As other operators axe their 3G plans, it seems strange for Hutchison to buy yet another license. But the company has several advantages – in particular, chairman Li Ka-shing’s willingness to play a very long-term game. In five years’ time, Hutchison will be a leading mobile operator throughout Europe and Asia. Making returns on its investments, however, will take much longer.
Hutchison Whampoa has made an offer for Telia’s Finnish 3G license.
Hutchison Whampoa has made an offer for Swedish telco Telia’s 3G license in Finland; the license is vacant because Telia is merging with Finnish operator Sonera. While reselling licenses in Finland is forbidden, Hi3G plans to buy all of Telia’s Finnish mobile operations as a going concern, so the deal should be permitted.
But why is Hutchison stepping up its investment at a time when operators are pulling out of (or at least delaying) 3G left, right and center, and the prospects look particularly bleak for new entrant operators?
The simple answer is, because it can. Unlike debt-plagued Western operators, Hutchison doesn’t have to worry about finding financing. The parent company, dominated by founder and chairman Li Ka-shing, has enormously deep pockets – and isn’t looking for short-term returns.
Mr Li’s investment might well pay off. Hutchison is in a far stronger position than any other new entrant 3G operator. It has serious geographical reach, and the best relationship with handset manufacturers of any mobile operator. Its European 3G team also includes several of the people who created Orange.
Even so, it will take Hutchison a long time to get a return on its investment (quite possibly, the company could get a better return on its capital elsewhere). But Mr Li is not likely to change his mind; Hutchison is almost certain to put up the money needed to launch 3G services across the world. Rivals’ delays and cancellations will then work in its favor.
In five years’ time, Hutchison will rank alongside Vodafone as a major mobile player across European and Asia-Pacific markets. Making money out of it all will take rather longer – but Hutch is in for the long haul. The Finnish deal just highlights its determination.
Related research: Datamonitor, i-mode in Europe (BFTC0682)
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