HTIL lowers profit after SEC probe

Nicole McCormick
05 Mar 2010
00:00

Hutchison Telecom International (HTIL) has wiped almost $100 million from its profits for 2008 after the SEC queried its treatment of an Indonesian tower deal.

The US securities watchdog said the $500 million transaction should have been treated as a finance lease rather than a sale, HTIL said in its full-year accounts yesterday.

The results had been delayed two weeks because of the probe.

The restatement meant HTIL was required to trim HK$1,163 million ($96.5m) reported operating profit HK$4,060 million, and HK$751 million from the HK$1,883 net.

“The 2008 consolidated accounts, which treated this transaction [Indonesian tower sale] as an operating lease, have been restated to reflect this transaction as a finance lease,” said HTIL.

HTIL chairman Canning Fok said that the profit restatement did not affect the plans of parent company Hutchison Whampoa (HWL) to privatize HTIL. HWL has offered to purchase of almost 40% of HTIL for $545 million.

“We have sought and received confirmation from the offeror that the proposal for privatization remains unaffected by the decision of the company to amend and restate [its financial results],” Fok said.

HTIL quadrupled its 2009 net profit to HK$4.94 billion thanks to a HK$6.33 billion gain from the sale of its 51.3% stake in Israel’s Partner Communications to Scaile.

However, it almost tripled the operating loss on continuing operations, up from HK$813 million to HK$2.07 billion. Excluding the sale of tower sites and other items, the operating loss would have been HK$2.5 billion compared to HK$1.98 billion in 2008.

HWL said in January that HTIL was now “less suited” to continuing on as a listed entity given its recent disposal of assets in Israel and the spin off of its Hong Kong and Macau businesses.

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