HONG KONG-Although the recent decision by Hutchison Whampoa Ltd. to provide a $1 billion capital infusion into Hutchison 3G U.K., of which it owns 65 percent, will have no immediate impact on the parent company’s investment-grade A3 bond rating, Moody’s Investors Service said it has assigned a negative outlook to Hutchison’s debt.
“H3GUK’s other two joint venture partners, NTT DoCoMo and KPN, have as yet made no commitment to provide additional equity injection at this stage,” said Brian Cahill and Gary Lau, corporate finance analysts for Moody’s. “Whilst this can be comfortably funded by the company’s more than $13 billion liquid reserve on hand, it nevertheless would increase overall exposure to this venture.”
Hutchison’s capital infusion into its U.K. joint venture will allow it to relax third-generation network construction requirements of a syndicated loan facility and extend the repayment date by one year, to 2005.
“However, the delay in rolling out 3G services in the U.K. may pressure Hutchison’s ability to achieve the target number of subscribers and target cash flow breakeven date,” Cahill and Lau said.
