Telstra reports flat returns, asks CSL to look overseas for growth opportunities

21 Oct 2003

Australia’s leading operator Telstra yesterday reported a disappointing set of financial results for its domestic operations, before revealing that it will be asking its Hong Kong CSL mobile subsidiary to look for future growth opportunities in Southern China. Telstra reported revenues of AUD5.03 billion for the three months to the end of September 2003, a 0.5% increase on the corresponding period of 2002. Sales from its Australian operations reached AUD4.68 billion, a rise of 1.7%, thanks mainly to the addition of 151,000 new mobile subscribers to take its total to 6.72 million, equal to 45% of the Australian cellular market. Telstra’s total mobile revenues increased by 6.3% to AUD942 million after improved handset sales and a 45% increase in SMS revenues.

However, Telstra’s domestic figures were dragged down by depleted returns from Hong Kong CSL, which reported a 6.3% drop in first quarter sales to HKD978 million. CSL cited the current price war between Hong Kong’s six cellular operators as the main reason behind the decline, compounded by the continued fallout from the SARS outbreak earlier this year. Telstra has reacted to CSL’s disappointing performance by asking the island-based operator to scour new markets in Southern China for growth opportunities, a move it claims it has been planning since taking full control of CSL in April 2002. Telstra’s chief executive Ziggy Switkowski hinted that CSL may seek to forge alliances with the likes of China Mobile and China Unicom from the beginning of next year, adding that it already enjoys a constructive relationship with the former, particularly in relation to roaming agreements. In accordance with China’s accession to the World Trade Organisation (WTO), from January 2004 Hong Kong telcos will be allowed to take stakes of up to 49% in Chinese companies.