Earnings reports

Hutch Telecom Turns Profit in 2006

Hong Kong-based Hutchison Telecommunications International Ltd. (NYSE: HTX) recorded its first full year of profit in 2006, driven by growth at its operations in India (which it recently sold) and in Israel. (See Hutch Telecom Reports 2006.)

The emerging markets arm of Hutchison Whampoa Ltd. (Hong Kong: 0013; Pink Sheets: HUWHY) reported a net profit of HK$1.58 billion (US$201.73 million), compared with a loss of HK$150 million ($19.2 million) in 2005, as revenues increased by 37 percent to HK$33.38 billion ($4.27 billion). Earnings per share were HK$0.04, compared with a loss of HK$0.17 per share in 2005.

HTIL's earnings before interest, taxation, depreciation, and amortization (EBITDA) grew by 56 percent to HK$10.08 billion ($1.29 billion), and its EBITDA margin increased from 26.5 percent in 2005 to 30.2 percent last year.

In individual markets, Hutchison Essar in India reported a 51 percent increase in EBITDA, and Israel's Partner Communications Co. Ltd. (Nasdaq: PTNR; London: PCCD) reported an 18 percent increase. The company saw a return to operating profit in Hong Kong, where it posted a 75 percent increase in EBITDA, and its first positive EBITDA in Thailand.

That growth offset the startup costs of establishing operations in Vietnam and Indonesia. HTIL launched HT Mobile in Vietnam in January, while PT Hutchison CP Telecommunications is set to launch 2G and 3G services in Indonesia on March 30. (See Hutch Launches in Vietnam.)

In a Webcast presentation Tuesday, HTIL CEO Dennis Lui acknowledged that in selling Hutchison Essar to Vodafone Group plc (NYSE: VOD), "we are selling an important contributor to our historical results." (See Vodafone Wins Battle to Buy Essar.)

The Indian operator reported a 55 percent increase in revenues to HK$15.46 billion ($1.98 billion) last year -- that accounted for 46 percent of the group's overall revenues and was up from 41 percent in 2005. Of HTIL's 30 million customers at the end of December, 23.3 million were Hutchison Essar subscribers.

But Lui sounded an optimistic note on HTIL's remaining operations, pointing to Israel and Hong Kong as making a "profound contribution" to its results and to its "promising businesses" in Sri Lanka, Indonesia, and Vietnam. "2007 will be a transitional year for Hutchison Telecom," he said.

The company said last month it will spend some of the extra cash in its coffers from the Hutchison Essar sale to pursue acquisition opportunities in other emerging markets. (See Hutch Telecom Plans Spending Spree.)

— Nicole Willing, Reporter, Light Reading

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