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Hutch's Subscriber U-Turn

Hutchison 3G UK Ltd. has finally, following months of bullish predictions, started to suggest that its initial plan to attract one million subscribers to its UMTS cellular service by the end of this year is perhaps a trifle unrealistic.

The startup carrier today hinted that its original goal for its U.K. network appears unrealistic, in light of slow customer demand for the services and a limited supply of 3G-compatible handsets.

At its first-half 2003 financial results in August, Hutchison reported a U.K. subscriber base of 155,000 and reiterated its intention to hit the million mark by the end of 2003 (see Hutch Bullish on Targets). Industry watchers scoffed at the idea, claiming that the figures will fall short by a significant margin.

Hutchison spokesman Edward Brewster has now backtracked on previous company statements. “We will hit a million customers -- it is just a question of timing,” he tells Unstrung. “Our majority shareholder obviously set a clear and stretching target essential for any new business.”

Brewster was unable to predict exactly when the company would hit the magic million mark, offering “soon” as the only indication of timescale.

Phil Kendall, director of Global Wireless Practice at Strategy Analytics Inc., forecasts an “early Q2” date next year. “It will be in the first half of 2004. I would be very surprised if they made it to June without having hit a million.”

Despite a string of problems with its 3G (third-generation) service, Hutchison itself remains confident of future success (see 3G Powers Renege on Deal, 3G UK Cries for Help, and Hutch's Weekend Hangover). “We certainly have the demand, and we believe we have a sustainable price advantage,” proclaims Brewster. “We will move on from this base to become our ultimate aim -- the dominant communications brand in the U.K.”

Meanwhile, Hutchison's financial resources are being further stretched by its decision, announced today, that it has agreed to buy Dutch carrier KPN Mobile's 15 percent stake in the 3G venture (see KPN, Hutch Resolve Disputes). Hutchison will cough up £90 million (US$150.3 million) in cash for the stake, following a long-running dispute over funding (see KPN Mobile Nixes Loan).

The Universal Mobile Telecommunications System (UMTS) being used by Hutch for its service is the European standard for 3G mobile communications and is based on a GSM core network using a wideband air interface to increase data rates to a potential 2 Mbit/s maximum (in the lab, anyway). — Justin Springham, Senior Editor, Europe, Unstrung

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