[3GScottishUser]

Hutchison Telecoms International Limited (HTIL) is selling Hutch Essar for an EV of US$18.8 bn, of which close to 50% is attributable to parent Hutchison Whampoa.

Morgan Stanley estimated Hutchison will book an exceptional gain of around US$4 billion after paying tax. It believes Hutchison is unlikely to pass this cash through to its own shareholders. Moreover, it has plenty of potential uses for the funds, including paying down its net debt of US$18 billion, said the investment bank.

Morgan said its channel check showed the situation in the UK has deteriorated for 3, with stagnant subscribers. It expects the above exceptional gain could be the best opportunity for Hutchison to trade out of 3 UK given the large provision that such a transaction would likely require."Such a transaction could add HK$10/share to Hutchison's stock price", said Morgan Stanley.

http://corpsv.etnet.com.hk/webservice/jsp/ETNETP1/NEWS/ENG/NewsContent.jsp?MAINTYPE=NEWS&ENCODING=ENG&SUBTYPE=DETAIL&CLIENT=ETNETP1&NEWSID=170213148

Comment: No surprise that HWL are tipped to tidy up their remaining telecoms interests and the 3 UK operation must be the most pressing concern. What is being suggested above is that HWL will take a huge hit on 3 UK but the overall value of the parent company will probably more than offset the loss. A very tempting prospect for Canning Fok. Morgan Stanley's analyists have a habbit of correctly predicting the future strategies of major companies and appear to be following the 3 UK situation closely.

[Hands0n]

I rather fancy that 3 UK have pretty much burned all of their [Customer] bridges and now reliant upon existing business and not much new entry, given the awful PR in the public arena. It is always worth asking friends and associates whether they'd get a 3 contract when renewal comes up. At present, I am getting a uniform "No" from everyone I ask. Not a sustainable situation for 3 if my own anecdotal experience is being repeated across the nation.

This is all a crying shame really as 3 do have a superb network, great in-net facilities (My 3 takes some beating), a marvelous UK CS team if you can ever reach them - but normally by then its too late, you've been alienated from 3 by the Mumbai Muppets. And yet 3 UK persist in using the Mumbai CS operation to "save costs". Yup, they'll save costs alright, all the way to receivership.

A prospectively great company blighted by idiot board-level management who failed to listen to the roar of protest by its own Customers. It will be hard to turn this particular lemon around - it could perhaps be done, time is not on their side.

[3GScottishUser]

One can only speak from experience and that will always be determined by where you use the service but sadly in Scotland the 3 network is still a work in progress even in major cities.

3G only was a big gamble and the poor initial customer experience coupled with the customer preference for stylish handsets, the changes in regulation to extend the use of GSM frequencies and reductions in termination rates means that there probably is just nowhere to go with 3 to make money. The problem is compunded by the lack of any serious 3G killer application and the falling revenues from voice and texts.

It appears the disposal of 3 UK could have a positive impact on HWL the parent company and if that is accurate then Fok and Co must seriously consider whether it's worth putting up with the agony for any longer than necessary. Looking at the market in the UK it could be in HWL's best intrerest to make a move before they have to publish what will surely be some very poor statistics. The expected UK decline could actually harm other 3 companies like Italy where there might be some chance of gaining a return at some later stage.

All things considered I think Morgan Stanley have put forward a fairly compelling proposal.