Beijing Pressures Li Ka-shing to Delay Port Sale, Prompting Further Divestment Plans

File photo: Li Ka-shing being interviewed by the media. (Guo Weili / Dajiyuan)

[People News] According to an exclusive report by Reuters, citing sources familiar with the matter, CK Hutchison Holdings ("Cheung Kong Holdings") has begun preparations to spin off its global telecommunications business, including operations in Hong Kong, Europe, and Southeast Asia. The business is estimated to be valued between £10 billion and £15 billion (approximately $13 billion to $19 billion) and is planned to be listed on the London Stock Exchange as early as this year. However, the plan faces complex challenges, including political considerations, internal restructuring, and the need for shareholder approval. CK Hutchison declined to comment on the report.

Telecom Business Revenue Reaches HK$88.37 Billion in 2023

According to Radio Free Asia, if the spinoff is successful, it will be one of the largest IPOs on the London Stock Exchange in recent years. This move follows CK Hutchison’s infrastructure subsidiary, CK Infrastructure Holdings Limited, announcing a secondary listing in London in August last year. At that time, CK Hutchison’s chairman, Victor Li Tzar-kuoi, stated that he had "no immediate plans" to list other subsidiaries overseas, while also noting that he "did not dare to predict the long-term outlook for the Hong Kong market."

According to the company’s annual report released on March 20, CK Hutchison’s telecommunications business is primarily managed by CK Hutchison Group Telecom (CKHGT), which is one of the group’s most profitable sectors, contributing a quarter of its total earnings. In 2023, the telecom segment generated approximately HK$88.37 billion in revenue, reflecting a 2% year-on-year increase, mainly due to strong performance from its European Three Group operations. Currently, the company’s UK subsidiary, Three UK, is undergoing a $19 billion merger with British telecom giant Vodafone, which is expected to be completed in the first half of this year. This merger is seen as a significant step toward CK Hutchison’s broader plan for a secondary listing in the UK.

CK Hutchison stated at the time that its telecommunications business would undergo a comprehensive review this year to enhance productivity, with a focus on reducing operational and capital costs. The company also mentioned that it would complete this in-depth assessment and announce new strategic targets within the year.

Notably, the group expressed concerns that "there is no guarantee that European public institutions and/or regulatory authorities in the countries where the group operates will not make decisions or interpret regulations in a way that could materially and adversely impact the group’s financial position and operating performance." In particular, "ports are often regarded by governments as critical national assets," meaning that political instability could affect overseas port concession rights. Additionally, infrastructure and telecommunications licenses abroad could also face regulatory obstacles due to changing national policies. At present, the group has only secured "substantially permanent" mobile telecommunications licenses in the UK and Italy.

Delaying the Port Sale Does not Mean the Transaction Has Been Canceled

On the same day as this exclusive report from Reuters, several Hong Kong media outlets reported on Friday (28th) that under repeated pressure from Beijing, CK Hutchison Holdings (Zhang He) will 'postpone' the signing of an agreement with BlackRock on Wednesday (2nd) regarding the sale of the Panama port and other overseas port assets. However, it was clarified that this date is not a 'real deadline'; it is simply the earliest date for signing the agreement and does not mean that the transaction has been canceled. Instead, due to the complexity of the deal, there are still significant details that need to be resolved.

Radio Free Asia recently conducted an in-depth analysis, highlighting that Li Ka-shing (Li Jiacheng) has strategically repositioned himself at several critical junctures to protect his empire, preparing for 'both hands' to mitigate asset and business risks. Particularly since Xi Jinping took office in 2012, along with the political turmoil between Hong Kong and the U.S. and China, Li has opted to significantly withdraw from China and Hong Kong while expanding into markets in Europe, Australia, North America, and Southeast Asia, with the UK being a primary focus of his business.

Currently, the majority of Li Ka-shing's (Li Jiacheng) group's assets are derived from Europe, making up over 53%, with 23% coming from the United Kingdom. Since the 1990s, Li Ka-shing has been building his investment empire in the UK, investing hundreds of billions of Hong Kong dollars through mergers, acquisitions, and investments, thereby advancing key sectors such as major ports, natural gas, telecommunications, railways, airports, real estate, and retail. According to a report by the British media outlet 'Financial Times', the Li Ka-shing family controls nearly 40% of the telecommunications market in the UK, about 25% of the electricity market, nearly 30% of the natural gas supply market, nearly 7% of the water supply market, and almost one-third of the UK's docks, along with over 500,000 square meters of land resources. Furthermore, the group has several companies that were listed in the UK in earlier years to raise capital, and these actions have been described by outsiders as 'buying half of the UK' and as a 'vote of no confidence towards Beijing.'