Post by Alex Chen on Aug 4, 2003 1:55:53 GMT -5
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Hutchison to keep bleeding from 3G
AUGUST 01, 2003
HUTCHISON Telecommunications still has a long way to go before recouping its $3 billion investment in building a third generation (3G) network in Australia, according to analysts.
Hutchison in February revealed its losses for 2002 had blown out by $60 million to $197.3 million because of the hefty 3G start-up costs.
The company reports its half year results in Sydney on Tuesday.
Since the April launch of "3" in Sydney and Melbourne, Hutchison last month introduced the service to metropolitan zones in parts of Perth, Adelaide, Brisbane and the Gold Coast.
Despite recent comments by Hutchison chief executive Kevin Russell the company's 3 service was attracting up to 2,000 new subscribers a week, it still doesn't expect to be cash-flow positive until at least the end of 2006.
Shaw Stockbroking equities director Scott Marshall said that while his company did not release an earnings forecast for Hutchison, it believed Hutchison would make losses "for quite some time".
"We find it hard to see how Hutchison can generate sufficient profits to justify their investment," Mr Marshall said.
Telco industry analyst Paul Budde said the situation with Hutchison was basically two-fold.
"I think because of their aggressive pricing in SMS and voice calls that they have made some inroads into the mobile market - I think above expectations," Mr Budde said.
"However, the use of the 3G applications such as video is very low.
"In other words, the reason people have moved to Hutchison is the lower call charges rather than video-based applications."
Mr Budde said he estimated there were between 20,000 and 30,000 Hutchison users but that average revenue per user (ARPU) would be on the lower end compared to other Australian carriers.
"It will be on the lower end because the company is attracting lower end customers," he said.
Mr Budde estimated there would be between 2000 and 3000 high end video-based users currently on the network.
The cost of setting up the service has weighed heavily on Hutchison, which owns the Orange brand here and whose parent is Hong Kong's Hutchison Whampoa Ltd. Hutchison Whampoa, which owns 57.8 per cent of its Australian subsidiary, is spending $36 billion worldwide rolling out 3G networks.
Competing carriers Optus and Vodafone have said they won't release 3G until at least 2005, while debate continues about whether Telstra's 1XRTT technology qualifies as 3G.
AAP
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Hutchison to keep bleeding from 3G
AUGUST 01, 2003
HUTCHISON Telecommunications still has a long way to go before recouping its $3 billion investment in building a third generation (3G) network in Australia, according to analysts.
Hutchison in February revealed its losses for 2002 had blown out by $60 million to $197.3 million because of the hefty 3G start-up costs.
The company reports its half year results in Sydney on Tuesday.
Since the April launch of "3" in Sydney and Melbourne, Hutchison last month introduced the service to metropolitan zones in parts of Perth, Adelaide, Brisbane and the Gold Coast.
Despite recent comments by Hutchison chief executive Kevin Russell the company's 3 service was attracting up to 2,000 new subscribers a week, it still doesn't expect to be cash-flow positive until at least the end of 2006.
Shaw Stockbroking equities director Scott Marshall said that while his company did not release an earnings forecast for Hutchison, it believed Hutchison would make losses "for quite some time".
"We find it hard to see how Hutchison can generate sufficient profits to justify their investment," Mr Marshall said.
Telco industry analyst Paul Budde said the situation with Hutchison was basically two-fold.
"I think because of their aggressive pricing in SMS and voice calls that they have made some inroads into the mobile market - I think above expectations," Mr Budde said.
"However, the use of the 3G applications such as video is very low.
"In other words, the reason people have moved to Hutchison is the lower call charges rather than video-based applications."
Mr Budde said he estimated there were between 20,000 and 30,000 Hutchison users but that average revenue per user (ARPU) would be on the lower end compared to other Australian carriers.
"It will be on the lower end because the company is attracting lower end customers," he said.
Mr Budde estimated there would be between 2000 and 3000 high end video-based users currently on the network.
The cost of setting up the service has weighed heavily on Hutchison, which owns the Orange brand here and whose parent is Hong Kong's Hutchison Whampoa Ltd. Hutchison Whampoa, which owns 57.8 per cent of its Australian subsidiary, is spending $36 billion worldwide rolling out 3G networks.
Competing carriers Optus and Vodafone have said they won't release 3G until at least 2005, while debate continues about whether Telstra's 1XRTT technology qualifies as 3G.
AAP
