Hutchison mobile market revenue up in 2004

Hutchison's annual results reveal the company had a service revenue of AU$523.1 million in 2004, up by 117 percent from AU$240.
Written by ZDNET Editors, Contributor
Hutchison's annual results reveal the company had a service revenue of AU$523.1 million in 2004, up by 117 percent from AU$240.90 million in 2003.

Hutchison CEO Kevin Russell said the company is on track to reach its target of 1 million customers within a year. In 2004, Hutchison's mobile customer base increased by 113 percent to 879,000 with the share of mobile market service revenue up from 3.5 percent to 7 percent.

Russell said Orange continued its steady improvement in operating earnings, recording a second full year of positive EBITDA.

On Hutchison's AU$552 million net loss, Russell said that "although EBITDA and net losses in the reported period have widened they are within the company's guidance and are expected to be peak losses for the business".

"The company is well-positioned to reduce losses and cash outflow in 2005, leveraging an existing quality customer base a tight operating cost structure and continued strong revenue growth potential," he said.

"In a year of intense competition, our two brands grew strongly, more than doubling Hutchison's overall market share, and with 405,000 customers added, outstripping all others in terms of postpaid growth," Russell said.

He added that Hutchison's blended average revenue per user (ARPU) last year grew from AU$56 to AU$68, "at a time when operators are struggling to maintain ARPU levels". ARPU in Hutchison's 3 has increased from AU$80 per month to AU$88.

"Our non-voice contribution to ARPU went from AU$10 to AU$11 over the full year, but the trend in the last months of the year was much stronger, with the December monthly figure coming in at AU$15," Russell said.

The anticipated cost savings in 2005 will initially be invested in customer acquisition activities. However, Russell said they expect to report a reduced loss position over full-year 2005. "We remain on track to exit 2005 with a positive monthly EBITDA position after fully expensing the costs of customer acquisition."

"The mobile market is highly competitive, but the industry is showing increasing signs of growth in mobile voice and SMS usage, new 3G services and substitution of fixed-line call volumes with mobile," he said.

Russell said that revenue contribution from non-voice services, including messaging, multimedia content services and high-speed data access has continued to grow strongly. "This trend, particularly in the second half of the year, has been encouraging with non-voice service revenue in 3 almost doubling from AU$11.3 million in the first half to AU$22.8 million in the second half of the year," he said.

Russell announced that approximately 1,900 3G cell sites are operational today with the dropped call rate diving to 1.3 percent. A network coverage expansion is scheduled in Canberra by the end of 2005.

Russell expects Hutchison's 3G network quality to be the "key differentiator" in 2005. Hutchison will be banking on its "market presence, product and network leadership" as competitors launch their own 3G networks in 2005. Russell also sees a significant opportunity in the pre-paid market.

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