Hutchison Europe Phone Business Boosts Earnings as Rivals Shrink

Hutchison Whampoa Ltd. (13)’s European wireless business bucked an industry trend last year, with the mobile carrier controlled by Li Ka-shing increasing earnings and adding users as rivals shrank.

The 3 Group Europe unit, which operates in six countries including the U.K. and Italy, boosted earnings before interest, tax, depreciation and amortization 38 percent to HK$12.7 billion ($1.6 billion), its Hong Kong-based parent said today. Sales climbed 5.6 percent to HK$62 billion and customer numbers rose 13 percent to 26.6 million, helped by an Austrian acquisition.

The unit, which vies with carriers such as Telecom Italia SpA (TIT) and Vodafone Group Plc (VOD), said it gained market share in data and smartphones. It is expanding in Europe as many rivals cut costs to cope with falling prices, buying Orange Austria in 2013 and agreeing to purchase O2, Ireland’s No. 2 mobile carrier, for as much as 850 million euros ($1.2 billion) in June.

“Hutchison Whampoa’s telecom business in Europe was really strong,” Louis Tse, a Hong Kong-based director at VC Brokerage Ltd., said by phone. “It added more wireless subscribers through acquisitions in the region.”

Hutchison also wants to buy more phone assets in the Nordic region, a person familiar with the situation said last year.

Telefonica SA (TEF), the Spanish carrier which operates in several European markets, reported yesterday sales fell 11 percent in the region last year to 26.8 billion euros ($36.8 billion), and earnings dropped 3 percent. Vodafone Group Plc, which operates in markets including the U.K. and Germany, said this month its third-quarter European service revenue declined 9.6 percent because of price competition.

Hutchison said it expects the underlying performance of its European carrier business to improve following its decision to stop subsidizing phones last year.

To contact the reporter on this story: Adam Ewing in Stockholm at aewing5@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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