[3GScottishUser]

Some breif figures from the HWL Trading Statement for 2005:

3 worlwide customer base now 11,909,000

Market Share 'about' 5% in the UK , 8% Italy. (3.57 Million active 3 subscribers in the UK at 22/03/2006). An increase of 360,000 since the last reported HWL's Intrerims. Approx 60,000 net new customers per month since Aug 2005.

Contract Customers 56% in UK (2 million approx) Pre-Pay estimate based on above total 1.57 million. Contract customers in Italy only 19%.

Non-Voice revenues in UK up from 22% to 23% of total ARPU.

3 Group ARPU down from €43.11 to €42.20 monthly

3 Customer acquisition costs increased from €274 to €293.

All EBITDA figures quoted exclude above customer acquisition costs.

http://www.hutchison-whampoa.com/upload_docs/2006/03/Corporate/1725/1725_eng.pdf

[Ben]

That's curious... don't Vodafone have like 10m 3G subscribers now? I thought Three were further ahead than that!

Nice to see non-voice revenues increase, and ARPU hasn't taken too much of a dive. Their acquisition cost just goes to show what a tough market they've taken on, though.

They seem to be trying very hard only to stand still at the moment, but in the highly competitive mobile markets perhaps that's enough for now.

[3GScottishUser]

The losses on 3G have been horrific and multiplying for HWL.

They are putting a brave face on things by subtracting the profit from the sale of 3 UK's equity provided by NTT-DoCoMo last year.

From HWL Annual results:

3 LBITDA for 2004 HK$ 16,329 million

3 LBITDA for 2005 HK$ 9,619 million but "includes a one-time profit of HK$9,400 million on elimination of minority interests in 3 UK relating to the re-purchase of a 35% interest in 3 UK from NTT DoCoMo and KPN at a deep discount."

Taking account of the one-off profit from the UK equity sale the actual losses for the group would equal HK$ 19,019 million in normal trading conditions.

Losses in real terms up by HK$ 2,690 or 16.5% approx year on year.

With increasing acquitistion costs (even more so looking at the deals on offer since the introduction of Flext etc), slow growth in key markets and falling ARPU the above cannot be good news for HWL. The increase of just 1% in terms of non-voice revenues in the UK must be a worry when more of the customer base are not only on contracts but contracts that include significant amounts of bundled content.

With ARPU at € 42.20 a month (€506 approx 12 months) and acquisition costs now standing at €297 per customer that leaves 3 just €209 to cover the cost of runnning the network, advertising and promotion, providing support and service and providing a share of revenue to 3rd parties for content and network services (02 roaming costs) and call termination charges. ARPU accounts for raw income (including bundled service charges) and is a top line figure that also includes ingress generated by 3's termination charges from other networks.

Looking at all of the above, the prospects don't apear to be stacking up too well especially in the UK and in most other European markets for HWL in spite of the spin. HWL reported that 3 UK reached EBITDA after acquisition costs for the first time on a monthly basis in December 2005. Was'nt that the month when they pulled back on commissions after the departure of Gareth Jones. That was no typical month for 3 UK and I am very sceptical now as to the real reason for the lack of marketing push at that very significant period both on contracts and pre-pay. That statistic in the annual report seems to suggest that there is something very contrived re that particular period in the UK.

[3GScottishUser]

Just a thought.....

What happened to the churn statistics? (All other networks include this information).

No sign of that key indicator.

A noteworthy ommison?

[Hands0n]

I would like to see central registers of such things as Churn Stats and the other data that the mobops collect. Surely this is in the public's interest and therefore should fall under the Freedom of Information Act. To qualify that, I believe that the buying public should know a company's statistical data to decide whether their investment in that organisation's product is a sound one. I also think the info should be reported to, collated and presented by OFCOM (well, they seem to do s*d all else for their paycheck!).

Turning to the HWL investment in 3G and its current status. I feel that it all rather depends on whether HWL are in it for the short term or the long run. Anyone going into a mobile new technology venture for the short term (like their greedy backing banks did) will find out soon enough that there is nothing in it for them. This whole business has to be centered on long term investment. For sure, there will be short term revenue requirements, if for no other reason to pay the salaries and build out the network etc. But if anyone is seriously expecting HWL's 3 venture to start paying back like the incumbents is kidding themselves.

That said, after three years it is time for positive signs to start appearing if for no other reason than to provide a serious indicator that the business venture is capable of turning a profit. But look at what they have got into, along with the incumbents. Selling a network technology that at first glance does no more than the existing network does for the Customer (that nasty piece of work that they have to sell to). To date the marketing of 3G has not fired the imagination of the Customer to any significant degree. Numbers such as 10Mln and 11Mln globally just don't match up with how many 2G/2.5G Customers there are in circulation. I'm finding even technically literate colleagues of mine are renewing 2.5G contracts and eschewing 3G completely as "irrelevant".

Talking with a friends wife this evening she summed it up beautifully when I mentioned 3G, as I am oft found to do. "What am I supposed to do with that 3G stuff then that I cant with my existing thingy?" (her term for a mobile handset). I mentioned the web experience, content, faster downloads, email, videocall, quicker MMS. "I don't do none of that stuff nor have any interest in it either" she replied. Now I am not, for one moment, suggesting that she is wholly representative of the mobile user population at large. However, with such an attitude even among a [relative] minority of incumbent users the mobile ops have a huge uphill struggle with 3G to not only make it work for real but to sell it to that pesky old Customer of theirs.

[3GScottishUser]

Hutchison's stats are all smoke and mirrors.

They dont count acquisition costs of contract customers in the normal way. They amortizise that spend over years. The only acqusition they write off is pre-pay.

They also neglect to provide churn statistics. Judge the reason for that for yourself.

Hutchison got a huge sum from NTT DoCoMo in Q1 2005 that turned up in their accounts as income!! Well maybe - a one-off that poured HK$ 9 billion into the equation. Strip that exceptional sale revenue out and the losses are horrific.

All things considered Hutchison are doing badly and trying to manipulate the statistics to provide a positve outlook within the legal requirements.