Body blow to 3 as KPN pulls loan

28 Apr 2003

It has emerged that the only operational 3G player in the UK, 3, has been dealt a body blow with the news that Dutch telco partner KPN has turned down a request for a £150m sterling loan.

3, a partnership between Hutchison Whampoa, KPN and NTT DoCoMo, had asked for more money to help with its infrastructure rollout in the UK and Italy.

A week earlier, NTT DoCoMo, the Japanese mobile giant which holds 20pc stumped up £200m sterling. Meanwhile Hutchison Whampoa said it would increase its own loan to £800m sterling from £650m sterling to make up the shortfall left by KPN’s reluctance to spend more on the venture.

The news of KPN’s decision not to sink further cash into 3G was welcomed by telecoms analysts across Europe who have described 3G ventures as being unwieldy and unlikely to deliver a swift return on investment. Others have mooted a potential link-up between KPN and MmO2, which would have proven awkward if it continues to invest in 3.

Hutchison 3G has been not only beset with cash problems since launching over a month ago, it has had to contend with software glitches and handset shortages that may obscure its plans to have two million customers in both Italy and the UK by the end of this year.

The company wants the banks to extend the £2bn sterling loan, which matures next year – for a further year as well as revise its loan conditions. It argues that delays in launching its services have affected its revenue prospects for the year.

By John Kennedy