[3g-g]

Taken from ABI Research. (http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20050511005498&newsLang=en)



The entrance of Hutchison Whampoa Ltd's subsidiaries, 3 and HTIL, to the mobile communications industry has reinvigorated it during an era in which most observers have been talking about consolidation, not expansion. "Despite the often hostile media press," says Jake Saunders, ABI Research's Director of Research, Europe, "Hutchison's 3 has been able to wade in and grab the consumer by the lapels. Just a year ago, headlines were predicting a hasty and undignified exit from 3G by 2006. That possibility is receding fast."

Here are seven little-known facts and forecasts about Hutchison (HWL):

1. HWL manages its mobile networks through a number of brands: 3, Orange, Hutch and others. Expect consolidation of those brands under Hutch (if 2G) and 3 (if 3G).

2. Expect a number of IPOs hosted by HWL in local markets. Italy is next, in mid-2005.

3. 3.5G technologies, such as HSPDA and HSUPA, will not only improve the end-user download experience but also cut the cost and number of 3G base stations needed by 2010.

4. Expect to see HWL take a keen interest in markets in the Middle East and Eastern Europe. Hutchison's Indian assets will become star performers within HTIL.

5. 3's ARPU is among the highest in its market. It will inevitably decline, but will remain above the market average.

6. The 3 brand is rapidly becoming an iconic brand similar in strength to Vodafone and Orange. In the UK, the operator has won a number of consumer and innovation awards.

7. 3 has achieved approximately 3-4% market-share and is projected to attain 13-18% by 2006 in many markets. Markets in which 3 is making inroads are: Hong Kong, the UK, Italy and Sweden. More challenging markets include Austria, Denmark, Ireland and Norway.

ABI Research's study, "Hutchison's 3 & HTIL" explores 3's & HTIL's organizational structure, network deployment, tariffs, value-added services and operational benchmarks, as well as handset features and pricing.

[3GScottishUser]

Here's my comments (in italic) ....

1. HWL manages its mobile networks through a number of brands: 3, Orange, Hutch and others. Expect consolidation of those brands under Hutch (if 2G) and 3 (if 3G).

They already have done this and appear to want to release themselves from paying France Telecom royalty obligations by rebranding the Orange subsiduaries.

2. Expect a number of IPOs hosted by HWL in local markets. Italy is next, in mid-2005.

If anyone is stupid enough to buy into it. The headline stats look quite good but the creative accounting that hutchison use (longer term aquisition cost write down etc) make any float a very risky prospect for investors.

3. 3.5G technologies, such as HSPDA and HSUPA, will not only improve the end-user download experience but also cut the cost and number of 3G base stations needed by 2010.

Hutchison have not yet implimented open Internet access in the UK so HSPDA makes no diffrerence.

4. Expect to see HWL take a keen interest in markets in the Middle East and Eastern Europe. Hutchison's Indian assets will become star performers within HTIL.

Possibly, but HTIL is a totally separate company from 3 excluding Hong Kong.

5. 3's ARPU is among the highest in its market. It will inevitably decline, but will remain above the market average.

Not when dealer cashbacks are taken into account. The vast majority of revenue accounted for in terms of ARPU from recent contract aquisitions in the UK are back door financed by Hutchison via dealer cashback schemes. This is a red herring.

6. The 3 brand is rapidly becoming an iconic brand similar in strength to Vodafone and Orange. In the UK, the operator has won a number of consumer and innovation awards.

3 sells on price only in the UK. Even new products have to be subsidised heavily to gain consumer acceptance. 3's market share is based on price and nothing else and its customer service is the worst in the industry.

7. 3 has achieved approximately 3-4% market-share and is projected to attain 13-18% by 2006 in many markets. Markets in which 3 is making inroads are: Hong Kong, the UK, Italy and Sweden. More challenging markets include Austria, Denmark, Ireland and Norway.

Hutchison can only buy business in the UK and it reamins to be seen whether they will continue to plough money into aquiring customers in such a competitive market. 2 years on dealers are reporting that 3 has one of the most vunerable products in terms of churn and slap dash deals (like cheap line rental and quirky products [Nokia 7600's etc]) that have driven growth look likey to have been temporary gains for them.

[Ben]

Ok, I'm gunna do the same as 3GSU.

1. HWL manages its mobile networks through a number of brands: 3, Orange, Hutch and others. Expect consolidation of those brands under Hutch (if 2G) and 3 (if 3G).

This seems to have largely happened already - the Three brand has been used to cover 2G networks also, causing a lot of confusion.

2. Expect a number of IPOs hosted by HWL in local markets. Italy is next, in mid-2005.

Inevitable. Hutch will make a lot of money from 3, which will undoubtedly change ownership in the medium term as they cash in.

3. 3.5G technologies, such as HSPDA and HSUPA, will not only improve the end-user download experience but also cut the cost and number of 3G base stations needed by 2010.

Poor us in the UK really couldn't give a damn if our pixelated music video downloads faster - I believe we're somewhat isolated in our lack of open data/internet access. Three's equipment is also old and rapidly installed, so such upgrades will surely be a long and expensive process.

4. Expect to see HWL take a keen interest in markets in the Middle East and Eastern Europe. Hutchison's Indian assets will become star performers within HTIL.

Good luck to them, I believe they've had to sell numerous things in those markets to provide money for the Three venture.

5. 3's ARPU is among the highest in its market. It will inevitably decline, but will remain above the market average.

And so it bloody well should be - Three are a pure 3G network, if they can't have a high ARPU then what's the point in ANY operator going 3G? The whole point of 3G from an operator perspective is to make more money - at least the figures Three are giving out aren't damaging progress by looking too weak.

6. The 3 brand is rapidly becoming an iconic brand similar in strength to Vodafone and Orange. In the UK, the operator has won a number of consumer and innovation awards.

In the UK it's certainly nowhere near as iconic as Orange or Vodafone. I don't know about you, but when I see someone with a Three handset I grin and think to myself *CHEAP!!*

7. 3 has achieved approximately 3-4% market-share and is projected to attain 13-18% by 2006 in many markets. Markets in which 3 is making inroads are: Hong Kong, the UK, Italy and Sweden. More challenging markets include Austria, Denmark, Ireland and Norway.

I sincerely hope Three continue to grab the market, but I hope they do it in a sustainable and meaningful way.

[3GScottishUser]

I agree with most of what you say Ben with the exception of "Inevitable. Hutch will make a lot of money from 3, which will undoubtedly change ownership in the medium term as they cash in."

NTT DoCoMo and KPN walked away from 3 UK nursing losses of 90% of their original investment. Hutchison have just done some creative accounting to bring forward the write off of thier UK obligations to those companies suggesting they are trying to make the books fit for a sell off sooner rather than later.

I suspect Hutchison have had their fingers well and truly burnt in the UK and an exit strategy is being implemented as we speak.

There is nothing to suggest Hutchsion Whampoa will be able to sell 3 UK for a profit and lots of evidence they might well exit to stop the losses that the UK operation seems to be increasing daily.

A sale to BT, NTL/Telewest, Tele2 or Telefonica could save face for them (as long as the sale price was not disclosed and it does not have to be as it's a private sale), and lead to a change in diretion for Britain's 5th mobile network that could be good for consumers too.

[3g-g]

NTT DoCoMo and KPN walked away from 3 UK nursing losses of 90% of their original investment

Just about the NTT comment, I think the Japan outfit thought that 3 would be the road into the UK for launching i-mode, which might of proved to be a huge customer "turn on" and the ultimate selling point for 3, it would of been completely different from what everyone else offered. But as can be seen now, Hutch got frightened and fobbed us all off with bog standard WAP. i-mode, although extremely technically superior, is an operator run closed environment (walled garden if you wish ;)) but is an amazing scccess in Japan, the UK could have had similar, 3 thought not.

O2 plan to introduce i-mode. Alongside their current rollout of HSDPA ready sites, day by day their plan seems to become a lot clearer to me.