Hutchison legal scrap over call charges

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The Independent Online

Hutchison 3G, the company behind the "3" mobile phone, is locked in a legal battle with its regulator in a case that could force it to slash its call charges.

Hutchison 3G, the company behind the "3" mobile phone, is locked in a legal battle with its regulator in a case that could force it to slash its call charges.

Britain's newest mobile phone operator charges more money to connect incoming calls than most of its rivals. However, Hutchison 3G is worried that a recent ruling by Ofcom, that its has "significant market power", could force it to reduce its rates in line with the other operators' rates.

Hutchison 3G disputes that it has significant power as it has been operating in the UK for less than two years and is still building its network. It has taken its case to the Competition Appeal Tribunal which is expected to rule later this year.

The case is critical to Hutchison 3G's future in the UK. The company's incoming call charges, known in the industry as wholesale call termination, is in some cases more than 50 per cent higher than other operator's.

Hutchison 3G's rivals suspect that the company is using the extra revenue to fund big discounts on outgoing calls, in an attempt to win customers.

If Hutchison 3G were forced to reduce its incoming charges then it would face a huge squeeze on its margins. Hutchison 3G, which is owned by the Hong Kong conglomerate Hutchison Whampoa, declined to comment.

A spokeswoman for Ofcom said: "If Ofcom designates a company having significant market power then [it] has the power to impose charge control as appropriate and proportionate."

The issue of Hutchison 3G's charges will be highlighted on Thursday when it releases its latest subscriber figures. Across the nine countries it operates in, it is expected to reveal three million subscribers, according to investment bank Nomura.

But in a report published on Friday, Nomura says that because of Hutchison 3G's promotional discounts and offers ,"we do not believe that H3G will ever make an adequate return on capital".

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