Hutchison Whampoa to Reap Huge Gains from VoiceStream Sale

Strategic Insights -

Hutchison Whampoa and its parent company Cheung Kong (Holdings) could reap a massive profit if they sell their US mobile unit, VoiceStream Wireless, to Deutsche Telekom. The German telecom giant is in talks to acquire VoiceStream in a deal valued at $53 billion, or $205.60 per share. This is more than a fifth higher than the current market price. According to analysts, Hutchison's average cost for its VoiceStream stake is around $22.8 per share, suggesting an 801.75% gain in less than two years.

Key Takeaways:

  • Hutchison Whampoa stands to gain a massive profit if it sells its US mobile unit, VoiceStream Wireless, to Deutsche Telekom.
  • The deal is valued at $53 billion, with Deutsche Telekom offering 3.2 of its shares plus $30 in cash for each VoiceStream share.
  • Hutchison's average cost for its VoiceStream stake is around $22.8 per share, indicating an 801.75% gain in less than two years.
  • Analysts believe Hutchison may not sell the US operation to Deutsche Telekom unless the German telecom giant is willing to pay a substantial premium.
  • VoiceStream is aware that Telekom is willing to pay $53 billion, with the price seeing Deutsche Telekom paying over $20,000 per subscriber.
  • Deutsche Telekom has a war chest of 100 billion euros (HK$717.6 billion) to finance its entry into the US market.

Statistics:

  • The deal is valued at $53 billion.
  • The price per share is $205.60.
  • Hutchison's average cost for its VoiceStream stake is around $22.8 per share.
  • The gain in less than two years is 801.75%.
  • Deutsche Telekom aims to enter the US market with a war chest of 100 billion euros (HK$717.6 billion).
  • The price per subscriber is over $20,000.
  • France Telecom paid around $6,000 per customer for the British cellphone group Orange this month.

Sources:

  • The Wall Street Journal.
  • Reuters.
  • Bloomberg.
  • CIBC World Markets.
  • Williams De Broe.