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HW and DoCoMo fell on 3G investment worry

March 10, 2003

3 logo  display in handset  

Shares in the Hong Kong conglomerate Hutchison Whampoa and Japan's biggest mobile-phone company NTT DoCoMo fell to its lowest level for 4 months on news that both giants will need to pump in an extra £1 billion capital into the UK 3G mobile phone business, Hutchison 3G UK.

Hutchison 3G UK is currently own by Hutchison Whampoa with 65% shares, NTT DoCoMo with 20% of the UK business, while Dutch firm KPN Mobile owns 15%. The expensive venture that enable video-conferencing and high-speed Internet access on handsets is expected to cost £6 billion but the start of the service has already been delayed.

The request from Hutchison 3G UK renew concerns about DoCoMo's expansion outside Japan and the future of the 3G technology that is hampered with technical glitches and raising concerns about whether the venture can meet subscriber targets of 1 million by the end of 2003. In a company statement, the Japanese company is contractually obligated to provide £200 million if certain pre-conditions are fulfilled and will have until mid-April to make its decision.

Hutchison Whampoa has said it will commit £650 million funding. Rumours are suggesting that fellow Hutchison 3G stakeholder KPN Mobile may decline at the request to pump in the extra £150 million funds. It leads to talk that Hutchison Whampoa will have to foot KPN's portion of the bill and could even mean it would buy KPN's stake in Hutchison 3G UK which faces concerns as to whether it would be able to recoup investments.

All this can be viewed as bad news for the operators, Japan's Nomura investment bank view this sudden request is if banking syndicate is getting nervous, given delays to 3G launch in the UK. This can add to the view that problems are continuing with the rollout.

 


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