3G Operator 3 Italia Defers IPO

ASIA Hong Kong : The Boards of Directors of Hutchison Whampoa Limited ("Hutchison") and 3 Italia today announced a decision to defer the planned IPO of 3 Italia.

Canning Fok ( inset ), Hutchison's Group Managing Director and 3 Italia's Chairman, said, "3 Italia has now received all necessary regulatory approvals required to list. However, the window for executing an IPO is very short and would require the IPO to be completed in the next few weeks. At the same time, current market conditions for European telecom stocks are weak and, in the circumstances, I do not believe that the market would ascribe an appropriate valuation to 3 Italia's business on its IPO at this time."

Goldman Sachs, who was acting as one of the Joint Global Coordinators, has agreed to arrange and underwrite a structured pre-IPO transaction involving a private placement of an effective 10 per cent indirect share interest in 3 Italia held by Hutchison for €420 million. Holders of the placed shares will have the right to exchange them for 3 Italia shares on an IPO, and to put them to Hutchison in three years at the initial purchase price plus a premium to be calculated referenced to three-month Euribor interest rates plus 0.90 per cent (subject to adjustment), and earlier in the event of specified corporate activity Hutchison will also have the right to repurchase the shares in certain circumstances. The initial purchase price corresponds to an enterprise value for 3 Italia of approximately €9 billion based on estimated net debt of 3 Italia of approximately €4.8 billion at year end 2006. The transaction is expected to be completed by 31 March 2006. Due to the transaction structure, Hutchison will not recognize any profit upon completion. Any such profit would only be recognized upon the exchange of the shares for shares in 3 Italia.

Mr. Fok continued, "Between now and the IPO, I believe it is important for 3 Italia to conduct an investor education campaign comprising a full international roadshow presentation and analyst updates with a view to clearly differentiating the outlook for 3 Italia's business and the progress it has made in developing its unique business model from that of the incumbent mobile operators in Italy and the rest of Europe. This educational step is important to allow 3 Italia's management to clearly communicate to the global telecom investment community 3 Italia's current strong performance and favourable outlook. 3 Italia is not experiencing the same negative operating performance or outlook as incumbent mobile operators in Italy and Europe." "I believe these decisions will contribute to a better understanding of 3 Italia's business in the marketplace and will result in Hutchison shareholders recognising the value of their investment in both 3 Italia and our other 3G businesses going forward."

The transaction will be in existing shares of Hutchison 3G Italy Investments S.à.r l, and will represent an effective indirect interest of 10 per cent of 3 Italia. Terms of the transaction, which is being arranged and underwritten by Goldman Sachs subject to entering into definitive documentation and other standard market conditions, include Goldman Sachs' right to syndicate the transaction, customary anti-dilution and other investor protections, the terms of the put and provisions relating to Hutchison's financing of 3 Italia's business plan up to completion of the IPO.

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