HONG KONG - Li Ka-shing, Hong Kong's richest man, said that his high-speed mobile-phone business has turned a corner, posting its first profit after losing HK$157 billion ($20 billion) over seven years.
Hutchison Whampoa Ltd, which has invested an estimated $30 billion in its mobile-phone operations in Europe and Australia, said on Tuesday that its annual net income rose 47 percent to a three-year high of HK$20 billion, beating estimates. Li said that the company's phone business will make a "positive contribution" from now on after losses through 2009.
Hutchison shares jumped the most in almost two months as the company said it will increase dividends after overcoming the biggest drag on earnings in the past decade. The 3G (third-generation) investment has tested the reputation of the 82-year-old Li, nicknamed "Superman" by the Hong Kong media for his investing prowess.
"Not losing more money in 3G is good news, but this business never really became the cash-earner that they had expected when they first went into it," said Kalai Pillay, a senior director at Fitch Ratings in Singapore, who assesses Hutchison's debt.
3 Group, Hutchison's division that offers 3G mobile-phone services in seven markets in Europe and Australia, had HK$157 billion in loss before interest and tax between 2003 and 2009, according to Bloomberg News calculations from company filings to the stock exchange. Hutchison spokesman Hans Leung said he couldn't immediately verify the amount.
Best performer
Hutchison shares rose 5.1 percent to close at HK$93.35 in Hong Kong trading on Wednesday, the biggest gain since Feb 2. The stock's 65 percent gain in the past year makes it the best performer in the benchmark Hang Seng Index. Cheung Kong increased 4 percent to HK$127.40 on Wednesday.
The 3G division earned HK$2.93 billion before interest and tax last year, compared with a loss of HK$8.9 billion in 2009, Hutchison said in a statement on Tuesday. This included a one-time gain of about HK$1.5 billion from operations in Italy, in addition to a one-time gain from the United Kingdom, the company said.
Hutchison's investment in mobile-phone operations reached about HK$240 billion, Morgan Stanley said last year.
"We don't need to put much money into 3G now," Li said. Hutchison's 3G businesses can expand into higher-speed services, or so-called 4G, by financing them with existing resources without much input from the parent, Li said.
Hutchison contributed 38 percent of net income at Cheung Kong Holdings Ltd, the world's second-largest developer by market value, last year. Cheung Kong, which owns 49.97 percent of Hutchison, said on Tuesday that annual profit rose 35 percent.
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