Hutchison burns AU$280m, but future's bright

The company, which launched Australia's only third-generation mobile network -- under the '3' brand -- to date in 2003, told the market today "the competitive environment in the first half of 2004 continued to place significant market pressures on customer acquisition and retention, including the introduction of more aggressive rate plans for voice services, AU$0 handset offers, porting credits, anti-competitive bundling and other retention strategies by incumbent operators.

"Despite these market conditions, the company's core businesses, 3 and Orange mobile continued to demonstrate strong appeal, resulting in record customer and revenue growth".

Hutchison said monthly churn rates for the 3 business sat "well within industry benchmarks" at 1.1 percent for the period of operation, while the average national dropped voice call rate had declined to 2 percent due to network enhancements and improvements in software and network optimisation.

Customer numbers on 3 grew to 291,000 as at 18 August 2004, with 34,000 added in July alone.

Operating revenue from the 3 business -- which launched in mid-2003 -- climbed to AU$144.6 million for the half, up 94 percent from the half ended 31 December 2003.

The company said it was on track to complete the peripheral build of more than 200 network sites this year, bringing the total number across the licence areas to 2,000.

Hutchison said the process kicked off by signing of a heads of agreement this month with Telstra for sharing of its 3G W-CDMA radio network was expected to be completed in November.

"Significantly, the agreement cements the longer-term position of the company at the forefront of 3G service quality and network footprint, whilst allowing both parties to compete on products, services and other aspects of retail offers".

The company said handset roadmap for the remainder of 2004 "remains strong and handset prices are expected to continue to decline".

Hutchison said underlying revenue for the Orange mobile business grew to AU$149.3 million, up from AU$120.2 million the previous half, due to a variety of pricing initiatives.

It said the first phase of a capacity expansion of the Orange CDMA network was due for completion this month. The upgrade, using 1x technology, involves an overlay on existing base station sites, as well as four new sites and an upgraded voicemail system.