Canning Fok points to a shortage of handsets because of subscriber rush Hutchison Whampoa managing director Canning Fok Kin-ning yesterday suggested that the company could again face a shortage of mobile phones - but this time for the right reasons, as subscribers rush to sign up for 3G services. In attempting to turn the tables on critics, Mr Fok projected Hutchison would exhaust its inventory of two million 3G handsets in the wake of 'very strong' demand as it continued to recruit more than 10,000 customers daily. 'The only thing we really worry about is a handset shortage,' Mr Fok said at a ceremony to launch its latest 3G handset - the LG 8120 - supplied by LG of South Korea. A lack of handsets earlier forced Hutchison to push back its two million worldwide subscriber target - originally set for December last year - by almost a year. The group, which committed US$22 billion to rolling out its service in Britain, Italy and Hong Kong, reported 1.73 million 3G users as of last month. Mr Fok said mobile-phone users had been won over by the company's cut-rate pricing strategy, while the decision by Vodafone Group, Europe's largest mobile operator, to start offering 3G services had given the technology added credibility. Hutchison launched the phone in its two main European markets last month. It is described as the 'lightest, slimmest and smartest' 3G phone available and is compatible with 2G technology. The company has two million phones in its inventory, with 800,000 from LG. The 8120 gives about 21/2 hours of video talk time to allay customer complaints about the short battery life of previous models. With a more capable 3G phone, Hutchison is looking for faster payback of its 3G business. Mr Fok said he was confident of achieving break-even in earnings before interest, tax, depreciation and amortisation next year, and in earnings before interest and tax (ebit) by 2006 at the latest. 'We have the chance to perform better than expected, and we are performing possibly better than the street is expecting,' Mr Fok said. He dismissed analyst estimates that Hutchison's customer acquisition cost was about US$1,000 each, saying it was 'substantially lower'. 'These guys do not know our cost for handsets, they just plugged in rival numbers into their formulas and worked out our numbers,' Mr Fok said. Hutchison incurred ebit losses of HK$18 billion last year, or about $50 million a day. Mr Fok said subscriber acquisition costs would drop dramatically, although he did not elaborate. Meanwhile, Hutchison is expected to spin off its mobile services in India late this year or early next year. Reuters reported Hutchison India's 15 billion rupee (HK$2.55 billion) listing will dwarf the share offer by No1 mobile firm, Bharti Tele-ventures. It has about 6.71 million subscribers.
