Hutchison Telecommunications International Ltd agreed the $1.38 billion sale of a stake in Israeli telecom operator Partner on Wednesday as it offloads certain overseas units to offset losses elsewhere.

Hutchison Telecom, the emerging markets telecoms arm of Hong Kong tycoon Li Ka-Shing's Hutchison Whampoa conglomerate, said it expects to book a $1 billion pretax gain on the sale when it completes in the second half.

For Partner Communications, Israel's second-largest mobile phone operator, the sale to Scailex Corp removes uncertainty surrounding the ownership of the 51.3 percent stake and may give it more cash.

Scailex, which imports mobile phones mainly from Samsung Electronics, said it will buy 78.94 million shares of Partner at $17.50 a share, above Tuesday's closing level on Nasdaq of $17.21.

Hutchison Telecom also reported a net loss for the first half, swinging from a year-earlier profit, but the company was positive about the second half of 2009.

While the signs of any recovery in the global economy in the second quarter are unclear, we remain optimistic about the second half, Hutchison Telecom Chairman Canning Fok said in a statement.

Hutchison Telecom said it had not made a final decision on the use of proceeds from the transaction. In a statement it said its intention was to retain the funds for general corporate purposes until completion of a detailed review of the HTIL group's capital requirements.

Lisa Soh, an analyst at Macquarie Securities, said: The proceeds may be used to fund its capex (capital expenditure) requirements for its emerging markets operations and likely for dividend payments.

DIVIDEND PAYOUT

Analysts in Tel Aviv warned of a possible overpayment on the part of Scailex, saying Partner holds more risks than its peers.

We think the only reason now to ... hold Partner (shares) is to collect the 1.5 billion shekels special dividend that is likely to be paid by the new controlling shareholder, said analyst Gilad Alper at brokerage Excellence Nessuah.

This dividend will involve leveraging up the company and will require capital reduction approval. The risk one would be taking here is that in the meanwhile the share price could sink.

Partner, which operates under the Orange brand name, on Monday reported a 2.1 percent rise in second-quarter profit.

Its Tel Aviv shares, which had been suspended pending the announcement, reopened down but later recovered to be up 3 percent in late trading. Scailex shares were up 0.4 percent.

Hutchison Telecom swung to a first-half net loss of HK$285 million (US$37 million) from a HK$1.17 billion net profit a year earlier, reflecting a drop in turnover from its Israeli operations and currency depreciation.

Turnover fell 19.7 percent to HK$5.6 billion.

However Fok said: The performance of our Indonesian and Vietnamese operations in the first half has been above our expectation and both operations will continue to focus on customer growth and (increasing) market share penetration in the second half of the year.

The company also said the group remained in discussion about a potential exit from its Thailand operation.

Hutchison Telecom had asked for a trading suspension on its shares on Wednesday before the Partner sale deal was announced.

The stock has risen 36 percent this year, underperforming a 40 percent gain in the benchmark Hang Seng Index .HSI.

Scailex said last month it was in talks with a third party to issue securities to fund a possible purchase. It said should this happen, Suny Electronics Inc (SUNY.TA), which controls Scailex with an 86.5 percent stake, would lose its majority share.

(Editing by Anshuman Daga and David Holmes)

Israel