3 Group turns EBITDA positive

27 Mar 2008

Hutchison Whampoa’s 3G business has posted revenues of HKD59.9 billion for 2007, up 18% year-on-year as subscribers grew by 20%. EBIT improved from a loss of HKD20 billion in 2006 to a loss of HKD17.9 billion in 2007. Of perhaps most significance is that for the second half of 2007 the outfit posted positive EBITDA after customer acquisition costs (CACs) of HKD2.8 billion, meeting the target set by Managing Director Canning Fok and reversing the loss of HKD1.6 billion for the first half of the year. Fok says that positive EBITDA after CACs is the threshold that signals the 3G business is getting enough sales to cover running costs, without the need for financing from the parent company. The company has now set its sights on turning EBIT-positive in the second half of 2008.

As of yesterday the company had 17.7 million customers, 47% of which were contract subscribers, up from 45% a year ago. Overall average monthly churn fell to 2.6% from 2.9%, but monthly ARPU dropped by 9% to EUR41.7 (USD65.4). Non-voice services, however, continues to stand at an impressive 31% of ARPU.

Hong Kong, CK Hutchison