OXFORD, United Kingdom-Regardless of the decision by KPN to make a 1.2 billion euros (US$1.2 billion) write-off on its 15-percent stake in Hutchison 3G, Hutchison Whampoa Managing Director Canning Fok has calmly stated that it does not plan to make a provision for its third-generation (3G) business, because it is fully funded and will launch in October.
“If we acquire a license and do not start the 3G service, we will need to make a provision, but now, we have acquired the 3G licenses, and we will be going to start the business,” said Fok. He added that the 3G business is likely to achieve an earnings before interest, taxes, depreciation and amortization (EBITDA) break-even by 2005, stating that the company will make use of the sales network of the Kruidvat Group to promote and distribute its 3G services. The Kruidvat Group is reported to have 1,900 stores in Europe and employ 24,000 people in six countries.
In an effort to defend its decision, KPN said that while it has written down the Hutchison 3G asset to zero on its books, this does not mean that its 15-percent stake in the U.K. 3G player is worthless. In July 2000, KPN paid 1.5 billion euros (US$1.45 billion) for its stake. Now KPN is hoping it can get 300 million euros (US$291.6 million) for its holding.
