Hutchison welcomes 3G competition

Entry by Telstra, Optus and Vodafone into the third-generation mobile market this year will help rather than hurt its 3G business, Hutchison Telecommunications Australia's chief executive Kevin Russell said.

Entry by Telstra, Optus and Vodafone into the third-generation mobile market this year will help rather than hurt its 3G business, Hutchison Telecommunications Australia's chief executive Kevin Russell said.

At today's annual general meeting, Russell said competing 3G services scheduled for launch over the coming months would "increase consumer and business awareness and understanding of 3G, provide credibility for the platform as the way forward for the mobile market, and provide benchmarks for 3's offering to showcase our industry leadership.

"I strongly believe that the launches of competing 3G services in the coming months will be very beneficial to 3," he declared.

3 is Hutchison's 3G-branded service. Second generation services are packaged under the 'Orange' label.

Last August, Telstra paid AU$447 million for a 50 percent share of 3's radio access network, while Optus and Vodafone struck a similar agreement a few weeks later.

The three mobile telecommunications heavyweights are expected to launch 3G offerings in the second half of 2005.

In 2004, 3 notched up about 366,000 new customers while Orange gained 101,000 subscribers.

While "heightened competitor activity" in recent months had softened 3's net customer growth, Russell expressed confidence that growth rates later this year will "return to levels we saw in the second half of last year".

Demand is expected to be driven by the introduction of new handsets, e-mail messaging services for small to medium businesses, and a push into the Canberra market, he said, adding that migration of service revenues from 2G to 3G networks would "accelerate significantly" from the second half of 2005 onwards.

Although voice revenue was "a substantial part of the 3G opportunity," Russell said growth in data service margins was key to 3's long-term growth potential.

Over the last eight months, 3 has sold 370,000 subscriptions for content services, which includes live streaming of footage from reality television juggernaut Big Brother and continuous streaming of music videos from the Rage program.

Hutchison is majority-owned by Hong-Kong-based conglomerate Hutchison Whampoa. In Australia, Telecom New Zealand holds a 20 percent stake in the 3 business.

By the end of March this year, the 3 Group had recorded a global customer base of more than 8 million, with more than 1.7 million new customers added in the first quarter.

Hutchison Telecommunications Australia Chairman Canning Kin-Ning Fok told the meeting with the future growth in 2G predominantly limited to prepaid, "we have pulled pack from the Orange post-paid offering and have begun an active campaign to migrate appropriate Orange customers onto 3".