Earnings up at 3 Group Europe, but VHA disappoints

Hong Kong’s Hutchison Whampoa has reported impressive results across its European telecoms subsidiaries despite ongoing difficulties in Australia.

For the 2012 financial year, the group reported revenue growth in all of its European markets bar Denmark, while earnings before interest, tax, depreciation and amortization increased everywhere except Sweden.

Overall revenues at Hutchison Whampoa’s 3 Group Europe division rose 3% to HK$58.7 billion ($7.6 billion), with earnings up 15% to HK$9.2 billion.

Hong Kong’s Hutchison Whampoa has reported impressive results across its European telecoms subsidiaries despite ongoing difficulties in Australia.

For the 2012 financial year, the group reported revenue growth in all of its European markets bar Denmark, while earnings before interest, tax, depreciation and amortization increased everywhere except Sweden.

Overall revenues at Hutchison Whampoa’s 3 Group Europe division rose 3% to HK$58.7 billion ($7.6 billion), with earnings up 15% to HK$9.2 billion.

The company also said that it expects “further progress in the transition to a non-subsidized handset model” to lead to additional improvements in 2013.

Operators have been subsidizing more expensive smartphone devices with the aim of transferring customers on to pricier services, but the practice has squeezed their profit margins.

Arguing that consumers have grown frustrated with the lack of pricing transparency around subsidy-based offers, T-Mobile USA (Bellevue, WA, USA) this week launched a new tariff that separates device costs from service fees and does not require customers to sign a contract.

Steps in the same direction may have worked to the advantage of 3 Group Europe, which claimed to have added 2.1 million customers in 2012, compared with just 1.3 million in 2011.

In the large UK market, 3 was the fastest-growing operator last year, adding 900,000 customers to give it around 9.1 million in total.

Market leader EE (Hatfield, UK) lost around 700,000 customers, while O2 (Slough, UK) added 700,000 and Vodafone (Newbury, UK) just over 200,000.

The story was very different at Vodafone Hutchison Australia (VHA) (Sydney, Australia), whose losses grew from A$168 million ($175 million) in 2011 to A$394 million last year.

VHA was affected by 6% decline in its customer base, to 6.6 million, with brand perception described as “poor” by Hutchison Whampoa (Hong Kong).

Hutchison Whampoa says the struggling joint venture is undergoing a shareholder-sponsored restructuring under the leadership of Vodafone.

Although it is forecasting further losses this year, it expects the restructuring to lead to improvements in operational and financial performance for 2013 and 2014.