Hutchison Whampoa saw ‘good growth momentum’ from its 3 Europe division despite the eurozone crisis which has hit so many of its incumbent rivals. The firm has been indicating that it could make acquisitions in other European markets while prices are low, but it also wants to rethink some of its units, notably in Austria ‘ as well as its joint venture with Vodafone in Australia.
In the first half of 2012, 3 Group Europe reported EBIT earnings of HK$1.37bn ($177m), up 51% year-on-year, on revenue of HK$27.99bn, down 0.3%. In local currencies, revenues actually grew by 6%, something 3 attributed to a shift towards higher value postpaid customers, even though it has based its disruptive success in several markets mainly on prepaid. It also said it had growing market share in smartphones and its pre-tax earnings were boosted by a program of ‘stringent cost control’.
As of the end of June 2012, 3 Group had 22.23m customers, up from 20.45m in June 2011. Capex was up to HK$5.45bn, from HK$3.77bn the year before, the biggest factor being 3’s ambitious network modernization project in Italy.
Looking ahead, the firm said benefits from further termination rate cuts in the UK and Italy, and the ongoing reduction of handset subsidies, should ‘favorably impact profitability’ in the second half of the year.
However, on the other side of the world, the operator is seeing continued weakness at its Vodafone Hutchison Australia (VHA) joint venture, which also falls within the 3 umbrella. There, ‘challenging market conditions and continuing poor public perception’led to a continuing deterioration in the operating and financial performance,’ said the statement. Hutchison’s share of VHA delivered a pre-tax loss of HK$567m for the quarter, compared with a year-ago loss of HK$142m, on revenue down 12% to HK$7.65bn. Year-on-year, VHA has seen a 3% fall in its customer base to around 6.8m, including wholesale users. An increased loss is expected for the rest of the year.
Hutchison has other non-3 telecoms divisions, including its Hong Kong/Macau unit, which reported EBIT of HK$807m, up 18%, on revenue up 12% to HK$6.73bn; and Hutchison Asia Telecommunication, which narrowed its loss from $1.01bn last year to HK$675m, on revenue up 55% to HK$1.63bn. The latter operation has a total of 37m customers across Indonesia, Vietnam and Sri Lanka.
In other 3 news, the company’s Austrian division may open its network to MVNOs, notably Sweden’s Tele2, as part of a proposed deal to merge with Orange Austria. Tele2 Austria’s CEO Alfred Pufitsch indicated to reporters that his firm was considering buying capacity from the enlarged 3 unit. Tele2 previously sold its MVNO business in the country, in 2007, to Mobilkom (now A1 Telekom Austria) because of fierce competition, though it retains broadband operations. Pufitsch also indicated that Tele2 could consider bidding for 4G spectrum in a supplementary auction scheduled for this autumn. Tele2’s fixed line rival UPC Austria has also talked of an interest in launching as an MVNO.
Last month European Union regulators suggested that they would be more likely to approve the 3/Orange deal if the combined company allowed access to other local operators as MVNOs. However, Austria’s federal competition authority still objects to a clause which would see 3 sell MVNO Yesss! to A1 Telekom Austria, allowing the latter to boost its share to 47%.