Exclusive-CK Hutchison mulls global telecom assets spin-off, eyes London listing, sources say

HONG KONG/LONDON (Reuters) -Hong Kong conglomerate CK Hutchison Holdings Ltd ( CKHUF ) has started preparations to spin off its global telecommunication assets and list the business in London, two people with knowledge of the matter said.

The company has discussed the plan with a small group of financial advisers, the people said.

The spun-off entity would host CK Hutchison's ( CKHUF ) telecoms businesses in Europe, Hong Kong and Southeast Asia, the people said, who spoke on condition of anonymity because the information was confidential.

The business could be valued between 10 billion and 15 billion pounds ($13-19 billion), one of the people said.

CK Hutchison ( CKHUF ), founded by Hong Kong billionaire Li Ka-shing, is aiming to list the entity as early as this year, the person said, adding the timing could slip due to the transaction's complexity.

A spokesperson for CK Hutchison ( CKHUF ) declined to comment.

A listing in London, potentially one of the biggest in the past few years, would be a boost for the London Stock Exchange which has been losing out to rivals on big flotations. Britain has launched sweeping reforms to make it more attractive for companies to list in London.

CK Hutchison ( CKHUF ) has been focusing on enhancing the group's returns. It has been working on a deal to sell most of its global ports business, including assets near the Panama Canal, for an equity value of $14.2 billion to a BlackRock-led consortium.

U.S. President Donald Trump has hailed the deal as "reclaiming" of the Panama Canal. His administration had previously called for the removal of what it said was Chinese ownership of the ports near the canal.

But over the past couple of weeks pro-Beijing Hong Kong newspaper Ta Kung Pao published a series of commentaries criticising the deal for harming China's national interests and depicting it as a betrayal of China.

The South China Morning Post reported on Friday that CK Hutchison ( CKHUF ) would not be signing the deal to sell its two ports near the Panama Canal to a BlackRock-led consortium next week.

CK Hutchison ( CKHUF ) did not immediately respond to a Reuters request for comment on the South China Morning Post report.

TELECOM ASSETS

The ports deal could distract CK Hutchison ( CKHUF ) from proceeding with the spin-off plan, as the company deals with approvals and geopolitical uncertainty, said the first person and a third person with knowledge of the matter.

The company's advisers face the daunting task of sorting out the various parts of CK Hutchison's ( CKHUF ) telecoms assets, which have operations across a wide range of markets and different shareholding structures, the first person said.

Preparations for the spin-off are at an early stage and could change depending on the restructuring process that would need to happen beforehand and would require shareholder approvals, the person added.

Reuters reported last July that CK Hutchison ( CKHUF ) was reviewing options for its European telecoms unit with a view to reducing its holdings in the overall business.

CK Hutchison ( CKHUF ) would only be able to make significant progress with the plan after the closure of the Vodafone-Three UK merger, which is expected in April, making a listing this year potentially challenging, said the three sources.

The $19 billion merger that would result in CK Hutchison ( CKHUF ) owning 49% of Britain's biggest mobile operator is in the final stages of completion after receiving UK antitrust approval in December.

A spin-off of global telecoms assets could also face questions from investors due to the lack of synergies between the European and Asian telecoms assets, the second person said.

CK Hutchison's ( CKHUF ) telecoms business is the group's most profitable segment and brought in a quarter of its operating profit in 2024.

The CK Hutchison Group Telecom unit handles European operations, while Indonesia, Vietnam, and Sri Lanka are under Hutchison Asia Telecommunications.

Italy and Britain are the top contributors to the European business, with Ireland and Sweden the fastest growing markets. Its Three telecoms brand operates in eight countries including Ireland, Britain, Austria, and Sweden.

Hutch in Sri Lanka and Vietnamobile in Vietnam are the main Asia brands.

($1 = 0.7729 pounds)