A day in the life of Canning Fok: Hutchison chief makes $25bn bet on a bright future for its 3 mobile group

Canning Fok denies that the launch of a mobile broadband service is the last chance for Hutchison Whampoa's loss-making 3 mobile business.
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Rain is pouring down outside the windows of Canning Fok's penthouse flat, on the southern banks of the Thames. The right-hand man to Hong Kong's richest resident, Li Ka-shing, Mr Fok is proud of his Battersea base. He likes to use the fact that Hutchison Whampoa turned a "wasteland" into a gleaming property development, complete with an elliptical-shaped block of riverside flats, to show what the mighty conglomerate behind the 3 mobile business among scores of other global interests, can achieve against the odds.

"We are a company with far-sighted vision. We do things that don't seem obvious to people but are obvious to common sense," the 55-year-old group managing director of the £21bn powerhouse.

Today he is desperate to convince the outside world that the $25bn gamble 3 has placed on Europe's third-generation telephony market will - eventually - pay off. Mr Fok is in town to launch a new mobile broadband service in tandem with some of the biggest names in the internet world, which he hopes will finally turn 3G into a profitable mass-market product. But first he has time to whisk up a quick breakfast for his daughter, who is studying in London. "I always enjoy that," he says, with one of his trademark chuckles.


It's a two-minute stroll for Mr Fok to get to work: Hutchison's European headquarters are based on the same redeveloped plot of riverbank, just behind those curiously shaped flats. First up is a meeting with Nokia's Kai Oistamo; the Finnish company is making one of the only two handsets that will let users make Skype calls from their mobiles and access their home PCs and televisions, Sony Ericsson the other.

Some analysts are calling the launch of 3's new service, which will hit the shops on 1 December under the "X-Series" banner, the company's last roll of the dice. Hutchison is coming perilously close to the ignominious day when it will have racked up the same amount in operating losses from its 3G businesses as it scooped from its 1999 disposal of its 2G operator Orange to Germany's Mannesmann at the height of mobile mania. (The tally so far is $11bn booked in operating losses to $15bn profit. And that's glossing over the $25bn it has poured into developing its 3G networks across Europe.) But Mr Fok insists: "We don't roll dice. We do business." (There is no accompanying chuckle.)


Mr Fok has been in London all week. It's budget time for 2007, which means various European managers have been trotting in and out of his fourth-floor executive suite all week trying to get him to dip into the Hutchison piggy bank.

Despite the drain that is 3G on the company's resources, there should still be some cash to play with following some high profile asset sales in recent months. The biggest by far was the $4.4bn disposal of its vast ports business to a rival, the Port of Singapore Authority. That followed its sale two years ago of its 10 per cent interest in Procter & Gamble's China operations back to the consumer goods giant. It would have had more cash still had its plans to float its Italian 3G arm not been pulled.

As well as telecoms, ports and property, the group's European division is also active in the retail, energy and infrastructure sectors. It bought the chemist chain Superdrug from Kingfisher, and owns Cambridge Water and a gas distributor in northern England.

Despite the eclectic mix of businesses, Mr Fok says telecoms takes up "60 to 70 per cent" of his time. "We are in the end of the investment cycle now. So it is very important that we walk the last steps." That's quite labour intensive considering telecoms, which includes its 2G emerging markets operations, contributes around one-third of group revenues.

After a handful of briefings about the launch to come, it is time to brave the rainstorm once again and head to the marquee that has been constructed for the big event in a gap underneath the flats that will eventually house a fancy restaurant.


True to the experience that for many of 3's customers has marred their relationship with the mobile operator, the scheduled start gets delayed. It is well past the hour when Christian Salbaing, who runs the European telecoms business, takes the stage. Mr Fok quickly follows, treating the mosh pit that is the audience to a witty synopsis of Hutchison's foray into telecoms.

"When we started Orange, people told me: 'You are crazy lemons, don't do it'. People said Orange would become a lemon - but a nice lemon. When we didn't go to Germany [Hutchison decided the German 3G licences were too expensive] a lot of people said, 'Uh oh, uh oh, uh oh, these Hong Kong boys lost their balls. They are not in Germany'," he says, with plenty of smiles. "People say 3G is not successful. I say, 'I'm trying hard to find the answers'."

He takes his seat and for the next two hours watches a who's who of the internet world get their five minutes of airtime on the back of adding their services to 3's new offer. Skype, Yahoo!, Google, eBay and Microsoft are all backing 3's plans to turn your mobile phone into a mini PC-cum-TV.

For a flat fee paid on top of their mobile phone contract, customers will get broadband-on-the-go. 3, which initially signed up subscribers by offering staggeringly cheap voice calls, promises the price will be competitive against the £18-a-month industry standard that it costs to access broadband from home. Its partnership with Orb will let people use their handset remotely to access content stored on their computers, such as photos and digital music, while 3 customers will also be able to connect to their home television's personal video recorder thanks to some natty software from a firm called Sling Media. Whether the reality lives up to the hype will, of course, be another story.


Once he's finally freed himself from the hoards of excited techies, Mr Fok escapes back to his office for yet more budget meetings. He concedes that the estimated break-even date for 3 in the UK, which made £815m in losses in the first half of this year alone, has slipped yet again, into 2008, but insists Hutchison can make a go of 3G.

"When we go into Husky Oil [the Canadian oil producer it first took a stake in 20 years ago] people said, 'What do these Hong Kong guys know about oil?' We will make telecoms work too. Do you remember [the] IPO [of] Orange?" (Positively cackles with laughter, but doesn't also bring up Rabbit, Hutchison's failed first foray into telecoms.)

"If you ask me whether everything is plain sailing, there are some hitches from time to time but in two and a half years we have 14 million subscribers. How do you reconcile not successful with 14 million subscribers? In the UK today we were supposed to be Ebitda break-even, but we are not.

"We had some problems. We churn customers too aggressively in 2005 so we spend more money on retention so this is why we missed the target. But we are very transparent about it with the market. Elsewhere, things are falling into plan. You have 10 operations, and you have one operation not going according to plan - that's the way life is. We're going to handle that."


If Mr Fok were in Hong Kong, then he would have hours left to work, given the way the time zones work. But today, he calls it quits, to jump on a flight back home. Despite the multibillion-pound fortune of Hutchison's chairman, Mr Li, the company runs a tight ship and Mr Fok flies Cathay, rather than a corporate jet. Whether such relative economies help them to balance 3's books remains to be seen.

A life on the line

Name: Canning Fok

Job: group managing director, Hutchison Whampoa

Since when: 31 August 1993, but joined the company in 1979

Other directorships: Chairs numerous Hutchison businesses, including Hutchison Telecom International and HongKong Electric Holdings

Qualifications: Chartered accountant, with a bachelor's degree from Saint John's University in the US and a diploma in Financial Administration from the University of New England in Australia

Family life: Married with four children

Born: Hong Kong, 1951