Hutch UK Clings to Network

Subscriber figures may be disappointing, but this network ain't for sale

August 20, 2003

2 Min Read
Hutch UK Clings to Network

Despite sagging subscriber numbers (expected on Thursday) for its European 3G services, Hutchison 3G Ltd. is scotching rumors it is contemplating selling its U.K. network assets to a rival player.

The carrier is due to announce a subscriber base of approximately 150,000 for its U.K. operation, up from reported figures of 25,000 in June, following tariff cuts on voice services (see 3 UK Touts Pricing and Hutch Wakes Up).

Although this is an improvement on customer numbers prior to the price war, Hutchison's publicly declared ambition to win a million U.K. subscribers by the end of this year looks totally unrealistic.

Its struggles have sparked media reports suggesting the carrier is considering selling its U.K. network to one of the country's existing Universal Mobile Telecommunications Service (UMTS) license holders. Vodafone Group plc (NYSE: VOD) and T-Mobile International AG have both been touted as potential acquirers.

Rumor has it that either carrier could be set to make an offer to Hutchison 3G UK Ltd. in the next few weeks, proposing that its 3 brand operate as a Mobile Virtual Network Operator (MVNO) on what would become the acquirer’s own infrastructure.

Vodafone and Hutchison are denying any possibility of a linkup. “This is the first I have heard of this,” says Ray Bashford, director of reticent corporate communications at Hutchison 3G UK. “We don’t comment on speculation.”

Vodafone’s senior group communications manager, John Earl, is equally dismissive. “It certainly isn’t in our plans,” he tells Unstrung.

T-Mobile was not available for comment.

Analysts believe the idea to be implausible. “This is nonsense,” says Ovum Ltd. chief analyst Julian Hewitt. “Hutch won’t throw in the towel so early, as they have only just made the thing work. They are a long-term player with deep pockets and will give it all they have.”

Hewitt notes the complex technical challenges that would inhere in trying to incorporate Hutchison’s network infrastructure -- supplied by Nokia Corp. (NYSE: NOK), NEC Corp. (Nasdaq: NIPNY), and Siemens AG (NYSE: SI; Frankfurt: SIE) -- with Vodafone's LM Ericsson (Nasdaq: ERICY) kit. “I agree that Vodafone looks a sensible acquirer from a financial point of view; but from a technical standpoint it would be a nightmare. It is a huge hurdle to overcome.”

— Justin Springham, Senior Editor, Europe, Unstrung

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