Active in Sri Lanka since 1997, Hutchison Telecommunications Lanka (Pvt) Ltd. (HUTCH) is the local subsidiary of Hong Kong based CK Hutchison Holdings (CKH) Limited listed on the Hong Kong Stock Exchange.
CKH is a multinational conglomerate present in over 50 countries powered by a worldwide human resource base of 300,000, and operating across five core sectors–Ports and related services, retail, infrastructure, and energy and telecommunication. The global group recorded a consolidated revenue of USD 56 billion in 2019.
In Sri Lanka HUTCH is the third largest mobile network operator today. As part of its expansion, Hutch acquired Etisalat Sri Lanka’s operations in late 2019 and now serves mobile subscribers on both 078 & 072 prefixes with a focus on delivering top quality services that tightly integrate mobile and affordable broadband data connectivity to fulfil growing digital connectivity needs.
Hutch CEO Thirukumar Nadarasa joined us in conversation to reveal the telco giant’s journey in Sri Lanka so far and its future plans for Sri Lankan customers.
1. Do you think the above description as accurate?
TN: Yes, as a starting point, it’s an accurate description, though brief. The story of Hutch in Sri Lanka is indeed wider and bigger.
2. In Sri Lanka Hutch operates only in the Telecom sector. Please explain the holding and operating structure and the importance of Telecom and Sri Lanka to CHK Group.
TN: Hutch was one of early entrants to the telco sector in Sri Lanka when CKH (at the time Whampoa Group) arriving in the Sri Lankan market in 1996 with the acquisition of Call Link, a small analog operator. CKH saw great potential in Sri Lanka from early on. Having seen the great future potential of the country’s telco sector as well as its outlook as a financial hub centred on port, aviation and maritime, based on the geographic advantage, its fast developing infrastructure and improving quality of life, CKH decided to partner with Sri Lanka and boldly took an equity position in its telco sector in 1997. CKH’s vision of commitment to Sri Lanka did not change thereafter and was instead reconfirmed when it acquired operations of Etisalat Sri Lanka network in 2018. CKH commends TRCSL for its productive role in stabilising Sri Lanka’s telco industry, which in a way reinforced CKH’s own overarching vision of partnering with Sri Lanka’s development journey.
3. Can you reveal any financial information about Hutch’s operation in Sri Lanka other than the above?
TN: Hutch Sri Lanka is a private limited liability company and abides by specific disclosure obligations that are different to publicly held corporates. Therefore it is of prime importance that we honour the information privacy needs of Hutch Sri Lanka’s equity providers. In that light, as CEO of Hutch, it is appropriate for me to endorse only the financial information officially released by us and not any information and data provided by any third parties that are unsubstantiated.
4. Can you provide some background information on the Sale of CKH interests across Europe to Cellnex Telecom for a total consideration of €10 billion? Why did CKH sell and what will Hutch do with the funds? Will Hutch Sri Lanka benefit from the cash flow resulting from the divestment?
TN: While these queries appear to be pertinent, I should stress that I am not an authorised spokesperson on global level projects and transactions of CKH. On the other hand everyone, including me, is free to peruse the official statement of CKH on this interesting event. In fact, I couldn’t agree more with CKH’s official statement which answers all your questions: “This November 2020 transaction was all about unlocking the underlying value of CKHGT’s tower assets and businesses. Cellnex is Europe’s leading operator of wireless telecommunications and broadcasting infrastructures.
CKHGT’s partner in Denmark and Sweden was 5% of the total consideration when it was received by CKHGT. This transaction also accelerated the rollout of 5G across CKHGT’s networks. The significant capital gains and net cash proceeds were used to reduce CKHH’s net financial indebtedness and strengthen its financial profile. CKHH’s reported net debt to net total capital ratio on 30 June 2020 at 25.1% reduced to 14.9%, further strengthening the financial capacity of CKHH. This supports CKHGT’s future growth and potential M&A opportunities.”
5. What is the behaviour of active customer accounts – is it increasing or decreasing and what strategies are you deploying to grow this account base?
TN: Across the world, Hutch Telecommunications division serves over 100 million subscribers and this number continues to grow. Our active base in Sri Lanka is also growing. We are focused on offering the best voice, broadband and data products and services to a market that is still only 50% penetrated by smartphones. As such we see a growing demand for internet access as more subscribers upgrade to smartphones and go online. We have the widest range of affordable data products on a nationwide broadband network to deliver reliable data connectivity. With our 4G rollout and 5G setting up, we are positioning ourselves to address this new demand.
6. Is the 4G network rollout going according to plan and what other technical upgrades are you planning for the Sri Lankan market?
TN: The nationwide 4G network rollout was completed ahead of schedule in February 2020 just before COVID struck Sri Lanka and lockdowns began. In addition to the advanced 4G radio network, we have deployed the most advanced core network in the country and also the most advanced converged billing system that will enable us to offer the full suite of prepaid and postpaid services. The take-up rate has been very positive as we offer affordable data packages. We will continue to expand the 4G network in terms of both coverage and capacity to be able to serve the connectivity needs of the entire population. We view that our challenge in future will not be to create the demand for data, but to find methodologies that help cope with the huge growth in data traffic on our networks.
7. Please provide some idea of operations in Sri Lanka following the Easter Sunday terrorist attacks and ongoing network integration resulting from the acquisition of Etisalat Lanka in 2018.
TN: With the acquisition of Etisalat Sri Lanka in 2019, Hutch became quite engaged throughout 2019 and 2020 having to integrate processes of two businesses as well their architectures including networks, systems, products and subscribers. The Easter Sunday attacks did not significantly affect this integration process. In fact we pushed on with our work and successfully completed the very complex network and system integration, launching our new 4G network in February 2020 backed by a state of the art billing system. We do not plan to go to rest with this upgrade since our philosophy is one of continuous improvement. In this background, we are not stopping with 4G, and have now begun deploying the most advanced 5G-ready-core network, the latest system upgrade that we are busy pursuing right at this moment.
As a result of our network development on 4G we now cover 95% of the population in all 25 districts. The 4G network expansion was a complex process with over 3500 sites being merged and immediately riding on the back of technical integration of Etisalat grid to Hutch. Today we have a nationwide 3G/4G network on par with our competitors and offer a strong go to option to consumers looking for a reliable and affordable data service powered by broadband, 4G and soon, in 5G.
8. What has been the effect of the C19 Pandemic on CKH globally and in Sri Lanka? We understand both revenues and profits have decreased globally for CHK in 2020 – what about Sri Lanka?
TN: As I mentioned earlier I am not an authorised spokesperson on global level projects and transactions of CKH. As for Hutch Sri Lanka, like almost all businesses here, we too, faced the brunt of COVID’s effects especially in the early lockdown phases starting in March last year. The COVID challenge pushed the country’s telecommunication services to transform to be an essential service and Hutch too offered its full gamut of network services thus alleviating the COVID affected people’s connectivity issues. In fact we are pleased to have been supporting Sri Lankans with Hutch relief services including a unique ‘free daily relief reload’ service to subscribers, offered only by Hutch.
With people being restricted in their movements and opting to Work From Home and online based education methods, a strong demand for voice and data bandwidths were evident and we were pleased of being able to fulfil this new demand on the strength of our new upgraded network. With its upgrade to 4G being successfully completed by February 2020,Hutch was in a timely position to navigate the COVID’s demand curve. The COVID fuelled sudden and massive data load factor was in fact the first real-world test of the strength of Sri Lanka’s new Hutch 4G network –a test which Hutch passed with flying colours!
Allow me to elaborate a little more on how we assisted the subscribers during COVID. We quickly rolled out a series of network initiatives which included discounting our popular Hutch Non-stop cliQ data plans in addition to our daily free relief reload facility that I just mentioned. As a result Hutch subscribers across the country were able to navigate their online tasks during COVID-19 in quite a hassle free manner.
9. Online learning, e-commerce and digital have increased rapidly both pre and post pandemic. Is Hutch planning to enter and develop these business segments and will Hutch offer any special data plans targeting online learning?
TN: The expansion of digital economy was not merely in post COVID, but began way before. However, COVID lockdowns saw sudden, jolting expansion of everything ‘digital’ in a wider scale.
At Hutch, we expanded our digital offerings significantly to meet the new demands along with our new Work, Study and Zoom Data plan which has multiple pricing tiers thereby making it affordable to multiple consumer segments. We have recently introduced a portable Mi-Fi device to help this further.We also vastly expanded our Value Added Services (VAS) along with new offerings such as Spotify, the global music and audio streaming network for the first time in Sri Lanka, all of which position us as one of the leading telco providers supporting the digital economy of the country.
10. Is working from home the new normal for Hutch – do you have a global policy?
TN: We believe that the Hutch team is its most important strategic resource. Hutch supports Work from Home policies and fully facilitates its team members across the world not only in Sri Lanka whenever the need arises. We believe that staff safety is paramount and as such will limit their exposure to risk. Our commitment to serving our subscribers remain 100% intact, continues without disruptions and as such, we have facilitated WFH for our staff whenever necessary so that they can fulfil this commitment without any hindrances. We rapidly rolled out a number of innovative initiatives that helped subscribers to remain always connected while continuing with daily activities from home. For example, during the lockdowns, realising the difficulty for customers to move around and their inability to make reload payments, we came forward to offer totally free, daily relief mobile reloads. Hutch always prioritises its customers, be it in pandemic or post-pandemic.
11. How do you see the telco industry in post COVID-19, and how would the future be shaped, post pandemic?
TN: You can say that the Pandemic has benefitted the global telco industry in comparison tomany other infrastructure sectors. Globally demand surged for data trafficdue to the increased adoption of telco offerings across all population segments. Due to the increased load demands, telco networks including Hutch saw their infrastructure being used at optimal levels. Even though Hutch too, was stretched, we made sure the network experience was still consistent and our customers were served well through careful network and system optimisation.
The fact is even today only 50% of the population has smartphones to digitally connect. Once the remaining 50% also gets connected into the digital economy, more telco network based human transactions would take place in future resulting in expansion of existing as well as emerging eco systems: apps, voice, data applications and augmented reality applications including tech used for contact tracing that were used during the Pandemic.
This anticipated growth will bring significant operational issues as operators struggle with exponential growth in data traffic on their network while trying to ensure connectivity is continued. Despite all this, the industry continues to serve the Sri Lankan consumer with much commitment and to this end, I am pleased to inform that we are now on our installation phase in the 5G spectrum in Sri Lanka, bringing a whole new level of mobile experience to our valuable subscriber base. The priority of Hutch is always its subscribers and would be subscribers; that is every smartphone user in Sri Lanka.
Source: Ceylon Today