3UK hit hard by competition authority ruling

The UK mobile operation of Hong Kong conglomerate Hutchison Whampoa was struck a severe blow on Tuesday, as competition authorities ordered the company to cut its call termination rates by 45 per cent.

Mobile call termination rates (MTR) are the charges one network operator imposes on another to connect calls on its network.

The ruling of the Competition Appeal Tribunal upholds an earlier decision by market regulator Ofcom, which found that 3 UK had ‘significant market power’ and ordered the company to cut termination rates by 45 per cent.

At the time, 3 UK warned that such a ruling would severely impact its revenue over the next five years.

In March, Hutchison Whampoa said that it’s money draining 3G unit finally achieved its cashflow target and that, “Barring any further unfavourable regulatory or market developments, 3 Group will turn a new page in 2008 on a path targeting to achieve positive monthly EBIT on a sustainable basis in the second half of 2008 and full year positive EBIT in 2009.”

Unfortunately, that target looks to be slipping further away.

In an interview with telecoms.com last year, Kevin Russell, then newly installed CEO of 3UK, hit out at regulatory inadequacies that he claims are hobbling competition in the UK market place.