3g-g
25th August 2005, 10:24 PM
Here's the breakdown of the 3G sector for Hutchison Whampoa Ltd.
HWL 2005 Interim Results Highlights for 3G:
* The 3 Groups businesses have improved steadily and continue to build a quality customer base.
* 3G customer base currently totals over 9.4 million worldwide.
* 3 Italy is on target to achieve EBITDA breakeven, after all CAC expense, on a monthly basis for the month of August this year and 3 UK is expected to achieve this significant milestone later this year.
* 3 Groups funding requirements to decline in the second half of this year and it is positioned to contribute significant value to the Group.
* 3 Group has continued to achieve both above market expectation customer take-up and above market average customer revenue and service margins as migration of the most valuable 2 and 2.5G cellular customers to 3G services has accelerated in all of their markets.
We can confirm that Hutchison Whampoa Limited (HWL) has announced the Groups interim results for 2005 today, and disclosed an updated subscriber figure on its global network including Australia, Austria, Italy, Sweden & Denmark, the UK; as well as Hong Kong and Israel, which are under Hutchison Telecommunications International Limited (HTIL).
The 3 Groups businesses have improved steadily and continue to build a quality customer base. 3 Italy is on target to be earnings before interest expense and finance costs, taxation, depreciation and amortisation (EBITDA) breakeven, after all customer acquisition costs (CAC), on a monthly basis for the month of August this year. This is a significant milestone towards achievement of free cashflow breakeven for the 3 Italy business, and means in effect that revenues from the business are covering both its running operating costs and the cost of acquiring customers at its current high rate of growth. 3 UK and Hutchison Telecommunications Australia are also on target to achieve this significant milestone later this year and early next year, respectively.
The 3 Group continues to progress based on solid customer, revenue and margin growth and reported a significant reduction in loss before interest expense and finance costs, taxation, depreciation and amortisation (LBITDA) before prepaid CAC, loss before interest expense and taxation (LBIT) and net loss after tax (NLAT).
Gross customer additions of the 3 Group and HTILs 3G businesses in the second quarter were approximately 1.9 million, 12% ahead of the first quarter of this year and 70% ahead of the second quarter of 2004. 3 Groups gross revenues for the first half increased by 291% over the first half of 2004 to HK$17,256 million.
As customer usage of the unique 3G-services continues to gather pace, in addition to achieving higher than cellular market average revenue per customer, the 3 Groups average non-voice revenue per customer at 23% of total revenue per customer is ahead of cellular market averages. Because service margins (revenue less direct costs) from non-voice services are significantly higher than from voice services, the value of the 3 Groups customer base is rising much more rapidly than its market share, measured by customer numbers or revenues.
Operating costs and customer acquisition costs in the 3 Group have remained well managed, and are setting new benchmarks for the mobile industry. As a result, the 3 Groups largest operations, 3 Italy and 3 UK are fully on track to achieve a major milestone: EBITDA breakeven after all CAC on a month-by-month basis in the second half of this year, and Hutchison Telecommunications Australia is expected to achieve this target early next year. In fact, 3 Italy is on target to achieve this milestone for the month of August. The 3 Group as a whole is expected to achieve EBITDA breakeven on a month-by-month basis during the second half of this year.
Looking forward, with the 3 Groups funding requirements declining on an accelerating basis in the second half of this year and disappearing entirely in 2006, the 3 Group businesses should no longer result in an upward pressure on the Groups overall net debt and gearing profile, and are positioned to contribute significant value to the Group.
In order to set an early market benchmark for the growing value of Groups investment in the 3 Group businesses, our Italian operation is taking all steps necessary to be in a position to achieve an initial public offering and listing of shares, market conditions permitting. A successful offering at an enterprise value in excess of the total enterprise cost of the operation, would contribute both a dilution profit to the Group and a substantial reduction in the net debt attributable to this operation currently reflected in Groups consolidated net debt.
With the rapid expansion of its customer base, the 3 Groups average revenue per customer has declined since the annual results announcement in March 2005, an anticipated development as they broaden their customer base. Although ARPU has reduced, gross margin continued to improve due to increased penetration and usage of unique higher margin 3G non-voice services. In addition, management seeks to maintain and grow margins by lowering average customer acquisition costs and focusing on maintaining lower running operating costs and costs to serve.
Unit average customer acquisition costs for the first half of 274 was in line with the last half of 2004. However, the value of customers acquired was higher than 2004 as the Groups mix of postpaid to prepaid customers improved, particularly in the UK, Australia and also Italy. In the 3 Groups UK operations, which experiences the Groups highest difference between postpaid and prepaid customer acquisition costs and customer value, the mix improvement has been higher than the Groups average, and has improved from 45% / 55% to 53% / 47%. The Group has secured an attractive range of handsets under bulk orders to meet the second half demand at much lower prices than in the first half. This will contribute to lower overall unit average customer acquisition costs in the second half of this year.
Finally, 3 Group has adopted a pro-active management approach to deduct inactive start-up phase customers (mostly prepaid) from the customer base. As a result, the 3 Groups net customer additions for the second quarter were lower than net additions reported in the last report. This is expected to be largely a one-time effect attributable to the poorer quality of handsets available to mainly prepaid customers during the early start-up stages of the business. As a result, the revenue, margin and activity profile of our current customer base of over 9.4 million is significantly above industry averages. The rate of net customer additions is expected to resume in the second half and significantly out perform the first quarter and first half achievement.
Key earnings reported for the 3 Group are:
* LBITDA before prepaid CAC of HK$794 million, an 83% reduction or HK$3,903 million improvement over the first half of 2004 LBITDA before prepaid CAC of HK$4,697 million and a 77% reduction or HK$2,649 million improvement over the second half of 2004.
* Reported LBITDA, after deducting prepaid customer acquisition costs, of HK$6,375 million, a 7% or HK$394 million increase compared to the first half of 2004 reported LBITDA of HK$5,981 million, reflecting a 220% increase in prepaid customer additions in 2005, mainly in Italy, and a 40% or HK$4,207 million improvement over the second half of 2004 reported LBITDA of HK$10,582 million.
* LBIT of HK$10,621 million, a 26% or HK$3,669 million improvement over the first half of 2004 reported LBIT of HK$14,290 million and a 56% or HK$13,473 million improvement over the second half of 2004 reported LBIT of HK$24,094 million.
* NLAT of HK$5,348 million, a 49% or HK$5,066 million improvement over the first half of 2004 reported NLAT of HK$10,414 million and a 66% or HK$10,340 million improvement over the second half of 2004 report NLAT of HK$15,688 million.
HWL 2005 Interim Results Highlights for 3G:
* The 3 Groups businesses have improved steadily and continue to build a quality customer base.
* 3G customer base currently totals over 9.4 million worldwide.
* 3 Italy is on target to achieve EBITDA breakeven, after all CAC expense, on a monthly basis for the month of August this year and 3 UK is expected to achieve this significant milestone later this year.
* 3 Groups funding requirements to decline in the second half of this year and it is positioned to contribute significant value to the Group.
* 3 Group has continued to achieve both above market expectation customer take-up and above market average customer revenue and service margins as migration of the most valuable 2 and 2.5G cellular customers to 3G services has accelerated in all of their markets.
We can confirm that Hutchison Whampoa Limited (HWL) has announced the Groups interim results for 2005 today, and disclosed an updated subscriber figure on its global network including Australia, Austria, Italy, Sweden & Denmark, the UK; as well as Hong Kong and Israel, which are under Hutchison Telecommunications International Limited (HTIL).
The 3 Groups businesses have improved steadily and continue to build a quality customer base. 3 Italy is on target to be earnings before interest expense and finance costs, taxation, depreciation and amortisation (EBITDA) breakeven, after all customer acquisition costs (CAC), on a monthly basis for the month of August this year. This is a significant milestone towards achievement of free cashflow breakeven for the 3 Italy business, and means in effect that revenues from the business are covering both its running operating costs and the cost of acquiring customers at its current high rate of growth. 3 UK and Hutchison Telecommunications Australia are also on target to achieve this significant milestone later this year and early next year, respectively.
The 3 Group continues to progress based on solid customer, revenue and margin growth and reported a significant reduction in loss before interest expense and finance costs, taxation, depreciation and amortisation (LBITDA) before prepaid CAC, loss before interest expense and taxation (LBIT) and net loss after tax (NLAT).
Gross customer additions of the 3 Group and HTILs 3G businesses in the second quarter were approximately 1.9 million, 12% ahead of the first quarter of this year and 70% ahead of the second quarter of 2004. 3 Groups gross revenues for the first half increased by 291% over the first half of 2004 to HK$17,256 million.
As customer usage of the unique 3G-services continues to gather pace, in addition to achieving higher than cellular market average revenue per customer, the 3 Groups average non-voice revenue per customer at 23% of total revenue per customer is ahead of cellular market averages. Because service margins (revenue less direct costs) from non-voice services are significantly higher than from voice services, the value of the 3 Groups customer base is rising much more rapidly than its market share, measured by customer numbers or revenues.
Operating costs and customer acquisition costs in the 3 Group have remained well managed, and are setting new benchmarks for the mobile industry. As a result, the 3 Groups largest operations, 3 Italy and 3 UK are fully on track to achieve a major milestone: EBITDA breakeven after all CAC on a month-by-month basis in the second half of this year, and Hutchison Telecommunications Australia is expected to achieve this target early next year. In fact, 3 Italy is on target to achieve this milestone for the month of August. The 3 Group as a whole is expected to achieve EBITDA breakeven on a month-by-month basis during the second half of this year.
Looking forward, with the 3 Groups funding requirements declining on an accelerating basis in the second half of this year and disappearing entirely in 2006, the 3 Group businesses should no longer result in an upward pressure on the Groups overall net debt and gearing profile, and are positioned to contribute significant value to the Group.
In order to set an early market benchmark for the growing value of Groups investment in the 3 Group businesses, our Italian operation is taking all steps necessary to be in a position to achieve an initial public offering and listing of shares, market conditions permitting. A successful offering at an enterprise value in excess of the total enterprise cost of the operation, would contribute both a dilution profit to the Group and a substantial reduction in the net debt attributable to this operation currently reflected in Groups consolidated net debt.
With the rapid expansion of its customer base, the 3 Groups average revenue per customer has declined since the annual results announcement in March 2005, an anticipated development as they broaden their customer base. Although ARPU has reduced, gross margin continued to improve due to increased penetration and usage of unique higher margin 3G non-voice services. In addition, management seeks to maintain and grow margins by lowering average customer acquisition costs and focusing on maintaining lower running operating costs and costs to serve.
Unit average customer acquisition costs for the first half of 274 was in line with the last half of 2004. However, the value of customers acquired was higher than 2004 as the Groups mix of postpaid to prepaid customers improved, particularly in the UK, Australia and also Italy. In the 3 Groups UK operations, which experiences the Groups highest difference between postpaid and prepaid customer acquisition costs and customer value, the mix improvement has been higher than the Groups average, and has improved from 45% / 55% to 53% / 47%. The Group has secured an attractive range of handsets under bulk orders to meet the second half demand at much lower prices than in the first half. This will contribute to lower overall unit average customer acquisition costs in the second half of this year.
Finally, 3 Group has adopted a pro-active management approach to deduct inactive start-up phase customers (mostly prepaid) from the customer base. As a result, the 3 Groups net customer additions for the second quarter were lower than net additions reported in the last report. This is expected to be largely a one-time effect attributable to the poorer quality of handsets available to mainly prepaid customers during the early start-up stages of the business. As a result, the revenue, margin and activity profile of our current customer base of over 9.4 million is significantly above industry averages. The rate of net customer additions is expected to resume in the second half and significantly out perform the first quarter and first half achievement.
Key earnings reported for the 3 Group are:
* LBITDA before prepaid CAC of HK$794 million, an 83% reduction or HK$3,903 million improvement over the first half of 2004 LBITDA before prepaid CAC of HK$4,697 million and a 77% reduction or HK$2,649 million improvement over the second half of 2004.
* Reported LBITDA, after deducting prepaid customer acquisition costs, of HK$6,375 million, a 7% or HK$394 million increase compared to the first half of 2004 reported LBITDA of HK$5,981 million, reflecting a 220% increase in prepaid customer additions in 2005, mainly in Italy, and a 40% or HK$4,207 million improvement over the second half of 2004 reported LBITDA of HK$10,582 million.
* LBIT of HK$10,621 million, a 26% or HK$3,669 million improvement over the first half of 2004 reported LBIT of HK$14,290 million and a 56% or HK$13,473 million improvement over the second half of 2004 reported LBIT of HK$24,094 million.
* NLAT of HK$5,348 million, a 49% or HK$5,066 million improvement over the first half of 2004 reported NLAT of HK$10,414 million and a 66% or HK$10,340 million improvement over the second half of 2004 report NLAT of HK$15,688 million.