3 has too few handsets to meet million user target

Their phone calls now are the cheapest you can get; people are queueing up to buy video handsets - and yet Hutchison 3G is going to miss its year-end target of a million subscribers by miles.

Yesterday's Sunday Times predicts that the company "has run out of the NEC handsets that have accounted for the bulk of sales so far and has only limited supplies of two new phones from Motorola". The report concludes: "Sales have plummeted in recent weeks. Industry sources reckon the company is signing up some 2500 new customers a week, down from perhaps 15,000 in June and July."

Just how bad this is, is detailed in the long analysis the paper.

"By late August, 3 had signed up 155,000 customers in Britain, but its run rate was way below the level needed to achieve its sales targets," it reports.

The strange thing, it adds, is that the company seems to be living in a fantasy world. The report quotes Canning Fok, managing director of parent company Hutchison Whampoa, as saying he's "still confident" that 3 can achieve its ambition - which is a million customers by the end of the year.

This is painfully reminiscent of last year's time spent in a river in Egypt. At that time, there were no phones - really no phones, not just a shortage - and yet 3 insisted that it would be starting before the end of 2002.

Last year, its publicly pronounced faith in being able to achieve the impossible was shown to be fantasy.

This year, it seems equally out of touch with reality - but at the end of the day, its network is up and running, and its pricing structure is looking reasonable. The question that outsiders simply can't judge is this: how much is parent company Hutchison Whampoa prepared to lose before revenues start building up?

Nobody thinks HW is careless of its money - but on the other hand, it did sell Orange right at the top of the market, to France Telecom. It's not short of cash. Then again, it did replace last year's fantasy-pusher after the launch. It wouldn't be a big surprise if another scapegoat were to be found this time, too.

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