£4.7m-a-day 3G losses hit Hutchison

GLOBAL third-generation mobile phone operation 3 lost £4.7m a day last year, its Hong Kong parent Hutchison Whampoa admitted today. But executives claim the venture is on course to break even.

The swathe of red ink had been expected as the conglomerate backed by Li Ka-shing - Asia's richest businessman - weathers punishing start-up costs in Britain, Italy and elsewhere.

'I believe the market has begun to recognise the value created in this business which, going forward, will be judged more as opportunity than risk for the group,' Li said as he delivered the full-year figures.

'Although we do not underestimate the impact of competition in 2005 and subsequent years, we remain confident the 3 group will continue to gain market share and take its place as a strong player.'

In all, Li has wagered about £11.5bn on 3G telephony, a commercially unproven technology that marries mobile phone services with high-speed internet access. The pioneering service started in Britain two years ago, with 3 the first player in the market. In recent months, however, it has started to face direct competition from Vodafone and O2.

Last year, the 3 division lost HK$25.32bn(£1.73bn) worldwide, Hutchison said. The losses - which work out at £4.7m daily - weighed down the group's overall performance but were offset by a series of asset sales in other divisions.

In Britain, Li said 3 now has 3m customers compared with 361,000 just 12 months ago. Worldwide it has signed up 8m. Hutchison revealed that it spent an average of €271 (£186) to attract each new 3G user in the second half of the year, down from €299 in the first half.

Despite the rising competition, those critical acquisition costs are expected to drop further this year as more suppliers offer 3G-compatible handsets, Li said. He added that 3 is expected to break even operationally - including new-customer costs - in the second half of this year and contribute to the group's bottom line from next year.

Li's commercial interests span the globe and include major holdings in the ports industry around the world. Hutchison Whampoa also has extensive retail, property and energy operations and dominates the business landscape in Hong Kong. Billionaire Li enjoys a near-legendary reputation in Asia for his investment savvy and daring, and is often dubbed 'Superman' in the region's Press.