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TELECOM'S LATEST TUMBLE

Financier's Bid Is Just a Day's Work

January 29, 2002|EVELYN IRITANI | TIMES STAFF WRITER

If Li Ka-shing succeeds in his brazen bid to take over faltering telecom giant Global Crossing Ltd., it would be just another day's work for the Hong Kong billionaire dubbed Superman for his highflying financial moves.

From a small plastics factory, Li has amassed a global empire that includes ownership of Hong Kong's leading telecom companies, real estate firms and supermarkets, the world's largest private port operation, large stakes in Vodafone/Air Touch and Priceline.com and a controlling interest in Canada's Husky Oil.

The eldest son of a school principal, Li, 73, is the richest man in Asia with a net worth of $12.6 billion. He dines with China's top leaders and was knighted by Queen Elizabeth. His family's holdings represent 15% of the capitalization of the entire Hong Kong stock market.

In his latest deal, Li's Hutchison Whampoa Ltd. teamed up with another Asian powerhouse, Singapore Technologies Group, in a $750-million bid to buy the assets of Global Crossing, which filed for bankruptcy protection Monday.

The deal, the terms of which were not disclosed, must be approved by a bankruptcy judge. Opposition is expected to be fierce because it probably will leave little for Global Crossing's creditors.

Li's interest has been rumored for months. Asia is one of the world's hottest markets for mobile phone and broadband development, and Global Crossing's most-prized assets are its transoceanic cables that link Asia and Latin America with the U.S. and Europe.

Li is an "astute investor" who is accumulating the pieces to cash in on the broadband revolution as it circles the globe, said Michael Ingraham, director of research for U.S. Global Investors and head of the firm's China Region Opportunity Fund.

"Global Crossing did great things for the world's connectivity by laying fiber optics almost everywhere you can think of and now you're watching them suffer for that," said Ingraham, whose fund has investments in Hutchison Whampoa and in Global Crossing's Asian unit. "But we're also seeing other companies who have better fiscal policies come in and see the benefits."

Li got his start in the decidedly low-tech field of plastics production, but he has become one of Asia's leading proponents of a wired world. Although others have lost their shirts in the telecom collapse, Li has made several lucrative deals, including the sale of Orange, a British mobile phone company, to Mannesmann for $14.6 billion in 1999, followed by the sale of his stake in Voice- Stream Wireless Corp. to Deutsche Telekom for close to $4 billion.

Those deals gave Li a war chest to invest in licenses in Europe and Asia for the next generation of mobile phones--known as third generation, or 3G. In 2000, Hutchison paid $6.9 billion for a 3G license in Britain and has plans to roll out service later this year.

The company is seeking financing to set up 3G networks in Austria, Italy and Sweden and has been asked by the Israeli government to take a stake in that country's state-owned carrier, Bezeq. The Hong Kong firm also controls 20% of the mobile market in India.

Both Hutchison and Singapore Technologies are familiar with Global Crossing's woes, having been investors in separate pieces of Asia Global Crossing, the Asian subsidiary of the struggling telecom giant.

Hutchison is a partner in Hutchison Global Crossing, a Hong Kong-based telecommunications provider. Singapore Technologies Telemedia is partners with Asia Global Crossing in StarHub Crossing, which operates a cable pipeline connecting Singapore. Asia Global Crossing was not included in the bankruptcy filing.

By joining forces, the Asian companies are solidifying a technology network that is based in Asia and encircles the globe. In addition to fixed and mobile telecom networks, they also are heavily involved in Internet and satellite television in Asia. After spending $110 million to increase its stake in Priceline.com, Hutchison announced plans to launch an Asian version soon.

Both the Li family and STT are moving aggressively into China, the world's fastest-growing mobile telephone and personal computer markets. As Hong Kong's largest mobile operator, Hutchison is positioning Tom.com, its Internet portal, to be a major player as the wireless Internet takes hold in China. STT has 52,000 mobile- phone subscribers in Szechuan Province and a joint-venture paging network with China Unicom.

Not all has gone smoothly. When Li's real estate company, Cheung Kong Holdings, purchased last fall a coveted piece of Hong Kong waterfront from the government at a below-market price, it reignited fierce criticism of the Li family's influence. Li's youngest son, Richard, the founder of highflying Pacific Century CyberWorks, was sidelined by the collapse of the Internet bubble and has pulled back plans to spend $1.5 billion to create a pan-Asian interactive video service, Network of the World.

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