hutchison said the combined businesses would create a new telecom and IT services company, with the PowerCom business providing additional technology skills for connecting the "last mile" access to fixed line networks.

Vanda meanwhile specializes in providing application development and systems integration services to the Chinese and Asian banking and financial sector markets where it counts firms such as the People's Bank of China, Bank of China, HSBC, Deutsche Bank, Ministry of Finance, ABN Amro, Citibank, Nomura, and Sony Music among its customers.

Hutchison will raise some HK$1.3 billion (US$167 million) by selling its shares in Vanda, which it is widely expected to use to help repay some of its losses incurred through investments in 3G licenses in Europe.

The deal highlights the increasingly close co-operation between telecoms operators and IT services firms, which are partnering together to perform network access and the surrounding applications development, consulting, systems integration and maintenance services.

Last April, BT Group rebranded its IT services businesses under the BT Global Services banner to highlight the increased emphasis on providing its telecom and services capabilities as a joint proposition. In recent months other mobile operators Orange and Vodafone have begun forging alliances with IT services firms like Accenture, EDS and Cap Gemini Ernst & Young to develop new tools and services for accessing corporate networks using broadband, wireless and Wi-Fi hot spots.

Source: ComputerWire/Datamonitor

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