Hutchison 3G Cuts Losses Thanks to 3G License Revaluations

Hutchison Whampoa has reported an 14% drop in full-year revenues to HK$300.6 billion (US$38.7 billion) from a year ago, largely due to the poor performance of its ports and energy operations. However, net profits rose by 12% to HK$14.2 billion (US$1.8 billion) thanks to asset disposals.

The company also reported improving performance at its loss-making mobile phone subsidiary, Hutchison 3G (Three). Losses before interest and tax (LBIT) dropped by 67% from HK$15.8 billion (US$2 billion) in 2008 to HK$5.3 billion (US$682 million) in 2009. The improvement was primarily due to a gain on merger of 3 Australia, customer growth and cost and licences amortisation reductions.

The 3G customer base currently totals over 26.8 million worldwide. The 3 Group's customer base includes approximately 4.5 million mobile broadband access customers, a 75% increase from last year.

The 3G ARPU declined by 15% to EUR28.32 (US438.13) compared to 2008. This decline reflects an increased proportion of mobile broadband access customers in the 3 Group's customer base as well as price competition together with reductions in regulated mobile termination and roaming rates in certain markets. Although ARPU declined, the customer base continued to grow and total revenue in local currencies increased 5%. However, after translation to Hong Kong dollars, 3 Group's total revenue decreased 5% to HK$57.6 billion (US$7.8 billion).

The Losses before interest and tax (LBIT) reduced significantly due to the reasons above and also because of the effect of an indefinite extension of the telecommunications licences of 3 Italia and 3 UK, resulting in a reduction of amortisation of HK$969 million (US$125 million) for 3 Italia and HK$2.9 billion (US$373 million) for 3 UK.

Also, included in the 2009 results is a one-time gain of HK$3.6 billion resulting from the merger of 3 Australia with Vodafone Australia. The LBIT in the comparable 2008 results also included one-time foreign exchange gains totalling HK$2.9 billion from 3 European operations refinancings. Excluding the effect of the reduction in amortisation and one-time gains in both years, LBIT reduced 32% and in local currencies reduced 27%.