Hutchison Reports Record 2007 Profits on Disposals
Hutchison Telecom has reported a record annual profit of HK$67,776 million (US$8.7 billion) for last year, thanks largely to disposals. Turnover increased by 13.8% to HK$20,401 million (US$2.63 billion) reflecting a 57% growth in the customer base to nearly 10 million, increased usage especially in 3G and favourable foreign currency exchange rates. EBITDA increased to HK$5,253 million despite losses at start up operations in Indonesia and Vietnam, and HK$223 million non-cash charge for employee stock options, representing an EBITDA margin of 25.7%. Excluding the start up operations the EBITDA margin would have been 29.4%.
After a one off impairment charge of HK$3,854 million (US$496 million) previously announced for the company's Thailand operations, 2007 operating losses were HK$2,819 million (US$363 million). Excluding the impairment charge, the operating profit was HK$1,027 million (US$132 million), reflecting strong underlying performances from Israel and Hong Kong mobile, which were up 25.4% and 81% respectively.
Interest expenses were offset by substantially higher interest income from the Group's retained cash balance in the second half of the year. The loss from continuing operations was HK$2,726 million (US$351 million). Excluding the net impact of the impairment charge and associated tax credits, there was a profit from continuing operations of HK$707 million (US$91 million) compared to a loss from continuing operations of HK$823 million (US$106 million) in 2006.
The sale of CGP Investments (Holdings) - the company which held the holdings in India's Hutchison Essar - to Vodafone resulted in the recognition of a one time gain on disposal of HK$69,343 million (US$8.9 billion). Largely as a result of the profit on disposal, profit attributable to equity holders of the Company was HK$66,884 million (US$8.61 billion).
The company has also announced plans to sell 3,692 towers to PT Profesional Telekomunikasi Indonesia ("Protelindo") , a specialist tower company, for a consideration of approximately HK$3.9 billion (US$500 million) which is expected to generate a profit on disposal of approximately HK$1.8 billion. As already announced in November 2007, the company had teamed up with Excelcomindo in a tower sharing deal which allows access to roll out their network on their base station towers.
Dennis Lui, Chief Executive Officer of Hutchison Telecom said: "2007 was a year of transformation for Hutchison Telecom. We capitalised on the opportunity to crystallise a significant return on investment allowing us to return substantial cash to investors and repay debt, leaving the Group with sufficient cash resources to confidently address the future. We have also made significant strides to address the Group's business in Vietnam, Thailand and Ghana sharpening our edge to achieve profitable growth. In Indonesia we have made an exciting start and, as with Sri Lanka, have found ways to increase the rate of network expansion. This together with the continued momentum of our established businesses will be our focus in 2008."
Key facts:
Indonesia
-- Customer base to 2,039,000
-- Network extended from Java to the major cities in Sumatra
-- Tower deals to raise HK$3.9 billion and provide access to many more
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Vietnam
-- Conversion to GSM confirmed
-- CDMA new customer acquisition stopped
-- Business slowed in second half on pending GSM approval
Hong Kong and Macau mobile
-- Customer base increased 13.5% to 2,427,000 in 2007
-- 3G customers base is now 1,144,000
-- Turnover increased 13.7% to HK$4,775 million
-- EBITDA increased 16.5% to HK$1,572 million
Israel
-- Customer base up 7.2% to 2,860,000
-- Turnover increased 18.9% to HK$11,650 million
-- EBITDA up 18.4% to HK$3,765 million
Sri Lanka
-- Customer base increased 104% to 1,141,000
-- Turnover jumped 52.4% to HK$189 million
-- EBITDA up 52.5% to HK$93 million
Thailand
-- Customer base increased 34.3% to 978,000
-- Turnover down 4.3% to HK$973 million
-- EBITDA negative at HK$14 million on licence recharge provision
Posted to the site on 18th March 2008