Strong sales leave Hutchison with handset shortage

June 30, 2004

Hutchison Whampoa could face a shortage of 3G handsets for the second time as subscribers rush to sign up to its service. This shortage comes as demand for its service is "very strong" and it is signing up more than 10,000 customers a day.

"The only thing we really worry about is a handset shortage," said Hutchison Whampoa managing director Canning Fok at the launch of its latest 3G handset, the LG 8120 for the Hong Kong market.

The LG8120 model is priced at HK$1,680 for a 12-month, HK$183 a month service contract. The price is cheaper than some of the top range 2G handsets in Hong Kong.

Hutchison's first handset shortage happened before Christmas in Europe when handset suppliers were late in delivering new handsets that were desperately needed to attract new customers. The shortage affected the company's sales during the Christmas period. This also lead to the company failing to achieve 1 million customers in both the UK and Italy.

Hutchison has launched its first LG handset last month in other markets. The LG 8110 was Hutchison's best selling phone in the UK for May.

On the back of strong sales, Fok is looking for the company to break-even in earnings before interest, tax, depreciation and amortisation before the end of 2005.

Hutchison has been using aggressive pricing to win customers and some estimate the company's customer acquisition cost was about US$1,000 each. Fok did not give details on the customer acquisition cost but said it was "substantially" lower than the US$1000 estimate.

The group has 1.73 million 3G subscribers globally, with 84,000 customers in Hong Kong. Rival operators CSL, SmarTone and Sunday are expected to launch their 3G services in Hong Kong later in the year.