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Hutchison quits Optus resale business

Hutchison says 3G is the future of wireless communication growth  

By CNN's Geoff Hiscock, Asia business editor

SYDNEY, Australia (CNN) -- Hong Kong conglomerate Hutchison Whampoa's Australian telco unit is rationalizing its mobile phone business in two deals with Optus, the second-largest Australian carrier.

Hutchison Telecommunications Australia said Tuesday it is selling its 260,000-strong GSM mobile resale customer base to Optus for about $22 million (Aust. $43 million)

Hutchison has been reselling the Optus digital mobile service for six years, most recently under the Orange GSM brand.

Optus, now a subsidiary of Singapore Telecommunications, and Hutchison, owned 58 percent by Hutchison Whampoa, have also agreed to a long-term transmission capacity supply deal that includes operations and maintenance.

The value of this deal for Optus is estimated to be more than $30 million (Aust. $60 million), the companies said.

Changes will mean job losses

At a glance: Australia

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Hutchison Telecommunications chief executive Kevin Russell said in a statement Tuesday the move would mean up to 350 job losses, made up of 240 in the GSM resale business and about 110 in the Orange business.

Hutchison is selling the resale 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.

Optus, market leader Telstra and third-ranked Vodafone dominate the Australian mobile market, which has about 8 million customers.

The former fourth-ranked telco, One.Tel collapsed in May this year, and further rationalization is taking place among second-tier players such as Hutchison.

Before Tuesday's announcement, Hutchison had just over 400,000 Australian mobile-phone customers using its Orange-branded GSM service.

About 260,000 of them operate the service via Optus's mobile network, while the remainder use Hutchison's own network.

Hutchison's Russell said GSM resale was a non-core business.

"As we move forward we are focusing on our CDMA and 3G operations where we own network infrastructure," he said.

Building own 3G network

Hutchison spent $102 million (then A$196 million) in March to buy 3G spectrum, and then in June announced it would spend $430 million (A$830 million) to build a 3G mobile network in Australia's five largest cities: Sydney, Melbourne, Brisbane, Adelaide and Perth.

That investment has yet to reap any returns, but Russell said Tuesday that Hutchison Australia is "100 percent committed" to its 3G business, and the future for wireless communication growth was 3G, not 2G.

"We can debate timelines, but this is the reality," he said.

Hutchison 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).

Russell said Tuesday the company's forecast loss for the second half of the year would be about $38 million (A$75 million), suggesting a full year loss of $83 million (A$166 million).

Hutchison shares rose 7.7 percent or 2 cents to close at A28 cents Tuesday on the Australian Stock Exchange, after coming out of a trading halt.


• Hutchison Telecommunications
• Optus

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