Hutchison Telecom Reports Robust Growth for Six Months Ended 30 June 2005

Share Name	Share Symbol	Market	Type
Hutchison Telecommunications International Ltd	NYSE:HTX	NYSE	Ordinary Share

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Hutchison Telecom (NYSE:HTX)
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Key highlights -- Group operating profit increased 297.6% to HK$1,014 million -- Turnover rose 56.1% to HK$10,757 million -- Consolidated mobile customer base increased 30.9% to 14.1 million -- Increased integration in Hong Kong businesses operationally and with management appointments to drive synergies -- Indonesia and Vietnam commence initial phase, CEOs appointed Financial highlights First half First half 2005 2004 Change HK$'million HK$'million (unaudited) (audited) Turnover 10,757 6,891 56.1% Operating profit before disposal of investments and others 1,014 255 297.6% Profit (loss) attributable to equity holders of the Company (352) 793 (144.4%) Earnings (loss) per share HK$(0.08) HK$0.18 (144.4%) Adjusted loss per share* HK$(0.01) HK$(0.11) 90.9% * excluding profit (loss) on disposal of investments and others HONG KONG, Aug. 3 /Xinhua-PRNewswire/ -- Hutchison Telecommunications International Limited ("Hutchison Telecom", the "Company" or the "Group"; SEHK: 2332; NYSE: HTX) today announced strong growth in the Group's results for the six months ended 30 June 2005. The Group's underlying operating profit before disposal of investments and others reached HK$1,014 million, a 297.6% increase compared with the first half of 2004, boosted by strong operating results in India and Israel and a reduction of losses in Thailand. All markets reported growth in customer base, which rose overall by 30.9% to 14.1 million. The vigorous growth in worldwide customer base fuelled the surge in the Group's turnover to HK$10,757 million, an increase of 56.1% compared with the same period a year earlier. During the first half we consolidated our Israel subsidiary, Partner Communications Company Ltd. ("Partner") for the first time. Excluding the impact of the consolidation of Partner, turnover growth was 25.4%. EBITDA increased 84.8% to HK$2,831 million and EBITDA margins improved to 26.3% from 22.2%. The Group recorded a loss attributable to equity holders of the Company of HK$352 million, or HK$0.08 loss per share, after it took a net loss on disposal of investments and others of HK$295 million, finance costs of HK$612 million and a taxation charge of about HK$318 million. During the first half of 2005, the Group strengthened its operations with a number of key strategic initiatives to build Hutchison Telecom into a leading provider of telecommunications services in Asia and developing markets elsewhere. These included expansion into Indonesia and Vietnam; reorganisation of the Indian operations; increasing ownership in existing operations in Israel and in the Hong Kong fixed-line business; and the sale of the operations in Paraguay. The Group is now well-positioned in its markets and today we also announce changes in senior management to capitalise on these opportunities. Peter Wong, Chief Executive Officer of Hutchison Global Communications Holdings Ltd ("HGCH"), will assume responsibility for both the fixed-line and mobile businesses in Hong Kong, whilst Agnes Nardi will take up the new position of Executive Director, to help drive growth opportunities in our developing markets. Dennis Lui, Chief Executive Officer, Hutchison Telecom, said: "Our focused strategy of investing for growth is clearly reflected in our excellent performance in the first half. I am particularly pleased to see satisfying operational momentum in our key markets of India and Israel." Mr Lui added: "Going forward, we will continue to drive our strategy of expanding in emerging mobile markets with high growth potential, such as India, Vietnam and Indonesia, while maintaining our leading position in Hong Kong's mobile and fixed-line markets." Tim Pennington, Chief Financial Officer, Hutchison Telecom, said: "Our revenue and profit growth demonstrates the strength of our operations. We will continue to strengthen our competitive position with further investment in growth markets, while continuing to drive initiatives to control costs to further enhance financial performance and organisational efficiency." Key markets review India -- Customer base increased 46.8% to 8.4 million -- Turnover increased 46.5% to HK$4,694 million -- EBITDA increased 66.7% to HK$1,579 million The India business continued to go from strength to strength despite continued competition in the market and some downward pricing pressure. Customer base in the first half increased 46.8% to 8.4 million, compared with 5.8 million a year earlier. In Q2, average revenue per user (ARPU) was INR554 compared with INR568 in the previous quarter, despite tariff reductions and stiff competition in the domestic long distance call market. The EBITDA margin rose to 33.6% from 29.6% a year earlier, reflecting the improved operating performance of the Group's newer operations and better cost control in all operations. Hong Kong and Macau -- Turnover of HK$3,263 million -- EBITDA of HK$680 million On a combined basis, turnover from Hong Kong represented 30.4% of Group turnover. Hutchison Telecom has completed the privatisation of HGCH. Holders of over 99% of HGCH shares not held by the Group elected to swap HGCH shares for Hutchison Telecom shares. This will result in a dilution of Hutchison Telecom's issued share capital of 5.3%. Hong Kong and Macau mobile -- Customer base increased 5.3% to 2.2 million -- 3G customers surged 272% to 351,000, representing 15.8% of total Hong Kong customer base -- Turnover increased 5.5% to HK$1,845 million -- EBITDA increased by 7.6% to HK$380 million Hutchison Telecom continued to be the largest operator in Hong Kong in terms of the number of mobile customers. 3G customers now represent approximately 15.8% of the total customer base and we expect this trend to continue with the introduction of our prepaid 3G cards in May 2005. We continued to see an increase in turnover due to strong growth of the 3G customer base. Our 3G customers have higher ARPU. We, like the rest of the market, are seeing signs of pressure on 2G revenues as a result. The rise in EBITDA was driven mainly by higher revenue and cost-saving initiatives announced in early 2005. EBITDA margin for the period also increased to 20.6%, compared with 20.2% in the same period last year. Hong Kong fixed line -- Turnover increased 15.5% to HK$1,418 million -- EBITDA decreased 12.5% to HK$300 million The Group, through Hutchison Global Communications Limited ("HGC"), operates one of the largest fibre-optic building-to-the-building telecommunications network in Hong Kong. We have 274,000 residential voice subscribed lines and 194,000 residential broadband subscribed lines. The increase in turnover was mainly driven by growth in international and local voices services, local data services and residential broadband services. EBITDA decreased 12.5% to HK$300 million, mainly due to one-off items affecting 2004 and 2005 results. To accelerate the growth potential of services business in Hong Kong, Alcatel and HGC have signed a business agreement in which HGC agrees to transfer to Alcatel certain of its engineering and operations services that support HGC's telecommunications network in Hong Kong. The co-operation will enable HGC to focus on new market opportunities and to reinforce the Group's leading position in Hong Kong. Israel -- Customer base increased 9.4% to 2.4 million -- Turnover increased marginally to NIS2,511.3 million (about HK$4,300 million) -- EBITDA grew 5% to NIS420.8 million (about HK$720 million) On April 20, the Group's stake in Partner increased to 52.2% as a result of Partner's share buyback, making it a subsidiary of the Group. Customer base rose 9.4% to 2.4 million, demonstrating Partner's ability to continue to grow its business in a highly competitive market. Thailand -- Customer base increased 27.6% to 676,000 -- Turnover decreased 7.9% to HK$556 million -- LBITDA narrowed by a significant 29% to HK$76 million Prepaid customers represented 51.5% of the total customer base, up from 19.1% a year earlier. The fall in turnover was due mainly to the increase in the proportion of prepaid customers, who typically have significantly lower average revenue per user. Losses narrowed significantly to HK$76 million due mainly to cost-saving initiatives and the reduction in customer acquisition costs. Other markets including Sri Lanka, Ghana, Paraguay and Corporate Office -- Combined customer base increased 103.4% to 332,000 -- Turnover increased 18.5% to HK$128 million -- LBITDA was HK$81 million, compared to HK$4 million in the same period last year The Group's operations in Sri Lanka, Ghana and Paraguay contributed to the success of the business. The increased turnover reflected the growth in customer base, especially through customer acquisition in Sri Lanka. The sale of our operations in Paraguay was completed in July. Indonesia In July 2005, the Group completed its acquisition of 60% of PT Cyber Access Communications, being renamed PT Hutchison CP Telecommunications ("HCPT" or "Hutchison Telecom Indonesia"). HCPT is one of only two mobile operators in Indonesia that holds a combined nationwide 2G and 3G mobile telecommunications licence. The Group completed the acquisition for US$120 million in July and has brought in management team members to begin the next phase of investment and construction of a world-class network. Mr Laurentius Bulters, the former director of operations at PT Telkomsel in Indonesia, has been appointed as Chief Executive Officer of HCPT. Vietnam Hutchison Telecommunications (Vietnam) S.a r. l. ("HTV" or "Hutchison Telecom Vietnam"), a wholly owned subsidiary of the Company and Hanoi Telecommunications Joint Stock Company in February received a 15-year investment licence from the Ministry of Planning and Investment of Vietnam to permit them to engage in business co-operation. Nortel has commenced building a nationwide CDMA2000-based mobile telecommunications network under a turnkey contract. Mr Matthew Lam, who was the project development director at Hutchison Telecom, has been appointed as the Chief Executive Officer of HTV. New accounting standards In 2005, the Group changed certain accounting policies after adopting new revised Hong Kong Financial Reporting Standards and Hong Kong Accounting Standards (the "new HKFRS"). This change is in accordance with the Hong Kong Institute of Certified Public Accountants' policy of pursuing full convergence with International Financial Reporting Standards and interpretations established by the International Accounting Standards Board. The adoption of the new HKFRS from 1 January 2005 resulted in decrease of HK$24 million in the profit attributable to equity holders for the six months ended 30 June 2005 and a decrease of HK$149 million in opening reserves at 1 January 2005. Outlook Whilst we continue to operate in competitive markets we remain optimistic about the second half. Customer growth in the first half has been in line with our expectations and, in the absence of any factors affecting the growth of the India market, we would expect to see a similar trend in the second half. Despite continuing competition, ARPUs in most of our markets have remained consistent. We are positioning all our businesses for intensified competition in the second half. Underlying turnover growth performed in line with our expectations in the first six months and we see no reason to change our view on double-digit underlying Group turnover growth in 2005. We expect to see EBITDA margins continuing to improve as turnover grows and with the continuing focus on cost control. We expect to accelerate our capital spending in the second half. Expenditure plans made in the first half are likely to come through in the second half, resulting in capital expenditure significantly higher than in the first half. For the full year, we anticipate capital expenditure to remain between HK$6.0 and HK$7.0 billion (including Partner, which was previously excluded). About Hutchison Telecommunications International Limited Hutchison Telecommunications International Limited (Hutchison Telecom or the Group) is a leading global provider of telecommunication services. The Group currently offers mobile and fixed-line telecommunication services in Hong Kong and mobile services in Macau, India, Israel, Thailand, Sri Lanka and Ghana. It has plans to commence service in Vietnam and Indonesia. It was the first provider of 3G mobile services in Hong Kong and operates brands including "Hutch", "3" and "Orange". Hutchison Telecom is a listed company with American Depositary Shares quoted on the New York Stock Exchange under the ticker HTX and shares listed on the Stock Exchange of Hong Kong under the stock code 2332. A subsidiary of the Hong Kong-based Hutchison Whampoa Group, Hutchison Telecom is dedicated to providing superior telecommunications services in markets with high growth potential. For more information about Hutchison Telecom, see http://www.htil.com/ . Disclaimer: Non-GAAP Measures While non-GAAP (generally accepted accounting principles) measures such as EBITDA and LBITDA are often used by companies as an indicator of operating performance, they are not expressly permitted measures under GAAP in Hong Kong and may not be comparable to similarly titled measures for other companies. Accordingly, such non-GAAP measures should not be considered as an alternative to operating income as an indicator of the operating performance of the Group or as an alternative to cash flows from operating activities as a measure of liquidity. The use of non-GAAP measures is provided solely to enhance the overall understanding of the Group's current financial performance. Additionally because the Group has historically reported certain non-GAAP results to investors, the Group considers the inclusion of non GAAP measures provides consistency in our financial reporting. Forward-looking statements: This press release contains forward-looking statements. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events. Forward-looking statements involve inherent risks, uncertainties and assumptions. The Company cautions you that if these risks or uncertainties ever materialise or the assumptions prove incorrect, or if a number of important factors occur or do not occur, the Company's actual results may differ materially from those expressed or implied in any forward-looking statement. Additional information as to factors that may cause actual results to differ materially from the Company's forward-looking statements can be found in the Company's filings with the United States Securities and Exchange Commission. For further information, please contact: Mickey Shiu Hutchison Telecom Work: +852 2128 3107 Mobile: +852 9092 8233 Email: KEY PERFORMANCE INDICATORS Q2 2005 Q1 2005 Customer 30 June 2005 31 March 2005 Base Post- Pre- Post- Pre- Total paid paid Total paid paid Country ('000) ('000) ('000) ('000) ('000) ('000) Hong Kong (incl Macau) 2,226 1,316 910 2,204 1,291 913 India 8,441 2,364 6,077 7,798 2,265 5,533 Israel 2,409 1,690 719 2,372 1,666 706 Thailand 676 329 348 662 344 318 Others 332 293 GROUP MOBILE TOTAL 14,084 13,328 Q4 2004 Q3 2004 Customer 31 December 2004 30 September 2004 Base Post- Pre- Post- Pre- Total paid paid Total paid paid Country ('000) ('000) ('000) ('000) ('000) ('000) Hong Kong (incl Macau) 2,195 1,270 925 2,176 1,248 928 India 7,159 2,135 5,024 6,351 1,797 4,554 Israel 2,340 1,640 700 2,269 1,576 693 Thailand 615 362 253 585 407 178 Others 244 205 GROUP MOBILE TOTAL 12,553 11,586 Q2 2004 Customer Base 30 June 2004 Total Postpaid Prepaid Country ('000) ('000) ('000) Hong Kong (incl Macau) 2,113 1,233 880 India 5,751 1,479 4,272 Israel 2,202 1,524 678 Thailand 530 429 101 Others 163 GROUP MOBILE TOTAL 10,759 Notes: (1) A customer is defined as a Postpaid Customer or a Prepaid Customer who has a SIM or USIM that can access to the network for any purpose, including voice, data or video services (2) Post paid customers are defined those whose mobile telecommunications service usage paid for in arrears upon receipt of the mobile telecommunications operator's invoice and who have not been temporarily or permanently suspended from service. (3) Prepaid customer defined as prepaid SIM cards that have not been used up or expired at period end. (4) All numbers quoted on the basis of the total customer base of the operation irrespective of the company's ownership percentage. (5) All numbers quoted as at last day of the quarter (6) Others currently comprise Ghana, Paraguay and Sri Lanka (7) The data for Hong Kong for the periods relate to both 2G and 3G services. ARPU(1) Q2 2005 Q1 2005 30 June 2005 31 March 2005 Country Currency Blended Postpaid Prepaid Blended Postpaid Prepaid Hong Kong (incl Macau) HKD 154 209 31 145 199 31 India INR 554 1,150 316 568 1,178 313 Israel NIS 157 -- -- 157 -- -- Thailand THB 690 1,011 361 745 1,155 260 Others USD 9.17 -- -- 9.36 -- -- ARPU(1) Q4 2004 Q3 2004 31 December 2004 30 September 2004 Country Currency Blended Postpaid Prepaid Blended Postpaid Prepaid Hong Kong Incl Macau) HKD 156 210 40 151 205 36 India INR 589 1,247 318 583 1,293 318 Israel NIS 167 -- -- 176 -- -- Thailand THB 876 1,187 313 927 1,116 334 Others USD 10.68 -- -- 12.39 -- -- ARPU(1) Q2 2004 30 June 2004 Blended Postpaid Prepaid Country Currency Hong Kong incl Macau) HKD 152 207 36 India INR 591 1,408 328 Israel NIS 171 -- -- Thailand THB 1,137 1,246 331 Others USD 13.47 -- -- Notes: (1) ARPU is calculated as the total service revenues during the period divided by the weighted average number of activated customers in the period. (2) The basis for the calculation has been changed from the Prospectus in two material respects - (I) Customers - the quarterly KPIs uses weighted average subscribers whereas the Prospectus uses simple average; and (ii) Period - the quarterly KPIs use three month average data whereas the Prospectus used 12 or 6 month average data. (3) Service revenues are defined as the direct recurring service revenues plus roaming revenues (4) The data for Hong Kong for the periods relate to both 2G and 3G Services. (5) Others include Ghana, Paraguay and Sri Lanka MOU(1) Q2 2005 Q1 2005 30 June 2005 31 March 2005 Country Blended Postpaid Prepaid Blended Postpaid Prepaid Hong Kong (incl Macau) 423 593 46 394 558 45 India 351 654 230 342 629 222 Israel 296 -- -- 289 -- -- Thailand 341 468 212 381 513 223 Others 140 -- -- 157 -- -- MOU(1) Q4 2004 Q3 2004 31 December 2004 30 September 2004 Country Blended Postpaid Prepaid Blended Postpaid Prepaid Hong Kong (incl Macau) 407 573 50 396 558 51 India 337 625 219 334 662 211 Israel 288 -- -- 291 -- -- Thailand 422 524 238 441 513 278 Others 179 -- -- 184 -- -- MOU(1) Q2 2004 30 June 2004 Blended Postpaid Prepaid Country Hong Kong (incl Macau) 377 535 46 India 343 731 218 Israel 283 -- -- Thailand 593 658 318 Others 178 -- -- Notes: (1) Minutes of Use - are the total minutes carried over the network (2G total airtime usage + 3G voice and video usage, including both inbound and outbound roaming during the period) divided by the weighted average number of postpaid/prepaid activated customers for the period. (2) The basis for the calculation has been changed from the Prospectus in two material respects - (I) Customers - the quarterly KPIs uses weighted average subscribers whereas the Prospectus uses simple average; and (ii) Period - the quarterly KPIs use three month average data whereas the Prospectus used 12 or 6 month average data. (3) The data for Hong Kong for the periods relate to both 2G and 3G services. (4) Others currently comprise Ghana, Paraguay and Sri Lanka Churn(1) Q2 2005 Q1 2005 30 June 2005 31 March 2005 Country Blended Postpaid Prepaid Blended Postpaid Prepaid Hong Kong (incl Macau) 4.1% 2.0% 7.0% 4.3% 2.1% 7.3% India 6.1% 5.1% 6.5% 6.5% 5.8% 6.8% Israel 1.2% -- -- 1.3% -- -- Thailand 7.9% 4.4% 11.7% 7.9% 5.2% 11.3% Others 2.7% -- -- 2.4% -- -- Churn(1) Q4 2004 Q3 2004 31 December 2004 30 September 2004 Country Blended Postpaid Prepaid Blended Postpaid Prepaid Hong Kong (incl Macau) 4.5% 2.5% 7.3% 4.6% 2.8% 7.2% India 8.1% 5.8% 9.1% 8.0% 5.5% 9.0% Israel 1.0% -- -- 0.9% -- -- Thailand 7.4% 6.7% 9.0% n.m. n.m. 7.8% Others 4.2% -- -- 2.4% -- -- Churn(1) Q2 2004 30 June 2004 Blended Postpaid Prepaid Country Hong Kong (incl Macau) 4.8% 2.7% 7.9% India 7.8% 5.5% 8.6% Israel 1.1% -- -- Thailand 2.1% 1.8% 3.5% Others 3.3% -- -- Notes: (1) Churn % represents the average of the churn rates for each month in the period, which are calculated by dividing the number of disconnections (net of reconnection and internal migration between networks) for the relevant period by the subscriber numbers at the beginning of such period. (2) The basis for the calculation has been changed from the Prospectus in two material respects - (I) Customers - the quarterly KPIs uses weighted average subscribers whereas the Prospectus uses simple average; and (ii) Period - the quarterly KPIs use three month average data whereas the Prospectus used 12 or 6 month average data. (3) The data for Hong Kong for the periods relate to both 2G and 3G services. (4) Others currently comprise Ghana, Paraguay and Sri Lanka The Board wishes to remind investors that the above key performance indicators are based on the Group's unaudited internal records. Investors are cautioned not to unduly rely on such data. CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 30 JUNE As restated Unaudited Unaudited 2004 2005 2005 HK$millions HK$millions US$million Company and subsidiary companies Turnover 6,891 10,757 1,384 Cost of inventories sold 821 1,094 141 Staff costs 704 979 126 Depreciation and amortisation 1,436 1,905 245 Other operating expenses 3,834 5,853 753 96 926 119 Share of results of associated companies 159 88 11 Operating profit before disposal of investments and others 255 1,014 130 Profit (loss) on disposal of investments and others 1,300 (295) (37) Operating profit 1,555 719 93 Interest and other finance costs, net 433 612 79 Profit before taxation 1,122 107 14 Current taxation charge 44 106 14 Deferred taxation charge 192 212 27 Profit (loss) for the period 886 (211) (27) Attributable to: Equity holders of the Company 793 (352) (45) Minority interest 93 141 18 886 (211) (27) Dividends -- -- -- Earnings (loss) per share for profit (loss) attributable to the equity holders of the Company during the period: - basic HK$0.18 HK$(0.08) US$(0.01) - diluted HK$0.18 HK$(0.08) US$(0.01) CONSOLIDATED BALANCE SHEET As restated Unaudited Unaudited 31-Dec-04 30-Jun 30-Jun 2005 2005 HK$ HK$ US$ millions millions millions ASSETS Current assets Cash and cash equivalents 2,102 2,898 373 Restricted cash 10 -- -- Other current assets 4,211 5,476 705 Non-current assets held for sale -- 315 41 Total current assets 6,323 8,689 1,119 Non-current assets Fixed assets 20,228 23,390 3,011 Other non-current assets 4,449 6,963 896 Goodwill 5,988 6,426 827 Other intangible assets -- 3,785 487 Deferred tax assets 847 1,327 171 Associated companies 1,893 3 -- Long-term deposits 79 72 9 Total non-current assets 33,484 41,966 5,401 Total assets 39,807 50,655 6,520 LIABILITIES Current liabilities Bank loans 12,386 13,635 1,755 Other loans 1,316 574 74 Debentures 247 -- -- Other current liabilities 6,745 8,489 1,093 Total current liabilities 20,694 22,698 2,922 Non-current liabilities Long-term loans 3,606 8,396 1,081 Deferred tax liabilities 148 333 43 Other long-term liabilities 205 261 33 Total non-current liabilities 3,959 8,990 1,157 Total liabilities 24,653 31,688 4,079 EQUITY Capital and reserves attributable to equity holders of the Company Share capital 1,125 1,125 145 Reserves 13,013 14,272 1,837 14,138 15,397 1,982 Minority interest 1,016 3,570 459 Total equity 15,154 18,967 2,441 Total equity and liabilities 39,807 50,655 6,520 Net current liabilities 14,371 14,009 1,803 Total assets less current liabilities 19,113 27,957 3,598 DATASOURCE: Hutchison Telecommunications International Limited CONTACT: Mickey Shiu of Hutchison Telecom, +852-2128-3107 or +852-9092-8233, or Web site: http://www.htil.com/

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HTX Hutchison Telecommunications International Ltd