Hutchison slashes 3G voice tariffs in UK
As I explained in my infamous plan August 2001: <<Operators spent 130 billion Euros to keep competitors from entering their existing telephony-SMS markets. These costs start to look more as a protection for their existing markets rather than a sign of the potential future business in mobile wireless data.>>
Here how it became reality:
<<Boy am I good or not? :-)>>
Hutchison slashes 3G voice tariffs in UK
By Robert Budden and Chris Nuttall
Published: June 5 2003 19:42 | Last Updated: June 5 2003 19:42
Hutchison 3G touched off a damaging price war in the UK mobile market on Thursday, as the Hong Kong-backed group announced major cuts in its voice tariffs.
Analysts said the reductions amounted to a near 70 per cent discount on the current average per-minute price for mobile calls.
The UK operation is 65 per cent-owned by Hutchison Whampoa, led by Li Ka-shing, Hong Kong's richest tycoon. He has made a US$16.7bn bet on the success of next-generation mobile services in Europe and paid £4.4bn (US$7.3bn) in 2000 for his UK 3G licence. The latest price cuts could lengthen considerably the payback time on his investment.
Lex: Hutchison 3G
Hutchison 3G has stepped back in time. Having failed to wow customers with new age video services, the mobile start-up is undercutting rivals on good old-fashioned voice calls. The move is little surprise.
Go there
Shares of rivals Vodafone, Orange and MMO2 fell sharply in London on the news. Analysts at ABN Amro described Thursday's announcement as part of their long-predicted 3G tsunami.
"There is a tidal wave of capacity out there that will affect pricing and will change the UK market forever," said Jamie Mariani, telecoms analyst.
Price cuts had been expected under Bob Fuller, the new chief executive of Hutchison 3G in the UK, who has been conducting a root and branch review of the business to try to revitalise the ailing fortunes of the new entrant.
Sources suggest Hutchison is currently selling only around 600 handsets a day with Carphone Warehouse, the UK's largest retailer, accounting for less than a third of all sales. The low sales make its target of achieving 1m customers by the end of the year look increasingly tough.
But, in his first interview since taking over last month, Mr Fuller, told the Financial Times he was "building the business to be able to support" this target.
Mr Fuller insisted his rivals were wrong to dismiss Hutchison 3G so early on. "We are getting customers and we are getting them on the revenues we expected," he said.
Tim Pennington, finance director, said Hutchison had so far drawn down £1.7bn of its £3.2bn banking facility provided by a consortium of banks and that, combined with a £1bn shareholder loan, he "hoped" this financing would see the company to profitability. |
