First-quarter profits for Hutchison Telecommunications International (HTI) hit HK$310 million, a huge turnaround compared with the HK$236 million loss booked during the same period last year.

The international mobile and fixed-line telecommunications provider and unit of Hutchison Whampoa said the profits were driven primarily by its operations in Israel and the increasing strength of the New Israeli Shekel (NIS) to the Hong Kong dollar.

The company's global customer base, excluding Ghana and Vietnam, increased 6.2 percent to over 10 million, driven by a 14.3 percent growth in Indonesia to 2.3 million, and a 13 percent growth in Sri Lanka to 1.3 million.

A man walks past a store called "Orange", which is owned by Partner Communications Co Ltd, a subsidiary of Hutchison Telecom Ltd in Jerusalem, Israel. Hutchison Telecommunications' first quarter profits were significantly boosted from overseas business, particularly in Israel. Bloomberg

The number of 3G customers was about 1.9 million, representing 19 percent of its total customers, driven by strong growth in Hong Kong and Israel with net additions of 66,000 and 12,000, respectively.

This drove the 3G customer bases in the two places to 1.45 million and 753,000 by the end of first quarter.

However, average revenue per user (ARPU) dropped in Hong Kong, and other overseas markets dropped quarter-on-quarter due to seasonal factors and promotional offers.

ARPU for Hong Kong dropped from HK$218 to HK$208 as there were fewer business days in the first quarter, leading to a drop in MOU.

Meanwhile, the first-quarter ARPU from Indonesian operations fell 6.7 percent to IDR14,000 as the company adopted more promotional activities under the more- intensive tariff competition in the country.

ARPU for Sri Lanka operations fell 20 percent under the tough economic situation.

Dennis Lui, chief executive officer of the company, said the average ARPU won't drop further as the company will continue to strengthen its 3G network and services in Hong Kong with a higher ARPU.

Still, Lui said it will take time for Indonesia to build up a strong network and acquire customers.

He is still confident that the earnings before interest, tax, depreciation and amortization (EBITDA) will break even after two years of operating in the country.

The company announced in mid-March that it had received approval from the People's Committee of Hanoi City, allowing its Vietnam operation to convert from CDMA technology to GSM.

Hence, it stopped new customer recruiting during the quarter and started customer migration in late April.

Lui said that it will launch promotional activities to attract older customers by the end of this year, when the GSM network starts to operate.

In addition, the telecom company has a signed conditional agreement to sell its Ghana operation. Lui said that the sale will be completed shortly, as it has already been approved by the regulatory authorities.

Lui said the company doesn't plan to sell other assets. Meanwhile, it is interested in acquiring companies with GSM business in emerging markets and Asia.

It will also consider any fixed-line companies that can support its mobile network. But no details are being disclosed at the moment.

(HK Edition 05/07/2008 page2)