Hutch boss wants 3G breakeven in 2005

20 Aug 2004

Li Ka-shing, head of Hutchison Whampoa, has set the group’s 3G business the target of being cashflow positive by the end of next year. The challenge was laid down following the company’s revelation that it had 3.26 million 3G customers as of Wednesday, made as part of its second quarter results announcement. Hutch – which has UMTS businesses in Australia, Austria, Hong Kong, Italy, Sweden, Denmark and the UK – said that its much-maligned next generation operators signed up close to 700,000 new users between them in July. The upturn in fortunes led Mr Li to declare that, ‘the pick-up rate of 3G subscribers will get even better,’ before saying that the businesses ‘need to be cashflow positive,’ by the end of 2005. But customer growth is coming at a price, the average cost of acquiring a subscriber was EUR299 in the first seven months of 2004, and whilst Hutch claims this had fallen to EUR252 in July, the group is still using heavy subsidies to shift units. What’s more, it has had to switch the emphasis of its marketing from high-revenue data services to cheap voice calls, resulting in underwhelming usage statistics for its value added features: non-voice revenues accounted for just 9% of revenues at its Austrian business and only 10%, 11% and 14% respectively in Italy, Australia and the UK.

Hong Kong, CK Hutchison