VHA merger saves Hutchison's bacon in 2009

$119.6 million loss turned into $467.7 million profit thanks to Vodafone Australia deal

Hutchison Telecoms’ merger with Vodafone has dramatically turned around the fortunes of the company, according to the its chairman, Canning Fok Kin-ning.

Speaking at the company’s AGM, Kin-ning said that the realisation of a $587.3 million boost from the merger with Vodafone Australia last year had helped the telco report a profit of $467.7 million.

Without the windfall, the net loss for the company would have been $119.6 million – up $43.5 million from the previous year.

The company’s chairman also added that it was tracking ahead of its 2009 target cost savings following the successful completion of its early-stage merger integration activities. Some 390 staff were also made redundant during the year, compared to the original 320 flagged in October.

Also speaking at the AGM, Hutchison Telcoms CEO, Nigel Dews, said the company had focused on revenue and margin growth, and delivering costs savings identified in the merger proposal.

To that end, the company had grown its share of VHA service revenue to $1.89 billion, up 28 per cent year on year.

Operating margin also grew 39 per cent year on year and EBITDA increased 20 per cent year on year to $228 million.

At the end of 2009 the VHA business as a whole had 6.89 million customers, and since the start of 2010 had passed the seven million mark, Dews said.

On the merger cost savings front, Dews said that the restructure and reorganisation of the combined business had been completed. Savings had been realised via efficiency improvements through the companies combined networks, vendor renegotiations, and the delivery of the first of the company’s combined IT integration projects.

Office consolidation, contact centre consolidation and retail distribution efficiency programs were also under way.

“Overall I am confident that we are on track to deliver synergies with a net present value of $ 2 billion as outlined in the merger proposal put to [shareholders] at our last EGM last year,” Dews said.

Looking ahead at the Hutchison’s business in 2010 Dews said a key focus for the company was on building on 3’s mobile Internet services in both the mobile devices and mobile broadband segments.

At the end of 2009 the company had 673,000 customers using mobile services for broadband access – a 134 per cent increase on 2009, Dews said. Overall the company had 1.39 million subscriptions to 3G services in 2009 – up 164 per cent on 2008.

Dews added that the company will be taking steps to unite the ‘3’ and Vodafone brands under the one brand – Vodafone - in 2010.

Improving coverage while containing costs, preparing for LTE, and managing the explosion in mobile data were also major goals in the company’s network strategy, Dews said.

In March alone, the company’s customers put more than a petabyte – 1000 terabytes—of mobile data across its network.

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