Hong Kong conglomerate CK Hutchison said its 3 Group Europe business is “now one of the major earnings contributors to the group”, as it acknowledged economic uncertainty for Europe in the near future.
In a statement regarding the UK’s decision to part ways with the European Union, it said that its operations in both markets are “predominantly resilient operations” with “solid fundamentals”, which are expected to continue generating “stable and reasonable returns”.
3 Europe’s active customer base increased 3 per cent to 26.8 million in the six months, with growth across prepaid and contract customers. The blended net ARPU average across the group declined by 2 per cent.
The mobile business’ EBITDA of HKD8.5 billion ($1.1 billion) was up 9 per cent, on revenue of HKD30.2 billion, down 1 per cent. The company said that the revenue decline was impacted by currency depreciation, and was up 1 percent when measured in local currency.
The EBITDA boost was attributed to an increase in net customer service margin, continued cost synergies at 3 Ireland, and “good cost management” in its other operations.
The company is in the process of merging its Italian operation with that of VimpelCom (Wind), pending regulatory clearance. This will become the country’s largest mobile operator by customer numbers.
Other telecoms operations
Hutchison’s business in its home market, Hutchison Telecommunications Hong Kong, saw its profitability impacted by lower hardware sales (attributed to lack of popular handsets in the market), as well as the reduction in mobile roaming revenue.
EBITDA of HKD1.3 billion was down 13 per cent, on revenue of HKD5.4 billion, down 51 per cent.
It has approximately 3.1 million active mobile customers in Hong Kong and Macau. The mobile business was said to have stabilised its contract customer declines due to a pick-up in higher margin contract customers, while the fixed line business also achieved steady growth.
For its Hutchison Asia Telecommunications business, the continued expansion of its customer base in Indonesia, as well as improvements in service margins and cost control initiatives, boosted profitability significantly. It has around 72 million active customers, with some 88 per cent in Indonesia.
EBITDA of HKD1.2 billion was up from HKD411 million, on revenue of HKD4 billion, up 26 per cent.
Momentum in Indonesia is expected to continue in the second half of 2016.
Hutchison also owns 50 per cent of Vodafone Hutchison Australia, which saw EBITDA of AUD206 million up 8 per cent driven by growth in the customer base and good cost controls (although depreciation and amortisation charges pushed it into the red).
Total revenue of AUD802 million ($159 million) was down 10 per cent, due to regulated termination rate cuts.