Hutchison Strong Despite 3G Losses

Hutchison Whampoa, the Hong Kong-based telecom multinational, posted a net profit of US$1.6B despite losses of $US1.1B from their 3G unit '3'. Hutchison says it stands behind its 3G investments, and clearly has the cash flow to do so. Meanwhile, the subscriber acquisition cost (SAC)fell for '3' to about $310. Dropping SACs are good news, but a $300+ SAC is only appropriate for premium customers, who will quickly pay back the marketing loss. With '3' targeting low-end users with low-price calling plans, they need to have a significantly lower SAC.

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