Hutchison's 3G story: good news and bad news as numbers rise

by Guy Kewney | posted on 19 August 2004

First, the good news: Hutchison says it has over 3 million 3G users around the world. The bad news? Well, it's not making them any money, it seems.

Guy Kewney

According to Reuters, the figure of 1.7 million 3G phone users Hutchison Whampoa announced back in May has now nearly doubled. The Asian based group says the figure is now 3.2 million users, the agency reports.

But in Australia, figures suggest this is bleeding cash at a high rate: Stuff says that Hutchison in Sydney posted figures showing its first-half net loss "widened to $A280.5 million from the year-earlier net loss of $A129.4 million."

From Bloomberg, we learn that the group made profits of HK$12.4 billion - but that "Hutchison amassed HK$15 billion in gains from sales of assets, including its stake in a Chinese venture with Procter & Gamble Co." Which means that before it sold off its assets, it made a thumping HK$2.6 billion loss.

Hutchison also said that building revenues from non-voice services on 3 would be a major focus over the next year or two, according to the Sydney Morning Herald.

In the UK, we're told the magic million-subscriber figure which "3" ( Hutchison's local operator) was supposed to have reached before the end of 2003, will be hit today. Are we on track?

Comment: If 3 honestly expects to make more money from "non-voice" services than from chat, and also expects to make a profit on its 3G operations, then the market is changing in ways we never anticipated. Until 3 manages to find a way of making people use multi-media messaging - and nobody else has yet - it has virtually no other non-voice revenues except from its own internal "web site" information services.

Will this be bigger than voice? Only if voice becomes virtually free. Well, that's the trend they do seem to be following ... according to Dean Bubley of Disruptive Analysis, they're having to give away the farm to get it as well ... .

"I saw that a friend of mine had a nice, shiny new LG U8110 yesterday," commented Bubley. "Turned out he'd got, on 3, under one of their retailers' current deals: £5 a month for 6 months, then £12.50 a month, for 500 minutes a month. The phone itself was free: I'd guess that's a $300-400 phone wholesale, subsidised down to zilch."

No extra data revenue in it, either: "He sends about 2 SMSs per week and won't go near the walled garden video/info services. It's for voice. The only other service he wanted was to pick up his (Yahoo) email, which, of, course, 3 won't permit - but he's OK, as he's cancelled his previous phone contract, which was at £30 a month. And with the £200 he's saving this year, he's going to buy a Blackberry on one of the other operators instead ... ...

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