The weekend before Christmas saw an extraordinary swirl of rumours around Hutchison Whampoa’s 3G networks in Europe, 3UK and 3 Italia.
It all started with an emphatic report that both companies were about to be bought by China Mobile. It appeared on the Newswireless website and came from well-connected IT industry watcher Guy Kewney, who was quite definite about its accuracy. He says that a deal had actually been concluded in principle some time ago, with only the details to finalise and the regulators to notify.
3 responded vigorously: “Hutchison Whampoa is 100% committed to 3 in the UK. It has categorically denied that it has plans to sell any of the 3 Group businesses. Beyond that we don’t comment on rumour and speculation.
Kewney argues that this could be splitting hairs: if the sale had been agreed a few weeks ago, it would be literally correct for Hutch to say that it had no plans to sell – because that had already happened.
Then a couple of days later a Hong Kong-based English-language newspaper said the biggest Chinese fixed-line phone company, China Telecom Corp, was going to buy 15% of 3 Italia. It based the story on a document apparently sent by China Telecom’s chairman Wang Xiaochu to the US Securities and Exchange Commission. This specified a price for the 15% (HK$9.5bn, about £620m) and indicated that the deal would be completed by March.
China Telecom immediately put out a statement saying the document is a fake.
So what’s going on? Well, the Wang Xiaochu document was apparently emailed to investment banks in the US and the UK. That would have been done to boost Hutchison’s share price, but Hutchison itself is issuing so many denials that it couldn’t have been the source of the scam itself.
Our current thinking is that it was organised by stock market players in Hong Kong, perhaps in response to a professional market analyst’s report a couple of months ago that now would be a good time for Hutch to sell if it wanted to.
In the UK, the pot was stirred by a few local rumours. In particular, 3 has denied reports that CEO Bob Fuller is stepping down. The buzz started with the news that Kevin Russell, currently CEO of 3 Australia, is joining 3 UK this month as deputy CEO.
3 UK has confirmed that the company is cutting 130 jobs at its head office, but says the total headcount will actually rise this year as the operator recruits more retail staff – perhaps 200 of them.
Meanwhile the makeover of 3’s channel continued with a cull of another 50 dealers for failing to abide by the network’s terms and conditions.
It’s all part of the refreshing emphasis on quality connections rather than quantity, emphasised forcefully in briefings and dealer meetings towards the end of last year, and it brings to 200 the number of dealers who have lost accreditation since the middle of last year.
When we went to press 3 UK was still a Hutchinson company.
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