Hutchison's 3 loses customers in UK

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The Independent Online

3, the "third generation" mobile phone business, has been hit by fierce competition and the loss of customers in the UK, contributing to a delay in profitability at the 3G businesses owned by Hong Kong's Hutchison Whampoa conglomerate.

Hutchison's 3G businesses, which are spread across nine countries, made a collective loss of HK$12.0bn (£820m), before interest and tax, for the first half of the year. The result was a 40 per cent improvement on the loss seen for the period last year, but the company said that it would not, as previously targeted, now see positive EBITDA (earnings before interest, tax, depreciation and amortisation of goodwill) in the second half of this year. This should now occur in the first half of 2007, the company said. The EBITDA loss was HK$4.2bn (£285m) on the six months to June 2006.

Financial results for the UK business were not broken out separately. The company managed to grow customers by 4 per cent in the UK to 3.75 million during the first six months of this year. UK revenues grew by 16 per cent to £700m, while revenue per user jumped 20 per cent to £41.51. However, Hutchison warned about the UK: "Churn [loss of customers] for the first-half was higher than expected, reflecting fierce competition and the poor average quality of the customer base at the end of 2005. Churn has progressively been reduced over the first half and was 3.6 per cent for the month of July."

Michele Mackenzie , senior analyst at the industry consultants Ovum, said: "Delaying the break-even target date is not the only setback that the company has suffered this year. Earlier in the year it was forced to delay its IPO for 3 Italia because it was unable to achieve its target price."