Future not so bright for Hutchison


Hutchison is Australia is expected to focus more sharply on its 3G business

By CNN's Grant Holloway

SYDNEY, Australia (CNN) -- The Australian telecommunications sector looks set for further consolidation with another of the second-tier operators rationalizing its business.

Hutchinson Telecommunications told the Australian Stock Exchange Thursday it was re-negotiating the terms of its re-sale contract with Australia's number two telco, Optus.

Hutchison is 57.82 percent owned by Hong-Kong based conglomerate Hutchison Whampoa while Optus was recently acquired by Singapore Telecommunications.

Hutchison has just over 400,000 Australian mobile-phone customers using its Orange-branded GSM service -- a second generation technology that offers higher speeds and enhanced global roaming capabilities.

Of these customers, 279,000 operate the service via Optus's mobile network, while the remainder used Hutchison's own network.

Media reports Thursday suggested that Hutchison might offload the re-sale customers back to Optus in order to concentrate on developing the market for its fledgling third-generation (3G) mobile service.

New Zealand's largest telco, Telecom NZ, has a 19.9 percent stake in Hutchison's 3G operations and could also emerge as a key player in any business restructuring.

Former fourth-ranked telco, One.Tel collapsed in May this year, leaving Telstra, Optus and Vodafone to battle for the dominant share of Australia's more than eight million mobile telephone customers.

Hutchison invested heavily in buying Australian rights to 3G spectrum in March and April last year, spending more than $500 million (Aust. $1 billion) -- an investment which has yet to reap any returns.

Cricket sponsorship

The company posted a loss of $45 million (A$ 91.1 millon) for the half to June 30, 2001, on revenues of $105 million (A$212.5 million).

The company last month announced it had bought sponsorship rights to Australian test cricket matches for the next five years, and voiced its plans to bring 3G cricket services to the mobile world.

"We believe cricket will represent a fantastic 3G sports experience," newly appointed chief executive Kevin Russell said at the time.

"We will be able to offer instant replays, highlight clips, player interviews, profiles, official results and statistics immediately to cricket fans wherever they are."

Hutchison shares were trading unchanged at A28.5 cents a share at mid-afternoon on the Australian Stock Exchange.