ASIA : Merrill Lynch has stated that Hutchison Whampoa's 3G Wireless business has been pigeon-holed as looking gloomy, but that this is not indicative of the medium to long term outlook.

Inset Canning Fok, Chairman of Hong Kong's Hutchison Whampoa.

The current bleak outlook and disappointing sales are mainly due to a lack of handsets as opposed to a negative response to the idea of 3G video conferencing and the new 3G wireless technology.

Merrill Lynch maintains a " Buy" rating on Hutchinson Whampoa shares with a HK target price of HK$70. Merrill Lynch predicts increased subscriber growth and increased APR in the medium term.

The majority of investment banks expect Hutchison to miss its 2003 year end targets of one million handset sales in both Italy and the UK. Merrill Lynch predicts this target will only be achieved in the summer of 2004.

It further confirmed that the problems which Hutchison 3G ( 3 in Italy and the UK ) are experiencing are not uncommon to an earlier mobile start-up called Orange. 3's current performance is no worse than Orange at when looking at similar development stages.

Merrill Lynch expects 3 UK to have 250K subscribers and 3 Italy to have 400K by end of 2003.

This makes a shortfall of 1.35 Million subscribers on the target figure set by Hutchison Whampoa Chairman Canning Fok back in the heady days prior to launching 3G in Italy and the UK.

It is now expected that Hutchison will hit break even in 2007.