3 Group, Hutchison Asia Telecommunications report growth

2 Aug 2013

Hong Kong-based Hutchison Whampoa has reported that its European 3 Group subsidiary – encompassing mobile operations in the UK, Italy, Ireland, Denmark, Sweden and Austria – claimed a registered 3G customer base of 25.6 million at the end of June 2013, up by 9% since the beginning of the year, of which approximately 21.0 million were reported as active mobile users. 3 Group reported total revenue of HKD30.101 billion (USD3.881 billion) across its six European markets in the six months to the end of June 2013, an 8% increase over the same period of last year, while six-month EBITDA and EBIT grew by 38% and 35% to HKD5.661 billion and HKD1.854 billion respectively. 3 Group also achieved the milestone of posting positive EBITDA-less-CAPEX for the first half of the year, with the improvement in its underlying operating results reflecting gains in the smartphone and mobile data segments across its markets, as well as the increased contribution from 3 Austria upon the completion of the acquisition of Orange Austria in January 2013, and a ‘well-disciplined capital expenditure profile’. During the period – in June 2013 – 3 Ireland entered into an agreement with Telefonica to acquire O2 Ireland for EUR780 million (USD1.034 billion) with an additional deferred payment of EUR70 million payable dependent upon achievement of agreed financial targets (subject to regulatory approval). Pending completion, 3 Ireland will become the second largest mobile operator in the country. 3 Austria is currently focusing on restructuring activities to merge the acquired Orange Austria operations, ‘to ensure synergies from the acquisition are maximised.’ On a group-wide level, Hutchison reported that 3 Group made further progress in the strategic transition to a non-subsidised handset model in its customer base.

Hutchison Whampoa’s Hutchison Asia Telecommunications (HAT) division – operating in Indonesia, Vietnam and Sri Lanka – reported a registered mobile customer base of over 41.6 million at 30 June 2013, ‘of which approximately 36.0 million were active’, up from 37.2 million twelve months earlier. HAT’s total revenue of HKD2.981 billion in the first six months of 2013 was an increase of 83% compared to the same period of 2012, reflecting growth in the customer base as a result of the 3G network rollout in Indonesia. In 6M13 EBITDA losses and operating loss (EBIT loss) worsened by 26% and 3% to HKD59 million and HKD697 million respectively, due to ‘increased start-up losses and the delay in network ramp-up [in both speed and coverage] which affected customer acquisitions in Indonesia.’ The upgrade and expansion drive in the Indonesian network will accelerate in the third quarter, with a target to be fully completed by the end of this year, Hutchison stated. As a result, HAT expects to continue to grow its customer base and customer service revenues, and targets the achievement of EBIT breakeven on a monthly basis by the end of the year.