Hutchison foreseen to drop 3G by end 2006

May 10, 2004

Investment bank Nomura predicted that Hutchison Whampoa could walk away from its loss-making 3G mobile business by end 2006.

Nomura analyst Mark James estimates the Hong Kong conglomerate to rack up operating losses of about $2.7 billion this year on its 3G operation.

Normura failed to see how Hutchison 3G (H3G) can achieve an economic return on capital and value the company at a negative HK$63 billion. "Our Hutchison Whampoa estimates include an assumption that the company walks away from its 3G ventures by the end of the full year of 2006," James said.

The survival of 3 Italia was also called into question despite signing up the highest number of 3G subscribers among Hutchison's 3G business. The company announced in March that it had 453,000 customers in Italy.

H3G last week added the U8110 handset from LG Electronics to its range of 3G handsets. The LG handset is the smallest and lightest of the H3G's phones LG Electronics is Hutchison's fourth handset supplier alongside Motorola, NEC and Nokia and has signed a deal to supply the operator with 3 million units. The priority for the handset ordered will be given to Europe and Australia

3 Austria announced last week it has signed up 25,000 customers and is adding around 1,000 users per day.