Hutchison Telecommunications (Australia) Limited (HTA) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the Hutchison Telecommunication (Australia) Limited 2025 Annual General Meeting. I'll now hand over to the Chairman of the meeting.

Thank you. Well, good morning, everyone. My name is Barry Roberts-Thomson, and I am Deputy Chairman of the Board and Chairman of this meeting. As permitted by the Corporations Act and the constitution of the company, the 2025 Annual General Meeting is being conducted as a hybrid meeting. The Board considered it prudent to hold the 2025 Annual General Meeting in this manner and ensure maximum shareholders participate in the meeting. Shareholders are able to submit direct votes or proxy votes and questions ahead of the meeting and to attend the meeting live and ask questions in real time using an online webcast platform provided by the company's share registry, MUFG Corporate Markets Limited, formally known as Link Market Services. I'm very pleased, therefore, to welcome all shareholders present physically at the meeting and those joining online today through the online webcast platform. Shareholders using the online platform via their personal desktops, laptops, smartphones and tablet devices will be able to listen to the meeting in real time and ask questions online during the meeting, as well as cast their votes on the resolutions as set out in the notice of the meeting. I'd also thank those shareholders who have lodged their voting instructions via their voting proxy forms and the matter as set out in the notice of the meeting. Now with me in person today in Sydney are Mr. Justin Gardener, Non-Executive Director and Chairman of the Audit and Risk Committee; Mr. Steven Allen, Director; Mr. John Scanlon, Non-Executive Director; and Swapna Keskar, our Joint Company Secretary. I also welcome our finance team, legal advisers and share... [Technical Difficulty]

Maybe we have just lost temporary speaker connection. Please hold and the conference will resume shortly. Thank you. Your speakers are back on the line. Chairman, please go ahead.

Thank you. As I'm saying before I proceed with the business of the meeting, I'd like to introduce my fellow directors, Mr. Cliff Woo, and Ms. Susan Chow, who are joining us via the phone from Hong Kong. The Joint Company Secretary has advised there is a quorum present for the meeting. Therefore, I formally declare open the 2025 Annual General Meeting of the Shareholders. The agenda for today's meeting is as follows. Firstly, I'll present my address. Then we will proceed with the formal business of the meeting and the 3 resolutions to be put to the meeting today. So ladies and gentlemen, I'm very pleased to provide you with an update on the 2024 performance and future plans of Hutchison Telecommunication (Australia) Limited and its controlled entity here and below referred to as the Group. HTAL's principal activity remains its investment in TPG Telecom Limited. HTAL has a 25.05% equity interest in TPG. This comprises 11.14% interest directly held by HTAL's wholly-owned subsidiary, Hutchison 3G Australia Limited, and an attributed 13.91% interest indirectly held by H3GAH through its 50% owned joint venture, Vodafone Hutchison (Australia) Holdings Limited, which has a direct 27.82% interest in TPG. The group reported a net loss of $191.4 million for the year ended 31st December 2024. This comprised of operating expenses of $2 million; impairment loss on its equity-accounted investment in TPG of $31.7 million, reflecting a decline in TPG share price at the 31st of December 2024, when compared to the price at 31st of December 2023. $160.3 million comprising our group's effective 25.05 share of TPG's net loss amounting to $26.8 million and our group's 50% share of VHAH's net loss amounting to $133.5 million, arising from VHAH's finance costs. Our offset against the losses was HTAL's revenue from ordinary activities, which represented interest income only. For the year ended the 31st December 2024, revenue increased to $2.5 million from $900,000 for the comparative year ended the 31st of December 2023, such increase being attributable to the higher cash and cash equivalents balance as well as increase in the bank's interest rate during 2024. And in comparison, the group's net loss for the year ended 31st December 2023, amounted to $124 million, comprising operating losses of $1.8 million and $123.1 million comprising our group's effective 25.05 share of TPG's net profit amounting to $12.3 million, and our group's 50% share of VHAH's net loss amounting to $134.4 million. Again, arising from VHAH's finance costs. Now, no impairment loss on the group's equity account investment in TPG was recorded in 2023. The decrease in the share price of TPG's results was primarily attributable to TPG's recognition of a one-off impairment charge related to the decommissioning of sites TPG will cease to use once the Multi-Operator Core Network, the regional sharing arrangement with Optus Mobile is implemented. The decrease in the share of VHAH's net finance costs mainly reflected the net reduction in those costs in 2024 compared to 2023. I might suggest for a more detailed summary of the group's financial results for 2024 and a comparison against the financial results for 2023. I'll refer to the Chairman's message in our 2024 Annual Report. H3GAH received dividends of $37.3 million from TPG during the year 2024. And in April of 2025, received further dividends of $18.6 million. Board will continue to review the group's financial position to determine the use of these proceeds. Moving to TPG's financial results. TPG announced a total revenue of AUD 5.2 billion. Earnings before interest, tax, depreciation and amortization of $1.712 billion, and a net loss after tax of $107 million for the year ended 31st of December 2024, compared to $5.533 billion revenue, EBITDA of $1.875 billion and a net profit after tax of $49 million, respectively, for the year ended 31st December 2023. And once again, for further details and explanation of TPG's results for the year ended 31st December 2024, you may refer to TPG's 2024 Annual Report, which was lodged with the Australian Securities Exchange on the 28th of February this year. Now to the outlook. HTAL's financial position is directly impacted by TPG's financial position and performance in the year ahead. HTAL remains committed to its principal activity being its investment in TPG and we'll continue to support TPG's business and strategies in the future. I take this opportunity to thank HTAL shareholders for their ongoing support after joining the Annual General Meeting either in person or via the online platform. As you can probably see, if you're online or here as well, the current ownership structure of the company is found on the screen. Now the notice of the meeting. The notice of the meeting was released and dispatched on the 28th of March 2024, and I propose to take the notice of meeting as read. Shareholders were also provided with a voting proxy form and an online platform guide providing instructions on how to ask questions and vote at this meeting through the online platform. We will remind shareholders of the arrangements for questions and voting when we get to the formal business of the meeting. Now if you are attending today's meeting via the online platform and you lose connection to the meeting at any time, you can log back in the platform by returning to the meeting link specified in the notice of the meeting and follow the prompts. You will then receive an automated e-mail recovery link or you can click on this link to reconnect to the meeting. Or further, please call our MUFG Corporate Markets on 1800 990 363 for assistance. That number is also printed at the bottom of the online platform guide. Now before I move to the formal business of the meeting, I will ask our Joint Company Secretary to explain some procedures. Swapna?

Thank you. In accordance with the company's current constitution and is set out in the notice of meeting, the Chairman has the design that voting on each of the resolutions will be conducted by a poll. The polls on each resolution is now open and will close 5 minutes after all resolutions have been put to vote. The results of the poll will be released to ASX and will be available on the company's website as soon as possible after the meeting. The voting eligibility of shareholders as outlined in the notice of meeting. Shareholders who are attending via the online platform, who have neither exercised a direct vote before this meeting nor appointed a proxy or representatives to vote on their behalf may cast a vote during this meeting [ on ] the electronic voting card received when you registered via the online platform. Similarly proxy holders attending online can submit their electronic voting card received when they registered via the online platform. If you have any questions about casting your vote online, please refer to the online platform guide, which can be accessed from the Downloads section at the bottom right-hand side of your screen or call the help number 1800 990 363 also showing on the screen. Shareholders and proxy holders who are attending the meeting in person today and who have not exercised a direct vote before this meeting, you'll have received a yellow voting card on entry to the meeting. If you did not receive a yellow voting card, please contact the representative of MUFG Corporate Markets who are located at the registration desk outside this room. Shareholders and proxy holders holding yellow voting cards will be invited to cast their votes on all resolutions by completing the voting cards and placing them in voting boxes. Representatives of MUFG Corporate Markets will circulate the voter boxes after all resolutions have been discussed and before the poll closes. [ There's one vote ] is taken for each item, the resolution to be voted on, the direct votes for and against the item will be displayed on the screen in front of me, and will be shown on the webcast for those participating online. These figures are as at the closing time for receipt of direct votes and proxies as of [ Wednesday 5 o'clock, May 7 ] 2025. If a shareholder who submitted a proxy has attended the meeting today and revoked their proxy or if a shareholder has cast a direct vote before the meeting but has instructed the company or the share registry before the commencement of the meeting, that they wish to revoke their previously submitted direct votes, these numbers will change, not materially. As set out in the notice of meeting, the Chairman will vote all directed proxies in accordance with the directions provided by shareholders and will vote all open proxies in favor of our resolutions. This includes proxy votes held by the Chairman, which will be voted in favor of Resolution 3 on the adoption of the remuneration report, unless specifically [ instructed ] otherwise. In accordance with the Corporations Act, other than in relation to proxies granted to the Chairman, all Directors and their closely related parties are not eligible to vote on this resolution and will abstain from voting. Shareholders and proxy holders who are present at the venue can ask questions [ in a legal way ]. Shareholders and proxy holders holding yellow cards or blue nonvoting cards will be [ assessed to ] ask questions from the floor. Visitors holding red visitor attendance cards are not entitled to vote -- when directed by the Chairman, please state your name clearly and your question. If you are joining via the online platform, you can ask a question by selecting the Ask a Question tab at the top or bottom of your screen. You can submit questions now or at any time prior to the vote on the relevant resolutions, and they will be dealt with at the appropriate time. If you have a question already prepared, please submit it now so that as many questions as possible can be answered. Questions must relate to the relevant item of business. There will be an opportunity to ask [ another ] question towards the end of the meeting. I ask that you keep your questions short and to the point so that as many shareholders as possible have the chance to ask their questions. All questions will go through to the Chairman and myself... [Technical Difficulty]

Apologies. We have just lost the speaker audio. Again, please continue to hold and the conference will resume shortly. Thank you. Your speakers are now connected. Please go ahead.

Thank you. All questions will go through the Chairman and myself. The Chairman will read out the question and will either answer it or pass it to the most appropriate person. We reserve the right to rule out questions not relating to the meeting or out of order. We will also not answer questions that are [indiscernible] of the parties to questions that have already been answered. Otherwise, we will endeavor to answer as [indiscernible] [ and ask to speak out ] For each item of business, we'll address questions from the floor to allow [indiscernible], shareholders will need to ask questions via the online platform or via the phone to submit [ your question ]. Shareholders may also ask questions of the company's auditor by PricewaterhouseCoopers in relation to the conduct of the audit, the operation and content of the audit report, accounting policies adopted by the company and the independence of the auditor in carrying out the audit. Shareholders and proxy holders may also ask questions via online or on mobile device in the manner detailed in the online platform guide. Please note, however, that we will [ ever leave ] the proceedings of the meeting and ask questions. You will not be able to cast your vote on the resolutions over the phone and you will not be included in the quorum. If you wish to vote during the meeting, you will still need to log in to the online platform. I will now hand over the proceedings of the Annual General Meeting back to the Chairman of the Board.

Thank you, Swapna. I will now move to the formal business of the meeting. We'll move first to the receipt and consideration of the financial report of the company for the year ended the 31st of December 2024. And the reports of the directors and auditors. No vote is required on this item of business. A copy of the 2024 Annual Report has been made available on the company's website on the 28th of March 2025, and we'll send to those shareholders who requested a copy. I will take the 2024 Annual Report as received and read. I will address any questions regarding the 2024 Annual Report at the end of the meeting. Our first resolution is the reelection of Mr. Frank John Sixt as a Director. The first resolution is the reelection of Frank John Sixt as a Director of the company. Frank's biography is set out in the notice of the meeting. And I note that each of the other directors supports Frank's reelection. I will now address any questions regarding Frank's reelection as a director. Are there any questions from the floor? If there are no questions from the floor, I will now address any online or telephone questions relating to this resolution. Thank you. It appears there are [ no questions ]. I will now put the resolution one, the direct votes and proxies received for this resolution are on the screen. Please record your vote on the yellow voting card that you are holding. If you wish to vote on the Resolution 1 online using your electronic voting card and you have not already voted, please vote now. [Voting]

Okay. Thank you. The Resolution #2 is reelection of Mr. Woo Chiu Man, Cliff as a Director. The second resolution of this meeting is the reelection of the Mr. Woo as a Director of the company. His biography is set out in the notice of the meeting. I note that each of the other directors supports his reelection. I now address any questions regarding Cliff's reelection as a director. Are there any questions from the floor? There are no questions from the floor. I will now address any online or telephone questions relating to the resolution. Thank you. It appears there are no questions. I'll now put to the meeting resolution to the direct votes and proxies received for this resolution are on the screen. Please record your vote on the yellow voting card that you are holding. If you wish to vote on Resolution 2 online using your electronic voting card, will the voter please vote now. [Voting]

Thank you. Resolution 3, the adoption of the remuneration report. Now this relates to the adoption of the -- which is set out in Page 16 of the 2024 Annual Report. The vote on this resolution is advisory only and is not binding. However, any discussion on this resolution and the outcome of the nonbinding vote will be taken into consideration by the Board. I remind you that as the company has no executives, this report only applies to the company's approach to the remuneration of directors. I'll now address any questions regarding the adoption of the remuneration report for the financial year ended 31st December 2024. Are there any questions from the floor?

Yes. I have been a shareholder for a very long time. And when I bought shares, I did not have any understanding of how our company operates or the finances, things like that. For the first time, I have attended this meeting. And I noted that the revenues are something like $2 million, it was less than $1 million last year...

Could we come back to that question because I'll just finish off the notice of meeting, then I'll come back and take the question.

So that is where I was coming to. Our data medical center, the revenues in excess of $2 [ billion ]. So that tells me the size of operation of the company is extremely small. I bought the shares because it was STA with a big name and everything. Now all the assets our shareholding in another company. And all the operating expenses are the directors remunerations or the expenses to the other staff. So the income comes from TPG shareholding and the expenses go into whatever these groups. So why are we giving any remuneration to the directors at all because they have no role to play. And essentially, why is the company being capitalized? Why don't we take the current assets and distribute to the shareholders or buy something else. And there's no business of the company other than keeping money in the bank or TPG and paying overhead.

Okay. There's a number of questions there. And can I come back to it when I -- after I finish because it's a very important question that you ask. So with the remuneration report, the -- are there any questions from the floor in regards to that? And I'll address your question, which is partly the remuneration. Are there any questions online? If it's no, I'll now put the meeting Resolution 3, the direct votes and proxies have said all this resolution are on the screen. Please record your vote on the yellow voting card that are holding, if you wish to vote on the Resolution 3 online using your electronic voting card, and you've not already voted, please vote now. [Voting]

Okay. Well, all the resolutions have really put to the meeting, and that concludes the voting on the resolutions of the meeting and the formal part of the meeting. Now the poll will remain open for a further 5 minutes for shareholders attending the meeting online who have not already voted. Such shareholders may lodge their online votes in time that shareholders will see a countdown timer on their [ spare ], which will tell them when the 5 minutes are over. For those [ don't ] shareholders and proxy holders present in the immediate -- person at the meeting, I ask that you please hand your yellow voting cards to MUFG Markets staff, they'll come around with [ boxes ] to collect your yellow voting cards. The results of this meeting will be announced to the ASX as soon as the votes have been counted. Now that completes the full business of the meeting. And now address a couple of points and half of it is what you -- but I'll come back to you. These are questions from shareholders that probably asked these questions. And one is in regards to dividends. The Board has no current intention to pay any dividends. It's the Board's intention to pay any surplus cash to meet our share of any contributions to VHAH for the interest payments, and any prepayments of the [ VHA's bank lines ]. The company's share price, the price is largely dependent on TPG's performance and share price, VHA's debt position and associated financing costs and the limited liquidity of our company shares. So coming to your question, thank you very much for it. That -- the history of the company goes back to when we were trading as a company called Hutchison Telecom and has evolved [ into a ] in fact, merger with Vodafone. And now the Vodafone Hutchison has merged with TPG. And I think your question is, why isn't the revenue going up?

That's not my questions. I did not ask why the revenue is not going up. I asked the question that I am an original shareholder of [indiscernible], that was operating a telecom business. And then it was with Vodafone. And now it has a shareholding in TPG. Essentially, the company has no business, and the revenue is extremely small. So why do we have all these expenses, all these overheads of auditors, auditors remuneration, directors, directors remuneration? Why don't we distribute the cash to a shareholder or give them equivalent shares in TPG?

You don't forget that there is a significant debt inside our company. And that's been brought about by a number of things, obviously, [ mutual putting ] the businesses together, purchase of spectrum, purchase of infrastructure, the changing of infrastructure Huawei to Nokia, et cetera. So this is a significant debt there. And if you look at what I said before is that most of the payments from [indiscernible] we get from [ TPG ] goes towards the [indiscernible]. So our problem is that we have a significant debt. Otherwise, there would be big dividends and [ that sort of stuff ]. So why are we there as a shareholder? Well, we are a telecoms business. And our investment in TPG, we believe it is a very good investment. We don't believe that what you're alluding to is the privatization or something like that. That's not on our agenda. And so to have it there and to look at ways how we can move forward, as I said, it depends directly on TPG and its performance. If you look at the last couple of years at TPG and its performance, whilst it's not showing revenue and growth from that...

I think you are, again, digressing. We are saying, I understand that all our revenues and all our fortunes and all our futures are based on how TPG performs. I'm saying the expenses of [ HCA ], what are they for? If our fortunes are linked to TPG, why not link the shareholders directly to TPG, by issuing shares in TPG to the shareholders? Why have this overhead, which are consuming the income and no benefit.

Well, if you look at the overhead and I explained it's $2 million for the year, I believe, it was $1.8 million the year before. If you look also at the detail of the payment to the directors, it's a... [Technical Difficulty]

Apologies. The speaker line has temporarily disconnected. Please hold and we will resume shortly. Thank you. We have the speaker line. Please go ahead.

Thank you.

Yes. Steve Allen speak. Perhaps I could sort of also sort of supplement what Barry has said. I think that the reality is that the company is where it is today. And it's evolved through a series of mergers to where we are today. And where that has left this company is, yes, it has shares in TPG, but it also carries this considerable amount of debt. Now any distribution of TPG shares is effectively a distribution in specie or a form of dividend. And the Board, as our responsibility has to look at all of our obligations and all of the full position of this company. And as at today, given its funding obligations in respect of VHAH where the bank debt sits, effectively precludes us on any prudent management of this company from distributing any shares or [ whereabouts ] any surplus cash that we have at the moment. And that's the unfortunate position where we are today. We're just not in a position as a Board, managing the affairs of this company. We're not in a position and have determined that we're not in a position to do what you're suggesting, which is to distribute the math -- any of the assets [ are ] because, of course, there's the debt.

So it was obviously any of the assets, pay off the loans if possible, and be done with it. I mean why are we having a dead man walking?

Well, I think from the perspective of this company, we have concluded, as Barry said, it's not on our agenda of this Board to take the company private. If the -- for the -- what the shareholders might decide to do, that's a matter for their decision and their determination. But from this Board's perspective, our position is that we are where we are, and we continue to support our investment in TPG as we are today.

Do we have a bright future? What are we running the company for, to have a brighter future?

As I said, it all depends on the performance of TPG. If you look at -- they've just sold some assets to [ Vocus]for $5 billion plus. That money will come back into the company, it will pay down some not saying to distributor. We don't know, but whether it's distributed to shareholders, but it certainly comes back into TPG. There will be debt sort of reduced there, I imagine. But once again, I'm not speculating that. But if you look at the performance of TPG over the last 12 months where they have increased the double -- they doubled the size of their coverage nationally. That's a bonus and certainly very positive from a sales perspective because we're seeing growth in sales, et cetera. So to answer your question, I mean a telco business in Australia today is highly valuable. Maybe it's not realized on the balance sheet, but the value of these businesses, everybody uses a phone or the everyday type of people. So you'd have to say there is true real value there. And if you look out for the next 10 or 15, 20 years, you'd have to say we're still going to be using mobile phones or data transition. So we're not seeing that it's going away is going to be impacted by another technology. So we do see a good future. We do see it's positive. And as just reiterating, is that we do support the investment in TPG. We got -- we're here because we're here. And there's incredible competition.

I understand why we are here. It is nobody's fault. The situation changes, the early commission companies. Now they are only 2 or 3. So the other 7 have to become debt in a way. I understand that. And I followed the history of the Vodafone merger, and this is not unique to this company. It is happening all over the world, that all companies or the new companies come and they are doing better business. And I'm not suggesting that telecommunication does not have a good future. In Australia, telecommunication is increasing. It is increasing all over the world. They will continue to increase. All I'm suggesting is as a shareholder. If I have a business, do I see the future of that business and that company going up or down. Let me put it this way. As a shareholder, would you say I attended TPG's meeting yesterday as well. Let's say I realize that Mr. [indiscernible] as the Chairman here. He's become the Chairman there. I saw some other directors who were 70, 80 years old. I don't know what they contribute to the company. But my question is, would you say, I'm better off getting rid of my investment here and making more investment in TPG? Because ultimately, we are saying our future is linked to TPG. If you see value investment in TPG, [ why don't I invest ] there directly?

Well, I guess that's your choice.

I was asking your advice on that.

I can't offer advice in as much as whether you should sell your shares or not. But what you're saying is feasible, but it's your choice, and I can't offer any advice [indiscernible]. We could take this offline.

Okay. That will be good.

All right. Well, once again, thank you for your question because we're all shareholders. As the shareholders, do you feel where you are dealing -- is there any -- I'm just saying to the broader shareholders. If there's any further queries, I encourage you to send them to our investor e-mail address, which is available on the company's website. And -- so that concludes the business of the meeting, and thank you for your attendance today. Thank you for participating, and we now can disconnect. Thank you.