India, Israel sales cut Hutchison loss
Strong growth in subscriber base helps operator shrug off impact of lower average monthly spending
Hutchison Telecommunications International Ltd (HTIL), the emerging markets arm of Hutchison Whampoa, said its first-quarter net loss narrowed to $24 million from 'about $100 million' a year ago on the back of strong subscriber growth in its two biggest markets, India and Israel. The growth more than offset lower per customer spending.
The 49.8 per cent-owned unit yesterday said that for the first three months this year, its subscriber base grew 4.16 million to 21.1 million, its largest three-month gain since the company was spun off by its parent in October 2004.
Part of the growth, however, came from the 1.6 million Indian subscribers it picked up when it bought BPL Mobile Cellular, which operates in three licence areas including Maharashtra, Tamil Nadu and Kerala states.
Hutchison bought both BPL Mobile Cellular and Mumbai-based BPL Mobile Communications for a total of US$1.15 billion last year in a deal that expanded its licence areas to cover 16 of the country's 23.
Chief executive Dennis Lui Pok-man yesterday said HTIL still planned to sell shares in its 61.2 per cent-owned Indian unit, Hutchison Essar, on the Mumbai stock exchange by the end of this year.
The company argued the Indian operations were its most valuable since they had a market penetration of just 4.8 per cent.
Last week, Indian media reported that IndusInd Telecom Network, which owns a 5.1 per cent stake in Hutchison Essar, was in talks to sell its shares to Hutchison Whampoa for US$450 million.
Under Indian regulations, foreign ownership in telecommunications firms is limited to 74 per cent.
Hutchison Essar, while doubling its subscribers to 15.4 million, saw their average monthly spending decline to 454 rupees ($77.40) from 511 rupees in the fourth quarter and 568 rupees a year ago.
CLSA analyst Eleanor Leung, who values Hutchison Essar at US$12 billion, including debt, said the 'current growth is sustainable and will remain strong for the first half'.
Subscribers to HTIL's Israeli unit, Partner Communications, grew 1.2 per cent in the first quarter from the fourth quarter of last year to 2.56 million, although average spending slipped to 152 shekels ($264.85) per month from 157 shekels a year ago.
On Monday, Nasdaq-listed Partner reported its profit rose 28.9 per cent to 160.42 million shekels.