Restructuring as a Response to a Challenging Environment
Hutchison Whampoa – which will simply be referred to as Hutchison in what follows where there is no risk of confusion – is normally described as a ‘diversified’ company and is not readily associated with the telecommunications industry, which is not its main line of business. Nevertheless, it has had a long and significant presence in the industry, particularly in terms of performing the role of a disruptive force in the mobile sector. Since the late 1980s, Hutchison has invested in several sectors of the industry – mobile, fixed-wire, cable and equipment – and has actively managed its investments, expanding into new markets while divesting itself of others. As a diversified company or conglomerate, it is reasonable to expect that Hutchison would move capital between different industries in the pursuit of maximum returns. However, Hutchison is unusual in that it has always seemed to be willing to continue to pump money into loss-making mobile networks, perhaps because two of its original investments – in Orange plc in the UK and in the Indian mobile market – were highly profitable. Hutchison continued to invest even though it found that building a third-generation (3G) mobile business from scratch was more challenging and protracted than anticipated (Curwen and Whalley, 2006). It used the proceeds from the sale of Orange and its Indian mobile operations to fund this continued investment, but the ability to invest successfully in one period does not guarantee that this feat can be repeated.
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