Hutchison Whampoa could explore further European telecoms markets, says expert

Technology law specialist Peter Bullock of Pinsent Masons, the law firm behind Out-Law.com, was commenting after Finance Asia reported that Hutchison Whampoa was in talks with VimpelCom, a Russia-based telecoms provider, over setting up a joint venture company to compete in the Italian mobile telecoms market.

In March, Hutchison Whampoa confirmed that it had finalised a £10.25 billion purchase of O2 UK from Spain's Telefónica. The merger is still subject to approval by the EU's competition authority. At the time, telecommunications expert Paul Haswell of Pinsent Masons said that the deal was being seen as evidence of the appetite Li Ka-Shing has to diversify business assets away from Hong Kong and Asia. Li Ka-Shing is the multi-billionaire owner of Hutchison Whampoa.

"Given the enormous capital deployed in a telecommunications licence acquisition and network build out, it will always be attractive for a market participant to ‘share the wear’ with another deep pocket," Bullock said.

"Hutchison is a conglomerate and Li Ka-Shing has in recent times expressed an interest in reducing its weighting in Hong Kong infrastructure. This led to him selling down part of his ports business in Hong Kong to mainland Chinese interests recently. If the euro looks cheap, the eurozone countries are obvious targets for investment by this never shy enterprise," he said.

Haswell said he expects Hutchison Whampoa to be the dominant partner in any joint venture arrangement with VimpelCom.

"No joint venture is equal, there is always a lead partner," Haswell said. "Even when you have a joint venture with a 50-50 share and a 50-50 board, one partner always ends up taking the lead and I would presume it would be Hutchison, building a bigger web across Europe."