It’s now nine years since Li Ka-shing took the biggest gamble of his long and illustrious business career by placing a gigantic bet on 3G mobile technology.
Nine years later and the biggest thing Asia’s richest man has to show for it is a shocking great pile of losses that have been a constant drag on the results of his port-to-telecoms conglomerate, Hutchison Whampoa.
3, the seven-country strong group of mobile phone start ups that Hutchison brought to life at the turn of the century, continues to haemorrhage cash – as this month’s half-year results reveal.
3, which includes 3 UK and Ireland, racked up losses of HK$1.81 billion (£142m) for the six months to June 30.
The good news is that represented a 66 per cent improvement on the losses in the same period last year.
But the bad news was that 3 once again postponed its target date for achieving positive earnings before interest and tax [EBIT].
3 watchers are well used to Hutchison’s annual refrain on this topic, which has almost become a running joke, so it should come as little surprise that there is yet another delay.
“Definitely we are going to be very close [to positive EBIT for 3G],” Ka-shing’s closest lieutenant Canning Fok told journalists.
“But because of the economic situation, the chairman wants to be more conservative.”
Ka-shing’s written comments in the financial statement were even more conservative. “Barring any further significant adverse market or regulatory developments, management expects loses before interest and tax from the 3 Group to continue to narrow in the second half of the year,” it reads.
Ka-shing adds, at the end of his statement: “The group’s second half performance should be better than the first half and I have full confidence in the long term prospects of the group.”
The fact that he still has to say that looks telling in itself, some might say.
Ka-shing’s problem is that the global financial crisis has dented profits at the rest of his, normally steady, businesses such as ports, so 3’s quest to finally crack the profitability equation has gained more urgency.
Full article in Mobile News issue 446 (August 24, 2009).
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