Hutchison Whampoa Limited & Global Crossing Forms US$1.2 Billion -HK$9.3 Billion- Fixed-Line Telecommunications and Internet 50/50 Joint Venture in Hong Kong - Company Business and Marketing

Cambridge Telcom Report, Nov 22, 1999

-- 50/50 joint venture combines Hutchison Whampoa's existing fiber optic telecommunications network and certain Internet-related assets in Hong Kong with Global Crossing's international cable capacity and growing inventory of web hosting, Internet applications and data services.

-- Hutchison gains technological expertise and global connectivity.

-- Global Crossing gains entry into attractive markets in Hong Kong and the Greater China region.

-- Partnership will expand Hutchison's existing network, the largest fully fiber-optic network in Hong Kong, as the cornerstone of the planned China Crossing, when regulations permit.

-- Global Crossing anticipates the integration of its share of new partnership with the Asia Global Crossing joint venture that includes Microsoft and Softbank.

Hutchison Whampoa Limited ("Hutchison") and Global Crossing Ltd. ("Global Crossing") announced Monday that they have agreed to form a 50/50 joint venture to pursue fixed-line telecommunications and Internet opportunities in the Hong Kong Special Administrative Region, China ("Hong Kong").

The 50/50 joint venture will combine Hutchison Whampoa's existing territory-wide, building-to-building fixed-line telecommunications and certain Internet-related assets in Hong Kong with Global Crossing's international cable capacity and growing inventory of web hosting, Internet applications and data services. For its 50% share, Global Crossing will directly provide to Hutchison Whampoa US$400 million (HK$3,108 million) in Global Crossing convertible preferred stock. Additionally, Global Crossing will contribute to the joint venture international telecommunications capacity rights on its global fiber optic network and global data center related capabilities which together are valued at US$350 million (HK$2,720 million), as well as US$50 million (HK$389 million) in cash. In aggregate, Global Crossing's investment values the joint venture enterprise, which will be named Hutchison Global Crossing ("HGC"), at US$1.2 billion (HK$9.3 billion).

Hutchison Whampoa Chairman Li Ka-shing remarked, "I am very pleased that Hutchison will have a successful company like Global Crossing as our partner for the telecommunication business in Hong Kong and potentially in the Greater China region. I am very impressed by Mr. Winnick's achievement in the industry, which he entered less than three years ago."

Commenting on the announcement, Gary Winnick, Founder and Chairman of Global Crossing, said: "Hutchison Whampoa is one of the great conglomerates of Asia and, under the leadership of its Chairman, Li Ka-shing, has been transformed into an agent of economic change admired around the world. Mr. Li Ka-shing is one of the greatest builders and innovators of our times and absolutely the right partner for the venture revealed here today that will do so much for the people of Hong Kong and, when appropriate, we hope for all of China."

Under the joint sponsorship of Global Crossing and Hutchison, HGC will build on Hutchison's position as the largest full-service alternative telecom operator in Hong Kong, one of the fastest growing telecommunications markets in Asia. HGC will pursue fixed-line telecommunications network business in Hong Kong, as well as seek to pursue fixed-line telecommunications opportunities in the Greater China region as and when regulations permit. The venture will focus initially on the expansion of Hutchison's existing network, the largest fully fiber-optic network in Hong Kong, to become the cornerstone of HGC's planned venture China Crossing. The venture will enhance Hutchison's rapid penetration of the Hong Kong corporate market by adding low cost global connectivity and a variety of web hosting services.

Using this network infrastructure as a platform, HGC will offer high quality broadband telecom services to high volume customers in Hong Kong, including multinational corporations, government bodies, ISPs and other telecom operators. In addition, HGC will adopt a focused approach to the roll out of telephony services in Hong Kong. By leveraging Global Crossing's extensive global network connections and strong customer relationships, the venture will offer a full suite of international telecommunication services.

Jack Scanlon, Chief Executive Officer of Asia Global Crossing, said: "This is an important strategic step that immediately introduces the Greater China region to the Global Crossing Network, which by year end will link Asia across the Pacific to North America and onto Europe. As the Greater China region sustains and expands its remarkable economic successes and becomes a central player in the world economy in the new millennium, it is essential that it have unsurpassed access to the full commercial and informational resources of broadband communication. We anticipate integrating our share of this new enterprise into the strategic mission of Asia Global Crossing, our recently established joint venture with Microsoft and Softbank, to bring world-class broadband services to Asia. The high-quality, customer-focused assets and talents added to the mix by Hutchison Whampoa create a platform for us in Hong Kong from which we can provide our business customers with a competitive advantage in their respective industries."