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Technology Stocks : 3G Wireless: Coming Soon or Here Now? -- Ignore unavailable to you. Want to Upgrade?

To: Eric L who wrote (52)	3/20/2004 2:23:40 PM
From: slacker711	Read Replies (1) \| Respond to of 666

It seems like the net adds for 3 have accelerated substantially since the launch of the e616, e313 and A925. I have to hand it to Hutchison, there arent many companies in the world that would be willing to suck up these kinds of expenses in the pursuit of a long-term profit. reuters.com Hutchison finds 3G users, but profits elude By Tony Munroe HONG KONG (Reuters) - Hutchison Whampoa Ltd has proved it can lure users to its 3G mobile network. Making money on its US$22 billion bet is another story. "To make it profitable will be like landing a man on Mars," said Francis Lun, general manager at Fulbright Securities in Hong Kong, after Hutchison on Thursday revealed a worse-than-expected 3G loss for 2003, but sought to give comfort by reporting that it now has more than one million subscribers globally. Hutchison's 3G cash-burn during 2003 was about HK$100 million ($12.8 million) per day, although that was largely covered by operations from the firm's other businesses, according to UBS analyst Paul Cheung. "I was a bit alarmed," Cheung said of the 3G losses of HK$18.3 billion on an earnings before interest and tax basis (EBIT). UBS calculates the year's cash burn at HK$36.5 billion, including losses before interest, tax, depreciation and amortisation (EBITDA) of HK$11.9 billion and capital expenditure of HK$24.6 billion. Hutchison, however, has the cash pile to cope. Its war chest stood at HK$185.54 billion at the end of 2003. Shares in Hutchison closed 0.43 percent higher at HK$57.75 on Friday as performance at its core businesses such as ports, retail, energy and property generally met or topped market forecasts. Helping to mitigate 3G losses was the release of HK$7.8 billion in provisions and a HK$6 billion deferred tax credit. Hutchison is deepening its commitment to the commercially unproven 3G, which has long been a drag on its share price. The company has said it wants to refinance a 1.5 billion pound ($2.7 billion) bank loan at its UK unit. It is also in talks to buy out its 20 percent partner in Britain, NTT DoCoMo, a source at the Japanese carrier told Reuters. JPMorgan and Citigroup slashed Hutchison profit forecasts for this year and next after the results, citing 3G worries. Citigroup analyst Anil Daswani predicted a deepening 3G loss this year of HK$20.6 billion. The worry, company watchers said, is that Hutchison is relying on heavy discounts to win 3G customers. In Hong Kong, for example, an ongoing promotion offers a lower-end NEC Corp c313 videophone for HK$998 (US$128) with a monthly service package of just HK$183. Last year's launches in the key British and Italian markets were slowed by a shortage of video-enabled handsets -- a problem Hutchison says has now been solved, with a current global inventory of 1.7 million. The next challenge for Hutchison's 3G business will come later this year when it is expected to face 3G competition from European rivals such as Vodafone Group Plc. ADDING USERS Hutchison said it has enlisted over 1.04 million 3G users, including 361,000 in the UK and 453,000 in Italy. During 2003, the company fell far short of reaching its million user targets in each of those two markets. In recent days, the company has been signing up more than 10,000 users per day, Hutchison Chairman Li Ka-shing, who is Asia's richest businessman, told reporters on Thursday. Some analysts said such subscriber growth momentum would provide a dose of relief to skittish investors. "What is not clear as yet is the subscriber acquisition costs, handset subsidies, etc., etc.," said Morgan Stanley analyst Rob Hart, who has an "overweight" rating on Hutchison and expects the company to finish 2004 with 3.8 million 3G customers, including 1.5 million in Italy and 1.2 million in the UK. In addition to those markets and Hong Kong, Hutchison has also launched services in Australia, Austria and Sweden. "We can expect that subscriber momentum can improve," said UBS's Cheung. "The point is that they're doing it at the expense of profitability." (Additional reporting by Tara Joseph)