3G costs hurt Hutchison in Australia

August 18, 2004

Hutchison Telecommunications Australia said its first half net loss more than doubled from the previous year as it continues to spend on expanding its 3G mobile network.

Net loss for the six months to June was A$280.5 million compared to a loss of A$129.4 million for the same period a year earlier. On the upside, operating revenue for the period more than doubled to A$306.7 million and sales growth on its 3G and 2G mobile networks continued to outpace the industry average.

The 'Orange' business had another positive result, with EBITDA (earnings before interest, tax, depreciation and amortization) coming in at A$13.1 million. However, its 3G business showed a negative EBITDA and losses came in at A$159.2 million.

Hutchison said that its mobile customer base increased by 52% from the end of December to 626,476 customers. The number of customers on its 3G network rose to 240,000 in June.

Hutchison's 3G business continued to show strong subscriber growth in July and as of August 18 it had over 291,000 customers. Average revenue per user for 3G customers was A$85 a month during the first half compared to A$80 a month in the second half of last year.

The company said the bottom line result was also hurt by acquisition costs as well as higher depreciation of network assets and higher borrowing costs for the start-up funding of the 3G business.

The company also announced on Wednesday that it has successfully secured a five-year A$1.5 billion loan facility from a syndicate of major local and international banks. It said the "competitively priced" loan facility will be used to refinance short-term loans for its 3G business and also for working capital.

"This facility, in conjunction with existing funding and equity arrangements fully covers Hutchison's anticipated peak funding requirement of the 3G business," the company said.