What will Hong Kong billionaire Li Ka Shing do with the billions that he makes out of the wealth he makes from selling his company’s stake in Hutchison Essar?
It is likely that he will buy more telecom companies in Asia, says investment bank Morgan Stanley in an analytical report.
“We think it is unlikely that Hutchison would receive the cash as dividend from Hutchison Telecom International Ltd as half the proceeds would leave the group, and even less likely that cash would be passed on to Hutchison shareholders as dividends,” the report said on Wednesday.
“We think the proceeds would more likely be used by HTIL to buy more attractively valued telco assets in the region,” it said.
Egyptian telecom company Orascom is a major shareholder in HTIL with an almost 23 per cent stake and a dividend payout by HTIL would lead to a payout of a $2-3 billion to Orascom as well.
Harit Shah, telecom analyst with Angel Broking, told Hindustan Times that it was unlikely that the funds would flow back into India.
“Surely they will not be re-investing the money in India as it would not make sense. But, yes they may invest it in the region. You must also note that Hutchison is exiting telecom business all over the world, especially the developed worldm,” he said.
Morgan Stanley added that Hutchison Whampoa remained one of the most attractive scrips in Hong Kong as it moved up by only seven per cent even as the Hang Seng index went up 34 per cent in 2006.