Doubts raised over 3G success: Hutchison's partner casts shadow over pioneering service with disappointing revenue numbers
SATURDAY AUGUST 3 12:00AM
SOUTH CHINA MORNING POST
Fresh doubts were raised over the likely success of Hutchison Whampoa's third -generation (3G) mobile venture yesterday after Japan's NTT DoCoMo unveiled disappointing revenue numbers for its pioneering service.
DoCoMo, which has the world's only active commercial 3G service, said its average revenue per user (arpu) fell 7.5 per cent in the second quarter to 7,800 yen (about HK$ 510) a month. The figure was even below the 8,150 yen arpu for its 2G operation, as the company offered discounts to stimulate usage of the new service.
Arpu is seen as a key number because it measures how willing users are to pay for the new features offered by 3G. It also indicates how quickly operators will be able to make 3G a profitable business after sinking hefty investments into licence and network costs.
The disappointing figures intensified concerns that Hutchison, which has enlisted DoCoMo as a partner in its 3G operation in Britain, will struggle to make money when it launches its 3G services in Britain, Italy and Hong Kong in the fourth quarter of this year.
"We are not worrying too much about Hutchison for now, given they could have an 18-month honeymoon period in Britain without much 3G competition," ING Barings analyst Cusson Leung said.
Hutchison has committed US$ 16.7 billion to launch 3G services in nine countries, six in Europe.
Mr Leung said while Hutchison would launch its 3 - the new brand for its 3G business - as a premium and high-end service, it would have to prove that it was worth the extra it would cost customers compared to 2.5G services.
A lack of difference between DoCoMo's i-mode service and its rival KDDI Corp's data service could explain why Japan's largest mobile company is struggling to attract as many customers as it had hoped.
Although DoCoMo offers face-to-face communication with video conferencing and fast Internet access, uptake of the service has been limited by perceptions of pricier handsets with poor battery life and limited geographical coverage. It has only 114,500 subscribers, less than 10 per cent of KDDI's 3G users, despite having a half-year headstart.
In view of this, DoCoMo has slashed basic fees by up to 55 per cent to encourage its existing 2G customers to switch to 3G.
As a result, DoCoMo's arpu fell 7.5 per cent from the first quarter, and was down 25 per cent from the quarter starting last October, when it launched the 3G service.
A Hutchison spokeswoman said comparing DoCoMo with the Hong Kong company was not an apples-to-apples situation.
"We will operate in very different markets and our company is predominantly a pure 3G operator. Hence, we do not see any relevant ground for comparisons," she said.
She added that the company had not outlined any customer acquisition plans and strategy, which could be different from DoCoMo's.
Shares of Hutchison Whampoa fell 2.23 per cent to HK$ 54.75 yesterday on worries about its 3G expansion.
wirelessweek.com
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Agnostic Hutchison straddles camps, with both cdma2000 and wCDMA networks presently in process.
Lacking Europe's jingoistic bias and hatred toward alternate technologies, might Hutchison cut losses and choose wisely? Might Hutchison demand the right to choose in Europe? |
