March 22 2004

The UK's only 3G phone operator is only about halfway towards achieving its target of one million subscribers. Just over a year after launching the UK's first 3G network, Hutchinson Whampoa's 3 has 361,000 subscribers, according to its financial results, published on Thursday.

The group has signed up just over one million subscribers worldwide, but this figure falls short of the company's original target of one million subscribers by the end of 2003 in the UK alone.

The disappointing results did not come as a surprise because in its financial results for the first six months of 2003, which were released last August, parent company Hutchison Whampoa revealed that it had signed up 155,000 3G customers in the UK. This was taken as firm evidence by analysts that Hutchison's 3 service was not going to hit its targets.

However, the company remains upbeat about its prospects and blames "SARS, the war in Iraq and an increasingly competitive world environment" for its "difficult year". In its financial report, 3 admitted its problems were intensified late last year because suppliers had difficulties delivering enough handsets, but the company said those problems have now been solved: "During the third quarter, suppliers only made limited deliveries, seriously impairing the Group's ability to increase its customer base… This issue has been resolved. The Group's suppliers commenced delivery of new handset models in commercial quantities and as a result of which sales have progressed very well."

The future for 3 could get worse as rivals prepare to launch competing 3G services. Unlike 3, which has concentrated its sales and marketing efforts on the consumer market and video calling services, T-Mobile and Vodafone will targeting the lucrative business market with data card products that allow notebook and PDA users to connect to the Internet at broadband-like speeds when a Wi-Fi connection isn't available.