Hello records Q4 loss on costs, competition

Photo by: TRACEY SHELTON

Workers at a Hello centre last year in Phnom Penh. The Kuala Lumpur-based mobile operator saw active users climb the most last quarter over any period in 2009, a financial report by parent firm Axiata showed Wednesday.

via CAAI News Media

Thursday, 25 February 2010 15:03 Steve Finch

Revenues and user numbers see robust growth, report shows

MOBILE-phone operator Hello recorded 6 percent revenue growth quarter on quarter as subscribers grew more than during any other period of 2009, according to financial results released Wednesday. But rising marketing costs and investment resulted in a loss, CEO Simon Perkins said.

Hello, a subsidiary of Kuala Lumpur-based Axiata, saw its subscribers climb more than 12 percent in the last quarter to 770,000, the report showed, resulting in a 30 percent increase in active users for last year compared with 2008, just under the overall Axiata growth rate of 34 percent over the same period.

“We had a major surge in terms of active subs in Q4, and we did a lot of marketing programmes to achieve this, which had a cost implication,” Perkins told the Post by email Wednesday.

Earnings before tax plummeted 58 percent, compared with the third quarter last year, the report showed without disclosing the amount. That led to an overall loss for Axiata’s Cambodia subsidiary for the last quarter over the proceeding period, in which profits after tax soared 71 percent.

In the third quarter Hello said it had enacted a cost-cutting exercise in a bid to prop up profits hurt by excessive competition in the sector.

Perkins said that Hello had spent heavily on its 3G network in the last quarter. The firm last year became the first to launch 3G Blackberries in the Kingdom and is set to introduce new handset models next month.

Wednesday’s report showed that Hello represented 5 percent of overall capital expenditure at Axiata last year, compared with just 2 percent in 2008, albeit during a period in which the firm reduced capital expenditure 47 percent to 3.015 billion Malaysian ringgits (US$885.6 million) from 5.652 billion ringgits the previous year.

Axiata noted again that Cambodia’s mobile phone environment remained a difficult one in which to generate profits, with a total of nine companies vying for the roughly 14 million potential users in the Kingdom.

“Intense competition and heavy price cuts in the Cambodia market continue to impact revenue growth in TMIC,” Wednesday’s report said, referring to the local subsidiary name Telekom Malaysia International (Cambodia) Co Ltd.

Axiata, the best-performing stock this year on Kuala Lumpur’s benchmark index, posted a 55.3 million ringgit ($164 million) profit overall.