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Last Updated: Friday, 1 April, 2005, 13:53 GMT 14:53 UK
Losses mount at 3 mobile company
Anna Friel starring in an advert for the 3 mobile phone network
Actress Anna Friel promoted 3's UK mobile phone service
Mobile phone operator 3 Group suffered heavy losses in 2004 as it sought to sign up customers for its 3G services.

Pre-tax, pre-exceptional losses totalled 37.5bn Hong Kong dollars ($4.8bn; 2.5bn), as 3 spent more than US$1bn on winning new customers.

The firm made a HK$19.6bn ($2.5bn) pre-tax, pre-exceptional loss in 2003 when it only traded for seven months.

The firm, owned by Hong Kong's Hutchison Whampoa, has more than eight million customers.

'Solid progress'

3 launched its UK third generation services - which enables users to download data at a faster rate than before, offering better quality sound, pictures and video - in 2003, ahead of established operators such as Vodafone.

As well as high acquisition costs, Hutchison said the scale of 3's losses was due to non-operational factors such as new accounting standards and currency movements.

3 achieved substantial business momentum in 2004
Li Ka-Shing, Hutchison Whampoa chairman

Losses before interest, tax, depreciation, amortisation and customer acquisition costs narrowed to $923m from $1.4bn while revenues rose to more than $2bn.

The network had made "solid progress" in 2004, Hutchison insisted, building a strong position in its core markets and generating revenues per user above the market average.

It now has more than three million customers in both the UK and Italy.

Looking forward, Hutchison said 3's losses would narrow in 2005 as the availability of cheaper handsets forced down customer acquisition costs.

Competitive impact

The company is expected to make an operating profit in 2006.

"The 3 Group achieved substantial business momentum in 2004 and will continue to press its first mover advantage through 2005," said chairman Li Ka-Shing.

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

At a group level, Hutchison Whampoa - whose interests span telecommunications, property, retail, manufacturing, transport and finance - saw its pre-tax profits fall 5% to HK$6.6bn.

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