Hutchison to put Rabbit back in hat: Portable phone service to close, but Hong Kong company will launch new network

HUTCHISON Whampoa, the Hong Kong conglomerate, is closing down its loss-making portable telephone service in the UK at the end of December after failing to attract enough subscribers.

Hutchison will make a provision of pounds 122m to cover the costs of closing down Rabbit Telepoint, as well as write-downs on the planned sale of its UK Mobile Data subsidiary, also announced yesterday.

But Hutchison said it was pressing ahead with its alternative two- way, PCN mobile phone product. This is set for launch next April and Hutchison, through its Hutchison Telecom (UK) subsidiary, plans to invest a further pounds 345m in its PCN network over the next three to four years.

The new PCN system, a rival to the recently launched Mercury One-2-One mobile telephone, is based in Bristol and will initially be available to 30 million people, or 50 per cent of the population. The aim is to reach 70 per cent by the end of 1994 and 90 per cent shortly afterwards.

Rabbit's closure marks the end of the Telepoint experiment, which was intended to provide a cheap, one-way portable phone service to compete in the market with the established mobile operators.

BT, Mercury and Ferranti have already failed in their attempts to provide the Telepoint technology, also used by Hutchison, with popular appeal. Telecommunications analysts have been convinced for some time that Hutchison would have to shut down Rabbit.

The company has built 12,000 base stations in centres of high population and along main arterial roads to transmit Rabbit calls, but so far it has attracted only 9,000 subscribers. Hutchison said a review of its telecoms businesses showed that Rabbit was not suitable for the UK market and should not be continued.

By contrast, Hutchison's Telepoint operation in Hong Kong, a much denser location, has signed up 70,000 subscribers in the past 18 months and is making a profit.

In the UK, Rabbit has suffered from more than the limitations of one-way communication. Its initial price advantage over cellular mobile phones has been rapidly eroded, particularly by the arrival of Mercury One-2-One, which offers free calls to off-peak users.

Existing customers are to be offered new Vodafone or Cellnet mobile phones in exchange for their Rabbit Motorola or GPT handsets, together with free connection and a subsidised monthly subscription for a year.

Alternatively, they can take pounds 100 in cash for their handsets or opt for free access to Hutchison's new PCN network and a free handset.