Hutchison Telecom to boost its network

PUBLISHED : Tuesday, 22 March, 2011, 12:00am
UPDATED : Tuesday, 22 March, 2011, 12:00am

Hutchison Telecommunications Hong Kong Holdings, lifted by its solid gains last year, plans to boost fixed-line network operations and launch fourth-generation mobile services later this year.

The operator, a subsidiary of conglomerate Hutchison Whampoa, yesterday reported a 61 per cent increase in net profit to HK$755 million last year, up from HK$468 million in 2009, on strong sales of smartphones and significant growth in demand for mobile data and fixed-line services.

Revenue rose 17 per cent to HK$9.88 billion from a year earlier. Basic earnings per share reached 15.68 HK cents, compared with 9.72 HK cents the previous year.

The Hutchison Telecom board recommended a final dividend of 6.83 HK cents, or HK$329 million in total, to registered shareholders. That is up from 6.16 HK cents in 2009. The company operates 2G and 3G networks in Hong Kong and Macau under the '3' brand, and fixed-line network services under the Hutchison Global Communications, or 'HGC' brand.

'We upgraded Hutchison Telecommunications to 'outperform' from 'neutral' and raised our earnings forecast on the positive momentum of smartphone subscriber acquisition and potential for Arpu (average revenue per user) growth,' Lisa Soh, an analyst at Macquarie Securities in Hong Kong, said in a report.

According to Hutchison Telecom, the total number of its mobile subscribers in Hong Kong and Macau swelled to 3.2 million last year from 2.96 million in 2009. More than 60 per cent of these mobile network users are postpaid customers.

Turnover from its mobile operations climbed 25 per cent to HK$6.95 billion, up from HK$5.58 billion in 2009, on the back of greater roaming revenue as more 3G subscribers used mobile data services while travelling and high demand for smartphones, such as Apple's iPhone.

That resulted in a 10 per cent year-on-year increase in monthly Arpu from 3G subscribers and HK$1.78 billion in telecommunications product inventories sold, compared with HK$756 million sold in 2009.

Peter Wong King-fai, chief executive of Hutchison Telecom, said the company launched successful marketing campaigns, expanded network coverage and capability, developed new tariff plans and co-operated with high-profile content providers to enhance the experience for mobile subscribers.

'Looking ahead, the group will try to maximise value for our shareholders by capitalising on the increasing demand for mobile data and enhancing the overall customer experience with the continued network upgrade.'

He said Hutchison Telecom would introduce advanced 4G services based on the standard called Long-Term Evolution (LTE) later this year, but declined to elaborate. A venture between Hutchison Telecom and PCCW won a licence to offer 4G services in Hong Kong during a spectrum auction in January 2009.

Rival CSL, however, unveiled its commercial LTE network last December to become the first mobile network operator in Asia to launch 4G services.

Hutchison Telecom's capital expenditure this year is expected to be HK$1.1 billion, same as last year, with up to 20 per cent budgeted for building its 4G infrastructure. Its HGC unit's operations will also be bolstered to include delivering consumer fixed-line internet access speeds of up to 1,000 megabits per second.

The operator's share price was up 4.56 per cent to close at HK$2.76 yesterday.