CK Hutchison has grouped all its telecom activities into a new holding company, including its activities in Europe under the 3 Group and in Hong Kong. The move will allow the company to refinance debt, notably at Italian operator Wind Tre, as well as spin off its towers infrastructure.
The new company is called CK Hutchison Telecom and includes operations in eight countries. The company will refinance all the existing external debt of Wind Tre of approximately EUR 10 billion and be separately rated with an expected investment-grade rating from all three credit rating agencies.
In addition, CK Hutchison Telecom will set up a new telecommunication infrastructure company, called CK Hutchison Networks Holdings, that will group the 28,500 tower assets into a separately managed wholly-owned subsidiary.
The new organisation structure and the refinancing transaction is expected to generate significant financing cost savings from 2020, as well as rationalise investments in light of the expected need for harmonisation of network, IT platform, and infrastructure configurations to meet new transnational business opportunities, Hutchison said.
Less customers, more revenues
The announcement came alongside interim results from the Hong Kong-based conglomerate. These show 3 Group's active customer base fell 7 percent year-on-year to 41.7 million at the end of June, due mainly to losses at Wind Tre following the tough competition from Iliad. 3 Group's revenue was still up 20 percent to HKD 43.46 billion thanks to the takeover of full control of Wind Tre and rose 27 percent in local currencies.
EBITDA increased 27 percent to HKD 16.3 billion, and EBIT rose 33 percent to HKD 9.97 billion. Hutchison said the underlying operational environment has improved in Italy, as the network consolidation and upgrade was substantially completed at the end of July, and the company realised higher than planned synergies and reduced churn.
Overall 3 Group Europe continued to report a healthy EBITDA margin of 44 percent, up 2 percent points from a year earlier. A number of 3 Group Europe operations will be completing network and IT transformations in the second half of this year, which is expected to further enhance customer experience and competitiveness, the company said.
