3 hints at European expansion

[Ben]

Hong Kong’s Hutchison Whampoa says its 3-branded mobile business will continue to aggressively look at acquiring rivals in Europe – but has warned it could walk away from a proposed deal in Austria if regulators study the deal for too long.

“If there is ever a consolidation to be done, then we are the consolidator, not the consolidated,” group managing director Canning Fok said in Vienna yesterday, reports Bloomberg. “We’ll end up being the surviving leader. I’m not interested in anything less.”

In Austria, the firm is attempting to merge its local unit (3 Austria) with rival Orange Austria as part of a EUR1.3 billion deal. The deal would reduce the number of players in the market from four to three, creating a strong challenger to Telekom Austria’s A1 and Deutsche Telekom’s T-Mobile.

The European Commission opened a full antitrust probe into the deal in July. Fok said that Hutchison will seek a judicial review if the transaction is blocked but won’t commit to the plan for an unlimited time.

“The longer the process takes, the weaker the business case will be,” he told reporters yesterday.

He added that 3 Austria was prepared to let others access its network as MVNOs in order to ensure competition in the market.

Meanwhile, Fok said that 3’s European businesses were benefiting in the continent’s financial crisis due to customers seeking out its low-cost deals. The group has almost 30 million European customers.

“In good times, people don’t see the value that we’re offering as that relevant,” Fok said. “But in times like this, it’s very good for us. We have growth.”

http://www.mobilebusinessbriefing.co...0cbf458f4b7262

[Ben]

Looks like ambition for the Three brand in Europe might be returning... is Three ready to play the long game at last and be a force in mobile in the West?

[Hands0n]

I have always maintained that Three, and their investors in particular, are in this for the long game. No US, UK or European venture capitalist would have had the staying power. HWL know exactly what the game is, they've always been deadly serious, and this is the kind of news that reinforces everything that I have ever said about Three and HWL.

Critiques have said that Three is a budget brand, ignoring the fact that they have economies that the legacy providers simply do not have accesible to them. They leverage those into the business and the customer.

I only wish that Kanning Fok would pay some serious attention to their now-legendarily awful Customer Services. That part of their organisation is the ruination of very much of the good stuff that Three deliver.

[3GScottishUser]

I'm not convinced HWL were ever in it for the 'long game' as their previous track record with Orange was to build and dispose of it as soon as the value was right. 3G looked like an opportunity to repeat what happened when GSM exploded in the early 90s but sadly for HWL it took much longer for a killer application to come to light for the technology and HWL have been bogged down with ferocious competition especially in the UK.

Things have changed and the telecoms markets have consolodated, most in Europe are now very mature markets so I don't think Mr Fok has too many options. He either has to grow to compete and that will mean expensive acquisitions, merge with others for a share of their business (HWL have already done this in Australia with Vodafone), or get out of the market. The latter may still be on the cards in some markets if the sale of spectrum does not go HWL's way.

I'm not sure why Fok figures 3 will benefit form recession in Europe by picking up customers looking for lower priced deals, 3's from what I can see are broadly similar to most others and at the budget end of the market (non-smartphones) 3 are more expensive in the UK.

[Ben]

Thing is, the market is massively shifting towards smartphones, and Three is well positioned at the budget end of the smartphone market. I think it's quite plausible that it could grow during these times of austerity in developed markets by gently eroding the share of its more established rivals.

[3GScottishUser]

Thing is, the market is massively shifting towards smartphones, and Three is well positioned at the budget end of the smartphone market. I think it's quite plausible that it could grow during these times of austerity in developed markets by gently eroding the share of its more established rivals.

Do you think so?

I can't see much difference in the offerings of the majors on smartphones and Vodafone and 02 have now started selling both own branded and branded (Hauwei and ZTE) handsets at low and premium prices. 3 were quick to offer ZTE and Hauwei handsets but seem to have backed off favouring premium brands. I'm not sure that was a good move after investing tons of cash establishing their own well received inq range and being one of Hauwei's biggest customers for dongles and MiFi devices. 3's marketing strategy is a bit of a mystery at times. Orange and T-Mobile have now jumped on the budget chinese smartphone bandwagon leaving 3 with only established branded product on offer. For example T-Mobile offers the Vivacity smartphone with 5MP camera 3G, WiFi, Android, 3.5" Screen..... pretty decent at just £7 a month on a 24 deal for low users who want 50 mins, 100 SMS + 250MB Internet. 3 have nothing that comes close. Their cheapest smartphone is the Samsung Galaxy Europa with a far inferior spec at £10 a month with 100 mins, 5000SMS + 250MB.

I think it has long been a misconception that 3 have a strong budget smartphone offer but they do have highly competitive high end offers and that appears to be the focus of their marketing despite what Canning Fok has stated.