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NEC to buy stake in Hutchison units
By Alex Frew McMillan
HONG KONG, China (CNN) -- Japanese computer maker NEC will pay $73.1 million for a 5 percent stake in Hutchison Whampoa's mobile telephone unit, Hutchison Telephone Co. Hutchison Whampoa said on Wednesday the deal also included a 5 percent stake in Hutchison 3G HK Holdings, which has the license for 3G, or third-generation mobile services, in Hong Kong. NEC is already the preferred handset supplier to Hutchison Whampoa, the ports and telecoms conglomerate controlled by Hong Kong tycoon Li Ka-shing. Hutchison units hold licenses for second- and third-generation phone services in the cities of Hong Kong and Macau, though it hasn't yet started 3G service. The company will issue new shares in Hutchison Telephone Co. and Hutchison 3G HK Holdings, then transfer them to its Pilot Gateway subsidiary. NEC will then buy Pilot Gateway, now wholly owned by Hutch. Hutch already has a deal to buy more than 1 million 3G phones from NEC, which is the first Japanese cell-phone maker to buy into a service provider. "I would see it more as a cementing of our relationships," spokeswoman Nora Yong told CNN. "We have been working together not only in handsets, they have also been building our network infrastructure in the UK and Italy," with other providers, she added. Roll out next yearThe sale, set for completion by December, will reduce Hutchison's stake in its Hutchison Telephone and Hutchison 3G HK subsidiaries to 71 percent from 74.6 percent. It had increased that by buying out long-time partner Motorola's 25 percent stake in February 2001. NTT DoCoMo, Japan's largest cell-phone company, will have its ownership trimmed to 24 percent from 25.4 percent. Hutch plans to roll out 3G service in Hong Kong by the first quarter of 2003. It starts offering the service on a trial basis in the United Kingdom this month, with the first handsets arriving Wednesday. Separately, Hutchison said it had put off a European bond offering worth 1.5 billion euros in Sterling and euros because of poor market conditions. The sale was set for pricing on Monday but has now been shelved. Hutchison Whampoa stock is up 1.3 percent on Wednesday morning, at HK$45.80, in line with a 1.4 percent gain in the Hang Seng index. NEC stock is also higher, up 0.7 percent to 572 yen, again mapping a broader upturn in Asian markets.
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