Hong Kong's Hutchison Telecom to improve mobile businesses after recent windfall
Hutchison Telecommunications Hong Kong, the city's second-largest wireless network operator, said it will work to improve its mobile and fixed-line businesses after recently posting a 57 per cent increase in its interim net profit.
"The group is tracking towards further enhancement in margin and profitability," chief executive Peter Wong King-fai said on Tuesday.
Hutchison Telecom, a subsidiary of billionaire Li Ka-shing's CK Hutchison Holdings, runs its mobile services in Hong Kong and Macau under its "3" brand, while its fixed-line residential operations fall under "3Home Broadband".
The company also provides sophisticated fixed-line, high-speed Wi-fi, data centre and cloud computing services to enterprises under the Hutchison Global Communications brand.
In a regulatory filing on Tuesday, Hutchison Telecom reported a net profit of HK$508 million (US$65.52 million) in the six months ended June 30, up from HK$323 million in the same period last year, mainly due to higher smartphone sales.
The company's consolidated earnings before interest, taxes, depreciation and amortisation - called Ebitda, a measure of a firm's operating profitability - rose 23 per cent in the first half to HK$1.46 billion from HK$1.18 billion a year ago.
Both the reported net profit and Ebitda missed the numbers forecast by Barclays, which estimated a net profit of HK$510 million and Ebitda of HK$1.5 billion.
Consolidated revenue grew 77 per cent to HK$11.02 billion in the first half from HK$6.23 billion the previous year. That was greater than Barclays' earlier estimate of only HK$6.96 billion.
Revenue for the fixed-line business in the first half remained flat at HK$1.98 billion.
The first-half turnover at the company's mobile business jumped 108 per cent to HK$9.24 billion, up from HK$4.44 billion in the same period last year, on high demand for the latest big-screen 4G smartphones, such as Apple's iPhone 6 and iPhone 6 Plus models.
Other popular models offered by the company include flagship smartphones from Samsung Electronics, Huawei Technologies, LG Electronics, Sony and HTC.
At the end of June, the operator had 2.9 million mobile subscribers in Hong Kong and Macau. That was down from 3.2 million at the end of December. Postpaid customers totalled 1.5 million, down from 1.7 million at the end of December.
"Hutchison Telecom wants to churn out its low-end subscribers and focus on mid- to high-end subscribers," Anand Ramachandran, the head of Barclays' telecommunications, internet and media equity research for Asia, excluding Japan, said in a report.
"We expect its subscriber base to stabilise from here."
The Hutchison Telecom board has declared payment of an interim dividend of 5.20 Hong Kong cents per share, higher than the 4.25 Hong Kong cents provided the previous year.
The company's shares traded lower to close down 0.89 per cent to HK$3.35 on Tuesday.