Hutchison profits up 19pc

20 Mar 2003

The holder of one of Ireland’s 3G mobile licences, Hutchison Whampoa, has reported a rise in its annual profit by 19pc, with an exceptional profit of HK$1.52bn, beating analysts’ expectations.

Asia’s biggest investor in European mobile phone networks said that net income in 2002 rose to HK$14.3bn from HK$12bn in 2001. Analysts had previously estimated it would turn in a net income of HK$11bn. Revenues at Hutchison rose to HK$75.2bn from HK$61.5bn in 2001.

In recent weeks, Hutchison’s European 3G venture, otherwise known as 3, began dishing out handsets in Italy and in the UK. It says that it will have 700,000 available within three months in the UK and two million subscribers a piece in Italy and the UK by year’s end.

However, cash problems may railroad progress for 3 in the UK and Italy, and the company is understood to have asked its three biggest shareholders – KPN, NTT DoCoMo and its parent company Hutchison Whampoa – for a £1bn sterling loan. Hutchison 3G already owes the banks £1bn sterling, drawn down from a £2bn sterling credit line arranged in 2001.

As reported in recently, a commentary by leading telecoms analyst Ovum said that greenfield operators such as Hutchison 3G, or 3, with no infrastructure or customers will have a problematic start in the European mobile telecoms market and may eventually shut down. “It hopes no doubt for significant first-mover advantage. But the owners of 3 are rational and hard-headed businessmen who will set clear performance goals and pull the plug on their investment if it does not perform well rather than allow it to haemorrhage cash from their global business portfolio,” said Ovum analyst David Lewin.

By John Kennedy