3 Europe’s parent company CK Hutchison has stated lower subscriber numbers in the UK and Italy is the cause of revenue decline in the European business, not the coronavirus pandemic.
While the coronavirus pandemic has been the reason for revenue decline elsewhere in the European telecoms market, CK Hutchison has resisted the temptation to pass the blame. Subscriber churn, higher spectrum fees in the UK and higher OPEX cost ate into the spreadsheets, but the business is operating relatively smoothly.
“The telecommunication businesses have been less affected by the pandemic than the Group’s other businesses, with total margin percentage remaining relatively stable,” CK Hutchison Chairman Victor Li said in the earning statement.
“Total margin was 1% higher than same period of 2019 in local currencies, primarily driven by growth in total margin from an increased proportion of higher margin customers, mostly offset by lower roaming revenues and certain regulatory impacts introduced since mid-2019.”
| Three first half performance by market (in millions) | ||||
| Market | Revenue | Year-on-year | Active customer base | Year-on-year |
| UK – £ | 1,116 | -4% | 9.5 | -7% |
| Italy – € | 2,324 | -3% | 20.3 | -12% |
| Sweden – SEK | 3,249 | 0% | 2.1 | +5% |
| Denmark – DKK | 1,127 | +7% | 1.5 | +7% |
| Austria – € | 417 | -2% | 2.9 | 0% |
| Ireland – € | 294 | -1% | 2.4 | +4% |
| Total –
HK$ |
40,524 | -7% | 38.7 | -7% |
Interestingly enough, alongside these financial results, CK Hutchison has also stated the creation of a wholly owned subsidiary of CKH Group Telecom known as CK Hutchison Networks has been completed. This business unit will act as the CK Hutchison tower company, leasing its passive assets to telecoms operators across the region.
With 29,100 sites across the six European countries, pan-European approach will allow the business to optimise costs, achieve better operational efficiencies and enhance revenues. CK Hutchison has said it would like to increase tenancy on the infrastructure by 1.2X. This is not a massive increase, but strategic sales should allow the company to source additional revenue while also maintaining a competitive edge for its own telecoms operations.