Market Hots Up, So Hutchison Switches 3g Focus To The Extras

Sydney Morning Herald

Thursday November 3, 2005

Julian Lee Marketing Reporter

For 2 1/2 years Hutchison Telecom has had the 3G mobile phone market to itself. It has spent more than $100 million in advertising and gone from the zen-like launch ads to harder price-capped messages delivered by Thunderbird-style puppets.

But now that Telstra and this week Vodafone have launched their own 3G services, 3 is switching its focus in order to get the most out of its existing users rather than trying to poach new ones from rivals.

Increasingly executives are talking about the non-voice average value per user (ARPU). Tanya Bowes, 3 communications and corporate affairs director, said the company was "happy" with the ARPU rate - twice the industry average - and was on track to make a profit but she would not comment on the slower growth rate.

"While we may not necessarily talk about subscriber numbers those measures, ARPU and EBITDA [earnings before interest, tax, depreciation and amortisation] are the way we measure our business and we are happy with those measures," she said.

Analysts say the subscriber take-up rate slowed in the second half of the year. They estimate 3 has 600,000 customers, up from 532,000 in June but rising at a slower rate than in the launch phase from April 2003 to December 2004 when 3 signed up an impressive 413,000 customers.

IDC analyst Warren Chaisatien said the shift in strategy to increase usage of extra services such as mobile TV, music and games made sense. "Two and a half years ago they were unique. There was an excitement around the launch. Now that 3G services will become ubiquitous and mobile penetration reaches a point where it will be hard to acquire new customers it makes sense to get them [customers] to spend more."

At $16 - $7 for paid content and the rest from sending SMSs - 3 says its ARPU rate is twice the industry average.

Scott Taylor, 3 general manager of content and services, said he was "blown away" by how much content customers were utilising on their handsets. Two-thirds regularly use services other than voice and half pay for extra content or services. He is also encouraged by the amount of time they are spending on mobile TV, for example. The Super Series cricket netted 65,000 streams of an average 11 minutes each while Big Brother saw 2 million streams of 41/2 minutes each, an example of TV "snacking". More channels would be available soon and films were being considered, he said.

Last week 3 put up for review its advertising account, which the incumbent, The Moult Agency, said it will defend. Ms Bowes said while the Thunderbird-like puppets succeeded in "building brand awareness and cut-through ... we need to build our brand beyond that for content and across new segments and for a broader demographic".

© 2005 Sydney Morning Herald

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