Cellnet told the Australian Stock Exchange it was advised on Friday last week that "all current distribution partners of Hutchison Telecom mobile phones, including Cellnet, will cease to be distributors of Hutchison 3G and CDMA mobile phones," starting on an undisclosed date.
As many as five distribution partners will be affected by Hutchison's decision. The distribution of Hutchison mobile phones accounts for approximately AU$78 million in Cellnet's turnover on an annualised basis.
Cellnet said the loss of that turnover has the potential to "adversely impact the group's bottom line. The full impact will not be known until any transitional arrangements, including timing, are settled with Hutchison."
Cellnet, however, announced that "the decision will have no impact on the financial year ended June 30, 2004."
Cellnet chairman Darryl McDonough said "We are disappointed with Hutchison's decision to alter its distribution model. However, it is one that was out of our control. The reality is we are in the business of distribution. We will from time to time lose and gain distribution contracts -- that is the nature of the business."
Even with Cellnet shares dropping nearly 15 percent after the announcement, Cellnet managing director Stephen Harrison said they are "currently negotiating a number of initiatives that will significantly mitigate if not cancel out the loss of the Hutchison contract."
Hutchison told AAP today it was in the process of changing its distribution model but would give no further details. Cellnet said as far as they know, Hutchison has decided to set up a distribution facility in Melbourne.