Newspaper article The Evening Standard (London, England)

Hong Kong's Superman Takes His Biggest Gamble; [Pounds Sterling]11 Billion Mobile Phone Network Called 3 May Be Wrong Number for Li Ka-Shing

Newspaper article The Evening Standard (London, England)

Hong Kong's Superman Takes His Biggest Gamble; [Pounds Sterling]11 Billion Mobile Phone Network Called 3 May Be Wrong Number for Li Ka-Shing

Article excerpt

Byline: RAY HEATH

IS HONG KONG'S billionaire " superman" about to blow his reputation as one of the world's shrewdest tycoons? Could Li Ka-shing be dialling the biggest wrong number of his life with his pound sterling11 billion mobile phones network, known simply as 3?

We will soon know. This week, 500 or so selected individuals in London will be receiving brand new 3 network handsets, operated by Hutchison 3G, the 65-owned British offshoot of Li's global ports-to-telecoms conglomerate, Hutchison Whampoa.

For Li, the man behind the Orange mobile brand, it is the start of what is being seen as the biggest single gamble of his remarkable business career.

The upmarket NEC-made mobiles will, it is claimed, give the privileged few unrivalled links with other mobile phone owners in Europe. But will this be the start of a new telecoms revolution, or will it be a stillborn experiment that will join thousands of other dud applications on the technological scrap heap?

Despite the success of Orange, not all the precedents are encouraging. Li's involvement in UK telecoms started with the ill-fated Rabbit mobile phone venture, which collapsed in 1993 with just 9000 subscribers. However, the question of failure this time, when the stakes are so much higher, is one that no one inside the Hong Kong-controlled company will - or can - entertain.

Canning Fok, Hutchison's chief executive in Hong Kong, has no doubts that 3G in Britain and Europe will succeed, and that shareholders' money is already safe. Fok, in London this week overseeing the trial of the 3 service, says: "There is no question that it is going to work. Even if there are problems, they will be overcome but, most important, this is a done deal, we have the finance already arranged. There is no risk.

"People were worried when we launched Orange, but then we also had the finance in place, and that is the crucial factor. 3G is a fully funded business plan and we will make it work."

However, his enthusiasm is not shared by some observers in Hong Kong, who look anxiously at the pound sterling4.25 billion UK 3G licence fee, and fret about whether income from 3 can ever meet the cost of building and running the infrastructure.

The amount of Li's UK investment has not been revealed but Hutchison's-share of the investment in the European 3G network is expected to be about US$17 billion (pound sterling10.8 billion).

"It's going to cost him up to $17 billion to get this off the ground but there is no proven revenue stream," says one Hong Kong observer. A UK-based consultant points out that not having an established network in Britain will make the job even more difficult. It is likely there will be too many players in the British market, and one of the five who applied for licences will fall by the wayside, he adds. …

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