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News not looking good for 3

May 19, 2003

3 UK may not survive past 2006, having been broken up or sold off by then or earlier, market researchers Enders Analysis predicted in a report in the London Independent.

The newspaper reported last week that the troubled operator’s published 10,000 subscribers may not represent a true estimate of subscriptions if freebies handed out to staff, VIPs, family and friends, as well as returned handsets are taken into account.

The operator has had numerous technical problems since its January launch, and the analysts predict that the company will attract around 84,000 subscribers by the end of 2003, although the researchers’ worst-case scenario prediction is that 3 will end the year with just 30,000 subscribers - far lower than the company’s own prediction of one million subscribers by the end of the year, and lower even than the number of subscribers sister 3G network 3 Italy has already signed up.

The newspaper is also reporting that other analysts have been kinder in their predictions: Citigroup analysts think that the company will have 300,000 subscribers by the end of the year, and that the company will make its first EBITDA (earnings before interest, taxes, depreciation, and amortization) profit by 2008, at which point they expect 3 to have 5.5m subscribers.

The Enders analysts also worry that 3 may not be profitable for another five to seven years. Even by 2010, the analysts say that the company may be losing £158million and £406million. The researchers believe that if this begins to happen, that the company may even be broken up or sold off - something that could happen "as early as the end of 2003, but more likely within the 2004 to 2005 period."

3 Italy, which aims to sign up 1 million people to its Italian 3G service by the end of the year, had 64,000 subscribers by the end of April, the head of its Italian unit said on Friday.

Vincenzo Novari, chief executive of 3 Italia, said H3G Italia was activating 1,000-1,500 new accounts per day.

At that rate H3G would notch up a further 365,000 users by the end of 2003, falling short of its goal of 1 million.

 


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