'3' turns the corner in Australia

08 Sep 2008

Hutchison's troubled Australian subsidiary is showing welcome signs of recovery, bucking tough market trends to boost mobile subscriber numbers and post improved financial results.

Hutchison Telecommunications (Australia), a local market leader as the first to introduce 3G services in April 2003, posted a A$85 million($72.8 million) loss for the six months to June 30 - a substantial improvement on the negative A$197 million result the previous year.

Revenue was up 23% to A$760 million while subscriber numbers increased by 28% to 1.81 million after an aggressive pricing campaign, which was reflected in a small drop in ARPU.
Hutchison, the fourth player in the Australian mobile market, is now expected to break through the two-million subscriber level this year.

'In an aggressive market, '3' has continued to deliver market-leading offers, a great range of 3G devices and 3G services,' chief executive Nigel Dewes said.

'A greater level of awareness of ways customers can use their mobile phones, our transparent pricing and a better customer experience are driving the increasing data revenue.'

Hutchison's Australian prospects have also been boosted significantly by a new roaming deal with Telstra, which will see it extend 3G coverage for services such as video calls and music downloads from 56% of the population up to 96%.

The deal with Telstra, worth A$120 million a year, gives Hutchison permission to use Telstra's Next G network in areas where the smaller company does not own a network. The arrangement is a surprise back-flip from Telstra, which reversed the carrier's earlier refusal to allow competitors access to its Next G network.

Analysts are divided on reasons for the change of heart. Some point to concerns about Telstra's wholesale revenues, while others see it as a move to undermine main rival Optus, even though '3' customers will not receive equivalent speeds to Telstra subscribers.

Talking up Hutchison's Australian prospects is Canadian-based research house IE Market Research Corp (IEMR), with research associate Paul Gray describing Hutchison as the 'growth story in Australia's mobile space.'

'We are now predicting an even more aggressive annual subscriber growth rate for Hutchison in Australia at 13.7% during the forecast period 2008-10,' said Gray.

'That far outpaces operators like Telstra and Optus. We also continue to forecast that in 2010, Hutchison will receive the highest ARPU at A$67.27 per month, while Optus will receive the lowest at $A45.62 per month.'

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