TELECOMMUNICATIONS: UMTS SUCCESS IN EUROPE STILL UNCERTAIN FOR HUTCHISON.

"The challenge facing Hutchison is enormous. They have done what they said they didn't want to do, which is to subsidise the sale of phones and agree to big discounts on voice communications, and this will weigh heavily on their marketing plan", says Ben Wood, an analyst at Gartner. Hutchison subsidiary H3G slashed the price of its combined UMTS handsets in the UK in June, with phones selling at around Euro 200 compared with Euro 600 at launch, and made considerable concessions on the price of calls. "They targeted customers who were attracted by the multimedia, video streaming and video conferencing. But customers in the UK are mainly interested in the competitive rates on voice calls", says Neale Anderson, an analyst at the Ovum consultancy. He believes the subscriber numbers "are not a disaster, but are probably below what the company had expected at launch". The reduction in rates in June had a "significant impact on customer sales", adds Ben Wood. But the figures given by Hutchison are "unclear" because it is not known whether they represent total sales or current subscribers. "A significant number of subscribers, around 15% to 20% of customers, have returned their phones", says Mr Wood.

The analysts say the initial target of one million clients each in Italy and the UK is...