Critical time for Hutchison CT2 in UK
HUTCHISON Whampoa's launch of its CT2 network in Britain faces a critical first six months ahead building subscribers, says group managing director Simon Murray.
''What we want is 100,000 people [subscribers]. It may take six months, it may take a year or a year and a half as long as it continues progressing in the right direction,'' Mr Murray said.
''The first six months of 1993 will tell us whether we have got a good business or not.'' He was responding to a report from the private subscription Financial Times Telecom Markets which said Hutchison's Rabbit network had signed 5,500 subscribers to the end of last year instead of the forecast 50,000.
Hutchison Telecom in Britain has yet to release official figures of handsets sold and subscribers listed on the system.
The ''official start-up'' was in November-December, but Hutchison had consumers on the system before then and the ''official opening'' would be this month, Mr Murray said.
''Let me put it this way. If you open a restaurant and expect 100 people to come and only 50 turn up you do not close the restaurant,'' he said.
The Cable and Wireless cellular telephone service had only about 1,500 users in the first two years but now there are about 80,000 or 90,000.
The publication said: ''Hutchison Telecom UK has 5,500 subscribers to its Rabbit System, having said in July that it hoped to sign up 50,000 customers by the end of this year .'' It said Rabbit was being marketed as a home cordless telephone which could also be used on the move.
''This strategy is being undermined by falling prices for analogue CT1 based cordless telephones which sell for a fraction of the price of CT2 models,'' said the publication.
Brokers in London and Hongkong were split on the implications of a 5,500 CT2 subscription meant for Hutchison Telecom and its parent.
Some, such as Kim Eng Securities, said it would make no difference to their forecasts as bad news from a number of operations was already factored into their numbers.
Fears were raised with many that a further provision in the accounts, to add to the $1.42 billion provision for Husky Oil, would have to be made.
Estimates of losses in Britain, where Hutchison's main investment is the construction of a personal communications network, focused on the GBP100 million (about HK$1.16 billion) level.
Wardley James Capel head of research Philip Niem said this might not necessarily follow, as Husky was taken as an investment in the group accounts and a write-down was needed to follow prudent accounting practice.
The losses at Hutchison Telecom UK were more likely to be taken in the annual depreciation of company assets over a number of years, as long as an auditor could be convinced that the company was expected to be profitable in the medium term.
S.G. Warburg Securities analyst Peter Golob said: ''I am surprised Hutchison is still in the telecommunications business [in Britain]. I believe they are packaging the operation, with heavy promotion to add value to the name, for a sale.'' At Crosby Securities the estimated write-off on a withdrawal from British telecommunications altogether was $2.5 billion to $3.5 billion, given the company had already stated it had spent GBP350 million there late last year, and some ?50 million might be accrued through the sale of selected assets.