Independent, The (London): OUTLOOK: Hutchison plays at Russian roulette in 3G landgrab gamble

LI KA-SHING, chairman of Hutchison Whampoa, is arguably the most brilliant and canny of the billionaire financiers to have emerged from post war Hong Kong - and there have been quite a few of these - but has he not wholly lost his marbles with his $16.7bn bet on third generation mobile telephony? Hutchison is a huge enterprise, with more than $20bn of cash and liquid assets at its command, so Mr Li is not exactly betting the ranch with his gamble on 3G, but it's one hell of a roll of the dice nonetheless, and from this side of the tables, it looks as if the odds are heavily stacked against him.

According to figures released yesterday, Hutchison has booked $500m of start-up losses on the venture in the first half of this year alone. For this it managed to sign up a paltry 155,000 subscribers in the UK and 300,000 in Italy. The great bulk of these subscribers have been acquired in the two months since 3 abandoned its attempt to sell the new network as a premium product, and instead started flogging its phones as a heavily discounted, bog standard, voice telephony service. Since then, the phones have been flying off the shelves, but the cost has been horrendous.

A glutton for punishment, 3 is sticking to its original forecast of achieving 1 million subscribers in both Britain and Italy by the end of the year, a target which even when it was set looked optimistic in the extreme and now seems almost wholly incredible. To achieve the target, 3 seems prepared to commit the financial equivalent of hari kiri by discounting even more heavily than it is already and by launching its first ever pre-paid package. With 3's mobile handsets costing upwards of EUR700 apiece, Mr Li seems to be moving from conventional roulette to the Russian version of the same game. To enter the pre-paid market with such an expensive piece of kit is going to be extraordinarily expensive.

There are a number of possible explanations for Mr Li's apparent bravado. When Orange was launched onto the UK market in the early 1990s, people said much the same thing as they are saying now about 3, and yet Hutchison proved them all wrong. Furthermore, it eventually made so much money out of Orange that the gamble it is now taking with 3 may not be as insane as it seems. There is a perfectly reasonable case, after a spectacular win, for putting half the money back on the tables, knowing that whatever the outcome, you'll still be heavily in the money at the end of the night.

Even so, this is gutsy stuff. Hutchison has already paid a king's ransom for its 3G licences, which it didn't have to with Orange. The market is also more mature than it was then, and infinitely more competitive, with a number of mobile virtual network operators battling for customers alongside the five licenced networks. The regulatory environment is harsher too.

Anyone else in Hutchison's position would already have written off the cost of the 3G auctions and abandoned the quest. Instead, Hutchison seems prepared to spend whatever it takes to buy its way into the market. Yet this is not like battle between Sky and OnDigital for digital pay TV, which involved giving away free set top boxes and where the winner took all. Hutchison is up against four hugely powerful incumbents. They are not about to allow the new kid on the block to eat their lunch.

Mr Li should never be underestimated. It's very much his style to bet against the crowd, and normally he wins. Is this another Li Ka- Shing masterstroke, or are we witnessing the delusions of an overly proud old man who's simply lost his touch? We'll see.