Hutchison Whampoa Eyeing Expansion in 4G Telecom Market
Hutchison Whampoa Limited a company chaired by Hong Kong billionaire Li Ka-shing, is looking to deploy its business in the potentially-huge 4G telecom market when its 3G operation is making a turnaround.
Hutchison 3G (Hi3G), a 3G telecom service unit of Hutchison Whampoa, has entered into a contract with ZTE Corporation and Huawei Technologies Co., Ltd. for the commercial operation of long-term evolution (LTE) network.
Under the contract, the two leading telecom equipment makers will deploy 2.6GHz LTE TDD/FDD networks in Sweden and Denmark for Hi3G, according to Hutchison Whampoa, noting that it is the first time that the Hutchison 3G unit has made its push into the LTE technology arena heard.
The cooperation between Hi3G and Huawei and ZTE signals a debut of Chinese power in the global 4G market, pointed out market observers. The advanced 4G technologies including LTE have been winning increasing favor of mobile telecom operators around the world, although it has been a short time since the 3G technology was put into commercial operation.
The presence of Hi3G in the LTE business makes Sweden the first country in the world to set up an extensive LTE network. Telenor Group and Tele2, two telecom operators in Europe, have unveiled plans to expand the LTE network that they are operating to 100 new localities within 18 months.
Telenor Group and Tele2 worked together to set up Net4Mobility, a joint venture in Sweden, in an attempt to fight against TeliaSonera AB, the biggest telecom operator in the country. TeliaSonera, which rolled out LTE services in 2009, has made the service available in 28 cities and skiing resorts in Sweden.
The fast-growing demand for mobile Internet will pave the way for Hutchison Whampoa to make a push in the 4G market, said market observers. The Hong Kong-based company saw its 3G business expand continuously in the wake of a brisk growth in mobile Internet user number.
Such a speedy expansion, according to some analysts, is boosted by a widely adoption of intelligent terminals such as iPhone4, iPad, and other smartphones. Hutchison Whampoa, which has poured tens of billions of US dollars into the 3G operation since 2000, had had more than 20 million 3G users by 2009.
A total of 17 telecom operators in the world have launched commercial LTE services by far, said Global mobile Suppliers Association (GSA), predicting that the number is likely to touch 64 by the end of 2012.
3UK head criticizes spectrum allocation ruling
Kevin Russell, chief executive of 3 UK, has indicated that his business could be sold after accusing ministers and regulators of distorting competition in the telecoms industry.
He criticized a decision by regulators to let the operator’s larger rivals reallocate some of their radio spectrum from basic phone services to data activities such as internet browsing.
The Hutchison Whampoa-owned operator is seeking guarantees that it will have a fair chance of securing a significant chunk of low-frequency spectrum in an auction due next year.
The company wants Ofcom, the telecoms regulator to draw up auction rules that cap the amount of spectrum that any operator can hold.
Without this, 3 doubts that O2 and Vodafone could end up holding the bulk of the spectrum available at a bandwidth below one gigahertz. Everything Everywhere, the largest network operator, has similar concerns to 3.
Low frequency spectrum below one gigahertz is suitable for expanding 3G services to rural areas because wireless signals travel long distances on it.
Like other rival companies, 3 needs spectrum to support bandwidth-hungry smartphones such as Apple’s iPhone.
Mr Russell criticized Ofcom after the regulator stated that Everything Everywhere, O2 and Vodafone could reallocate spectrum currently used for 2G phone and text services to 3G data activities. According to him, healthy competition is critical for UK consumers using mobile services and Ofcom and the government must address the significant competitive distortions they have now created in pushing through the reform of spectrum currently used for 2G mobile services. This can only be done through the structure of the spectrum auction planned for 2012.
Mr Russell highlighted how the merger last year between Orange and T-Mobile in the UK, to create Everything Everywhere, had already reduced the number of network operators from five to four. If the government and Ofcom get this wrong, further consolidation could result. Ultimately that can only be bad, not good, for UK consumers.
Bombay High Court postpones Vodafone tax hearing (India)
The Vodafone spokesperson has revealed that the Bombay High Court has postponed the hearing of Vodafone Plc’s petition to February 8, 2011, which was against a move by Indian tax office to treat it as an agent of the seller in its 2007 acquisition of Hutchison Whampoa’s mobile business in India.
Vodafone had filed a writ with the court on October 15, saying the tax office’s move to treat the company as an agent of the seller was an unusual move.
Facebook working on two Smartphones: Reports
If reports are to be believed, Facebook is working with mobile phone maker INQ Mobile Ltd to create two smartphone devices that may have a network tie up with AT&T Inc.
According to sources, the devices, which will feature Facebook social-networking services, are due to be introduced in Europe in the first half of 2011 and in the U.S. in the second half. AT&T, the second-largest U.S. wireless service provider, is still considering whether to carry the devices and haven’t made a deal yet.
According to Jaime Schopflin, a spokesman for Facebook, the company’s current projects included deeper integrations with some manufacturers.
According to the company, it continues to work with INQ Mobile, which has previously sold phones with Facebook features, along with other companies.
INQ Mobile, which is based in London and is backed by Hong Kong telecom firm Hutchison Whampoa Ltd.
Hutchison Whampoa lining up in profits
Hutchison Whampoa has revealed a higher-than-expected 12% rise in first-half net profit and are expecting 3G mobile-phone business to turn to the positive side.
The 3G division has been focusing on investors, as its losses have long been a pull on the corporation’s earnings. The company assures that it will make profits with its 3G operations by 2011.
The company’s net profit for the six months ended June 30 grew from HK$5.76 billion last year to HK$6.45 billion. The profits were more than the average HK$4.51 billion forecast of six analysts.
The company’s unexpected result was mainly because its 3G operations came in better than the market anticipated, but whether the recovery is sustainable will depend on how well its 3G operations in the U.K. can compete.
Hutchison’s 3G operations cover the U.K., Italy, Australia, Austria, Hong Kong and Sweden, and has more than 27.8 million subscribers.
Hutchison’s input to Cheung Kong Holdings Ltd., Li’s property flagship and Hutchison’s controlling shareholder with a 49.97% stake, rose 12% to HK$3.22 billion from HK$2.88 billion.
ARPU enlarged by 1% compared to last year. Apart from the consequence of the depreciation of Euro against other European currencies and Australian dollar, ARPU declined 4% compared to last year, largely owing to an improved proportion of mobile broadband access customers.
Excepting any major unfavorable market growth or regulatory developments, the management expects the 3 Group to make a positive contribution to the Group’s full year EBIT results this year.
The Group’s established mobile operations in Indonesia, Vietnam and its Sri Lanka and Thailand operations reported total revenue of HK$1,195 million and LBIT of HK$869 million for the period, a decline compared to the EBIT of HK$166 million for the similar period last year – largely reflecting the shrank contribution from its Israeli telecommunications operation which was disposed of in October 2009.
Hutchison telecom advised to accept buyout by Hutchison Whampoa
www.WirelessFederation.com/news: The proposed takeover bid of Hutchison Telecommunications International Ltd by billionaire Li Ka-shing’s Hutchison Whampoa Ltd has been considered as attractive enough for the former investors to accept a buyout bid.
Hutchison Telecom investors’ exposure will be reduced after accepting the HK$4.23 billion ($545 million) buyout to the unit’s unprofitable wireless operations. In January, Li’s biggest company with operations in ports, telecommunications, energy, property and retail, Hutchison Whampoa offered to buy the Hutchison Telecom shares that it doesn’t own for HK$2.20 apiece.
60.4 percent of the shares outstanding were owned by the parent company while Li owns 5.5 percent of Hutchison Telecom. Hutchison Telecom operates mobile-phone units in Indonesia, Sri Lanka, Thailand and Vietnam.
Hutchison Whampoa 3G business fails to reach breakeven (Australia)
www.WirelessFederation.com/news: The 3G business of Hutchison Whampoa has not reached the breakeven at the ebit level in 2009 and it has been expected by the company that the 3 Group achieves ebit breakeven this year.
One-time gain of HK$3.6 billion is included in the 2009 results due to the merger of 3 and Vodafone in Australia and license amortizations. Revenue in local currencies grew 5%, but fell 5% to HK$57.6 billion when converted to Hong Kong dollars.
It was expected by the company that its 3G arm would break even on an ebit basis in 2009. 26.8 million subs in 2009, up from 25.3 million in August has been notched by the 3 Group’s operations spanning the UK, Italy, Australia, Austria, Hong Kong and Sweden.
It is believed by Chairman Li Ka-shing that outlook to be “still positive” and he expects good growth in 2010 from the mobile arm.
Hutchison plans to delist from HKSE on May 25 (Hong Kong)
www.WirelessFederation.com/news: Delisting from the Hong Kong Stock Exchange has been planned by Hutchison Telecommunications Ltd. on May 25. The company is also planning to delist itself from the New York Stock Exchange on June 4.
The moves will be implemented if parent company Hutchison Whampoa Ltd gets approval from a local court and shareholders to take the telecom services provider private for US$545 million.
Hutchison Whampoa and Hutchison Telecom will hold an extraordinary general meeting on the plan May 12, after a court meeting.
According to Hutchison Whampoa, a conglomerate controlled by billionaire Li Ka-shing, in January it had offered to take 60.4%-owned unit Hutchison Telecom private for HK$2.20 a share, to gain more control over how to restructure unprofitable telecom assets.
Hutchison Telecom’s customer base reaches 12.8m
www.WirelessFederation.com/news: With an annual growth of approximately 98% on a like-for-like basis, 6.3 million customers has been added by Hong Kong based Hutchison Telecom, taking its customer base to approximately 12.8 million. The relaunch of the operators business in Vietnam and ongoing expansion of the network coverage in Indonesia paved the way for this massive expansion in the subscribers’ numbers.
Larger Indonesia operation and the revenue generated by the newly launched GSM services in Vietnam led to the rise in the revenue by 2.7% year-on-year to US$239 million. With the disposal of the Group’s entire indirect stake in Israel’s Partner Communications, ¬the net profit for the year increased from US$239 million to US$817 million.
According to Dennis Lui, Chief Executive Officer of Hutchison Telecom, 2009 saw the Group unlock significant shareholder value again and the company has created, maximized and delivered value for its shareholders over the five years since listing – an achievement that has been based on pursuing carefully chosen opportunities with a measured approach. Mr. Lui also revealed that Hutchison will continue to work on building out its principal growth markets to a fully competitive state.
Hutchison Whampoa, a majority shareholder in the company is currently in the process of being taken off the stock market.
Hutchison’s 3 drops objection to Orange, T-Mobile merger (UK)
www.WirelessFederation.com/news: After receiving assurances of continuing to have access to cellular networks, one objection has been dropped by Hutchison Whampoa Ltd.’s 3 mobile- phone unit to the merger of Deutsche Telekom AG and France Telecom SA’s U.K operations.
The number of mobile-phone towers will be increased as a result of the agreement which can be used by 3, the U.K.’s smallest mobile-phone operator. France Telecom and Deutsche Telekom can also win regulatory approval to combine their Orange and T-Mobile units with the help of this agreement, thus creating the U.K.’s biggest mobile operator.
Failure to secure continued access to T-Mobile networks would also mean that 3 would have a much tougher time†competing in the U.K. market.
