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Hutchison exits Germany
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August 18, 2000: 6:06 a.m. ET
HK firm transfers stake in German mobile phone consortium to KPN
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LONDON (CNNfn) - Hong Kong conglomerate Hutchison Whampoa Ltd. abandoned plans Friday to build a next-generation mobile phone network in Germany just hours after its joint venture won a coveted license for the cellular technology, saying the 8.4 billion euro ($7.7 billion) price tag was too high.
Hours after bidding wrapped up for the six prized German mobile phone licenses Thursday, Hutchison Whampoa said it will transfer its 50 percent stake in the E-Plus cellular consortium to alliance partner KPN Telecom. The Dutch carrier will now hold 100 percent of the venture, which aims to provide high-speed Internet access, video transmission and other multimedia services in Europe's largest mobile phone market.
In backing out of the venture, Hutchison Whampoa cited the license cost and said the amount of mobile network capacity won by the group is not enough to be shared with KPN. Each German license gives the holder authority to provide 10 megahertz of spectrum for their advanced cellular network, less than the 15 megahertz Hutchison and KPN wanted.
KPN shares tumbled nearly 11 percent, or  3.83, to 32.17 in late morning trading in Amsterdam as investors worried about how the carrier would foot the bill for the German phone license without Hutchison. Hutchison's stock fell 3.8 percent in Hong Kong.
In the German auction, six consortia bid a total of 50.5 billion ($45.9 billion) for 10 megahertz of spectrum apiece. While the deep-pocketed Hutchison could have easily afforded to pay for its half of the E-Plus license, the company's chairman, billionaire Li Ka-shing, said he did not consider it a good value.
"The prospect of 3G (third-generation mobile phone networks) is very good but anything, even the best, should have a price in the commercial society," Li told reporters in Hong Kong. "We have made the best choice and plan for (our) shareholders. I don't believe the license price can go up endlessly."
The auction's cost per capita came in at around 615, slightly less than the U.K. auction's per person cost.
Hutchison said, however, that it wants to be involved in Germany's third-generation mobile market, and is in talks that could lead to it leasing spectrum capacity from KPN.
"What we have sold back to them (KPN) is the consortium that will hold the license. There may be other ways, like we can lease spectrum from them to run the operation and provide service," Hutchison spokeswoman Laura Cheung said.
Hutchison, together with KPN and Japan's NTT DoCoMo, already holds a third-generation Universal Mobile Telecommunications System (UMTS) license in the United Kingdom, and recently took control of a consortium to bid for a third-generation phone license in Italy. Hutchison and its partners also plan to bid for a license in France.
KPN said Friday it would pursue development of E-Plus with other partners BellSouth Corp. (BLS: Research, Estimates) of the United States, which will carry 22.5 percent of the license fee, and NTT DoCoMo. 
-- from staff and wire reports
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Hutchison Whampoa
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