The numbers stack up for Three

Hutchison Whampoa has bet big on the Irish market since its entry in 2005

Canning Fok, group managing director of Hutchison Whampoa Limited, at the company’s HQ on Clarendon Row, Dublin. PHOTOGRAPH: BRENDA FITZSIMONS

Canning Fok, group managing director of Hutchison Whampoa Limited, at the company’s HQ on Clarendon Row, Dublin. PHOTOGRAPH: BRENDA FITZSIMONS

 

In the movies, Superman’s accomplice was Lois Lane, but in real life it is Canning Fok, a 52-year old from Hong Kong.

Li Ka-Shing, the richest man in Asia, is nicknamed after the caped crusader in his native land. His sprawling empire is mostly wrapped up in the conglomerate Hutchison Whampoa, which owns a blizzard of companies including Three mobile. Fok runs the lot: he minds all of Superman’s money.

Fok, Hutchison’s global managing director, was in town yesterday to check on the progress of Three’s €850 million purchase of O2 Ireland, which is being scrutinised by competition authorities in Brussels. It could be early next year before they give their answer.

Marriage
In the meantime, Three is ploughing ahead with its preparations for the marriage.

Fok is a business superstar back in Hong Kong, but he almost moved to Ireland when he finished college.

“I wanted to be a chartered accountant, so I wrote to firms all over the world asking to be an articled clerk.”

Only one firm replied, a chartered accountants’ practice in Dublin. Fok can’t remember its name.

“I had never set foot here, but I told them I loved the green island. They said ‘why do you want to come to Ireland? We won’t pay you and you’ll only get an allowance.’ I said ‘I didn’t care’, I was enthusiastic.”

He didn’t get the job, and eventually fell in with Li. He looks all the better for it.

Three, whose Irish boss is Waterford man Robert Finnegan, has bet big on the market here since its entry in 2005. Subscriber numbers have grown quickly in recent years, breaching the 500,000 mark during the summer, giving it 10 per cent of the market.

But it has been a costly journey. In the first six months of this year its earnings moved into positive territory for the first time. But it has accumulated losses of €500 million and invested a similar sum in infrastructure.

Throw in another €200 million outlay on 4G and the potential €850 million for O2, and Hutch’s Irish gamble tops €2 billion. Not to mention the €2.2 billion it bid in a failed attempt to snatch Eircom from examinership.

“We want to be successful, we want to make a statement here,” said Fok. “Look at the churn of customers in Ireland, it is only 0.8 per cent. So our base is small, but our customers are happy. A lot of people say that we can’t make it. But we’re still alive and kicking.”

If the O2 deal passes – and it may not be that straightforward – Three will have a market share of 37.5 per cent, within striking distance of Vodafone’s 40 per cent. “It will create competition. There is now another player that can stand up to the giant,” said Fok.

Up to €850 million – €780 million upfront with target-based payments of another €70 million – was seen by many as too high a price to pay. Fok is adamant the numbers stack up. Three needed to grow faster, he said. Its progress has been too slow.

“To go from zero to half a million subscribers took a long time. To go from half a million to something else would also have taken a long time. In the end, what did the consumer have? They only had Vodafone, eating and eating. We had to buy.”

He says the O2 deal means Three will have the scale to warrant even further investment from Hutchison.

“Ireland is way behind in terms of mobile infrastructure. I would like to put more 4G network here immediately, but the subscriber base doesn’t allow me to invest. We have to calculate return.”

By merging the two business, Fok says, the figures are “totally different”.

“Economically, we now have the mass to justify building the best 4G network in Ireland in the next two years.”

Hutchison owns businesses and infrastructure all over the world and has bet heavily on Europe in recent years – ports, water companies, telecoms, retail. Fok says he prefers mature markets for consumer businesses.

“The people in this part of the world are affluent. It is just the governments that are poor.”

Invest in Ireland
He added that if Li Ka Shing is willing to invest in Ireland, “many more will follow”.

“He is an icon in Asia. If he is willing to invest money, it is a big plus point.”

He made a courtesy call yesterday to Taoiseach Enda Kenny. So what’s his assessment of the Irish economic recovery?

“From what I heard, I think it is pretty good. They told me the deficit is narrower, unemployment is coming down slightly. It’s on the right track. But, of course I believe in Ireland’s recovery. To say it is one thing. But to do it with money is another. It means that what I say is true.”

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