3G drags Hutch’s 2003 results down

18 Feb 2004

Hutchison Telecommunications Australia, which operates 3G network 3 and CDMA operator Orange, has reported a full year loss of USD409.8 million for 2003, double the loss reported for the previous year. Operating revenue for the year stood at USD340.1 million, an increase of 49.5% on 2002, but capital expenditure increased to USD359.5 million.

The company attributed the higher than expected loss to a poor performance from its 3G operation 3, which claimed just 86,758 customers at the end of the year, up from 18,435 in June and 43,650 in August, despite predictions that it would sign up significantly more. Of the total, 68,323 were post-paid users. 3 launched services in April 2003 in Sydney and Melbourne, expanding to Adelaide, Perth, Brisbane and the Gold Coast in July, and is the country’s only 3G operator. Customer take up was relatively strong in its first four months of operation, but waned considerably in the second half of the year due to a lack of handsets and a decline in interest in 3G services. The unit reported a negative EBITDA of USD306.1 million, compared to last year’s loss of USD84.7 million.

Orange, Hutchison’s CDMA operator, on the other hand, saw strong customer growth during 2003, with the total number of subscribers standing at 325,180 at the end of the year, an increase of 23% over the twelve month period. In January 2004 the company announced plans to expand its CDMA network using a combination of IS-95 and 1x technologies. Orange’s EBITDA for 2003 stood at USD21.6 million, compared to a negative USD14.1 million for 2002. Orange competes against Telstra, SingTel Optus and Vodafone in the mobile market.

Hutchison says it is not overly concerned by the slow growth at its 3 unit, with CEO Kevin Russell playing down the losses as ‘consistent with our business plan’. It hopes to become earnings positive by the end of 2006, and says it will sign up a million customers across the 3 and Orange networks by the end of 2005.

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