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3 claims to have squared the circle

Operator reports positive earnings at last

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Mobile operator 3 has finally hit a key profit milestone, ending a terrible week for the wireless sector on something like a positive note.

In its year-end results 3 said it had turned earnings-positive for the first time. It also relayed a host of other upbeat statistics.

"Barring any further unfavourable regulatory or market developments, 3 Group will turn a new page in 2008," said Li Ka-shing, chairman of 3's parent company Hutchison Whampoa.

The mobile operator has, since its 3G launch, been trying to produce positive earnings, or least positive EBITDA. Finally, it has achieved it, turning around EBITDA of minus HK$22bn ($2.83bn, £1.42bn) in 2005 to become marginally positive at plus HK$1.2bn ($154m, £78m) in 2007.

Revenue was up 18 per cent to HK$59.9bn (US$7.7bn, £3.9bn) and its subscriber base up 20 per cent on the year, partly driven by its cut-price mobile broadband offering which now has 823,000 customers.

El Reg did notice, however, that 3's customer numbers were massaged upwards by including rocketing 3G growth in Israel, Hong Kong and Macau. The UK figure for subscriber growth was 9 per cent.

3 also reported that its British HSDPA network was "progressing well", and that it now covers 89 per cent of the population.

The news makes a helluva change after a torrid two weeks for the 3G industry. Texas Instruments, one of the largest suppliers of chipsets for mobile phones, cut its financial forecast, blaming a lack of demand for 3G handsets from one of its major clients. Though it did not name the client, analysts suggested it was Nokia, and shares at the Finnish phone maker fell six per cent.

Days later, Motorola said it would make redundant half the staff at its Birmingham design centre in an effort to turn around its ailing mobile device division, which had reported a $1.2bn loss for 2007.

It didn't take long for Moto to go to even further lengths, saying it would sever that division from the rest of the company by 2009.

Moto has already lost its head of mobile Stu Reed, chief marketing officer Casey Keller, CTO Padmasree Warrior and CEO Ed Zander over the past year. ®

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