3 Group sees strong performance in H1

3 Group sees strong performance in H1

31 JUL 2014
Hutchinson Whampoa

3 Group Europe has benefited from “improvements in the underlying operating performances and a well-disciplined operating and capital expenditure profile”, parent Hutchison Whampoa said.

And its view of the company’s future performance was similarly optimistic, noting that it is expected to benefit from its “highly competitive network assets and service offerings, stringent cost controls across all operations and the continued realisation of cost synergies from the recently completed acquisitions in Austria and Ireland”.

Revenue at 3 Group Europe for the six months was HKD31.06 billion ($4 billion), up 3.2 per cent year-on-year. Service revenue was HKD23.95 billion, up 8.7 per cent. EBIT was HKD2.28 billion, up 23.1 per cent.

The Group has a registered customer base of more than 26.9 million, up 1 per cent in the period. Active users number 22.59 million, up 2 per cent. The largest unit is Italy, with 9.84 million customers, ahead of the UK, with 9.72 million, and Austria, with 3.5 million.

Some 59 per cent of the registered customer base consists of contract customers, contributing 89 per cent of service revenue. The average data consumption amongst its active customer base in the six month period was 12.2GB, up from 8.8GB a year ago.

Unsurprisingly, there were different stories for each of its operating units.

3 UK saw EBIT increase by 43 per cent to £123 million, on revenue which declined 3 per cent to £974 million, although the biggest drop came through handset sales – service revenue increased by 8 per cent to £723 million.

3 Italy saw its loss increase sharply to €71 million from €5 million, on revenue which decreased 9 per cent to €815 million – including a 3 per cent drop in service revenue to €662 million.

The company noted that the “increasingly competitive” Italian market impacted growth and resulted in higher costs to acquire or retain “quality” customers. It is “expected to improve its performance in the second half of 2014 through enhancing its customer and tariff mix”, Hutchison said.

3 Sweden saw an 81 per cent increase in EBIT to SEK491 million ($71.3 million), on revenue of SEK3.05 billion, up 13 per cent. Service revenue increased by 16 per cent to SEK2.12 billion.

This unit benefitted from a larger active customer base and the completion of the transition to a non-subsidised handset model at the end of 2013.

3 Denmark saw a 12 per cent increase in EBIT to DKK200 million ($35.9 million), on revenue which increased 8 per cent to DKK1 billion, again benefitting from an enlarged customer base.

3 Austria saw a 52 per cent increase in EBIT to €79 million, on revenue which decreased by 7 per cent to €342 million (service revenue was down 11 per cent to €271 million). The unit “continued to benefit from the realisation of additional cost synergies following the acquisition of Orange Austria in 2013”.

And 3 Ireland saw a loss of €25 million, compared with €18 million in the prior year period, on revenue of €97 million, up 11 per cent. Hutchison completed the acquisition of O2 Ireland from Telefonica on 15 July, which will lead to a combination and restructure that “is expected to provide a meaningful contribution to 3 Group Europe in 2015”.

Hutchison also provided details for its other operations: Hutchison Telecommunications Hong Kong, which operates in Hong Kong and Macau, and Hutchison Asia Telecommunications, which is active in Indonesia, Vietnam and Sri Lanka.

Revenue at Hutchison Telecommunications Hong Kong was HKD6.23 billion, up 1.3 per cent, while EBIT decreased to HKD538 million from HKD834 million.

The shortfall in EBIT was attributed to a weaker performance of its mobile business, resulting from lower demand for new handset models and “customers being increasingly price sensitive”. Contrastingly, its fixed-line operation performed “well”.

The company has around 3.6 million active customers in Hong Kong and Macau.

Revenue at Hutchison Asia Telecommunications was HKD3.51 billion up 17.6 per cent. LBIT was HKD76 million, compared with HKD697 million in the prior-year period.

This unit has 46.5 million active customers.

Hutchison noted an increased customer base in Indonesia following a major network rollout last year, and an increased average user spend in Vietnam.

Looking forward, it will “continue to focus on growing its customer base and customer service revenue in Indonesia”.

Finally, Hutchison reported a loss of AUD79 million ($73.4 million) related to its holding in Vodafone Hutchison Australia, compared with a prior-year loss of AUD96 million, on revenue of AUD863 million, down 1 per cent.

It said that VHA “continued the momentum of its turnaround plan in the first half of the year with further improvements in both operational and financial performances”.