12 June 2003
Standard & Poor's (S&P) ratings action reflects their negative outlook on the prospects of Hutchison Whampoa Limited's ("HWL") 3G businesses. This is disappointing to us as these businesses have only recently launched and we do not believe S&P's negative view warranted a ratings action.
Our 3G operations in Europe as well as our operation in Australia have now commenced business. After assuring that our systems and networks are sufficiently robust to handle large numbers of customers, we have launched our first major summer marketing campaigns in Italy and the UK over the last few weeks. Initial customer response to these campaigns is very strong and we are confident that we are on track to achieve a solid operating performance in our 3G businesses this year.
Of course like all start-ups, our 3G businesses will incur start-up losses in the early years. It is for this reason that we have ensured that these businesses are fully funded and adopted a prudent financial management policy minimizing leverage in all our businesses and maintaining a high level of liquidity.
Currently, HWL's pool of cash and liquid investments totals US$21 billion, and the net debt to net capital ratio, after deducting cash and liquid investments is 17%. Out of this US$21 billion, less than US$2 billion is represented by listed equity investments. HWL's solid financial position, together with the strong recurrent cash flows from established core businesses (EBITDA exceeded US$4 billion in 2002), is more than sufficient to cover all our cash requirements, including our debt repayments, capital expenditures, and dividend payments, and will maintain HWL's healthy liquidity levels and long-standing policy of conservative net debt to net capital ratio.
We are confident that our 3G businesses will provide strong growth prospects for the Group and that our resources are more than adequate to cover all HWL's refinancing requirements as well as the needs of our 3G businesses and of all other businesses going forward.
For further information, please contact:
Tel: (852) 2128 1289
Fax: (852) 2128 1766
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