Beating other U.S. personal communications services carriers to the punch, Western Wireless Corp. announced Hong Kong-based Hutchison Telecommunications Ltd.’s intention to invest about $248 million in its Global System for Mobile communications PCS business.
HTL, a subsidiary of Hutchison Whampoa Ltd. that holds a 49-percent interest in U.K. PCS operator Orange plc and runs mobile phone networks in Hong Kong, France and Germany, will own 19.9 percent of Western PCS Corp. and plans to purchase an approximate 5-percent interest in Western Wireless for about $74 million.
Among the benefits, HTL’s investment gives strength to Western Wireless’ balance sheet, said Perry Walter, vice president and telecom analyst with The Robinson-Humphrey Co. Inc. in Atlanta. Hutchison Whampoa, whose core businesses include telecommunications, property, ports, retailing and manufacturing and energy and infrastructure, recorded 1996 revenues of $4.7 billion and profits of $1.6 billion.
GSM carrier Omnipoint Corp. has been vocal about its intention to find a global partner and was expected to be the first to announce such an investment. Reportedly, Finnish Telecom is among Omnipoint’s candidates. Aerial Communications Inc. last week voiced its interest in finding a foreign partner, and indicated it has been in discussions with possible partners that have a strong GSM focus.
“We anticipate the investment by HTL will allow us to expand our business and accelerate the development of many markets purchased in the most recent auctions,” said John Stanton, chairman and chief executive officer of Western Wireless. The company purchased D- and E-block licenses encompassing about 100 markets and was granted an additional seven markets in the F-block auction through its partnership with Cook Inlet PCS.
HTL’s investment also will help Western Wireless expand its footprint in its major trading areas as well as increase the company’s aggressiveness of going after new wireless customers, said Walter. The company can further strengthen its GSM position in the United States by sharing technical and marketing information with HTL, he said.
Western Wireless finished launching service in all of its major trading areas earlier this year, concluding with Denver in May, but has been slow to expand GSM service in some markets. Since launching service in its Honolulu MTA in February 1996, the company still does not cover key areas in Hawaii, which are essential to many customers who frequently travel throughout the state, say cellular carriers there.
In June, Western Wireless’ acting general manager in Hawaii indicated that the entire company had restructured to allow it to operate more efficiently. “We’re changing our distribution strategy, which will allow us to distribute our product in nontraditional areas,” said Tammy Zham.
Western Wireless said HTL’s investment represents the formation of a global alliance, which indicates the two may pursue partnerships to acquire international mobile phone licenses, said Walter.
