Hutchison 3G getting low on cash; outsources to Ericsson

by Guy Kewney | posted on 02 December 2002

It's hard to interpret Hutchison's decision to let someone else (Ericsson) run its 3G network in Australia as anything other than a severe shortage of money. The move has boosted its share price, but not everybody seems impressed.

Guy Kewney

The move in Australia has boosted the market's view of the local subsidiary, which is 58% owned by Hutchison in Hong Kong; but the Dow Jones view is that the global company "isn't likely to get a boost from Hutchison Australia's deal with the Australian arm of Ericsson," according to reports from Hong Kong.

Ericsson, says the Dow, will look after Hutchison Australia's paging and IT services; but the amounts saved - $A40 million or a little more - look negligible against Hutchison's overall financial position. Investors are "far more interested in Hutchison's 3G outlook in Europe."

Hutchison Australia shares jumped 32.6 percent to 30.5 cents on the deal which allows the company to focus on 3G content and applications as it prepares to launch third generation (3G) mobile services in Australia next year, say local news services.