Ofcom ruling to hit 3UK revenues hard

Despite arguing that a decision forcing 3UK to cut its termination charges would severely damage its future revenues, the U.K. regulator Ofcom has stated that the operator must reduce the costs it imposes on rival companies to connect phone calls to its network by a hard-hitting 45 per cent.

Earlier this year, the owners of 3UK, Hutchison Whampoa, said that it's money-draining 3G unit finally achieved its cash flow target and that, "barring any further unfavourable regulatory or market developments, 3UK would turn a new page in 2008 on a path to achieve positive monthly EBIT on a sustainable basis in the second half of 2008 and full year positive EBIT in 2009."

Regardless, the Competition Appeal Tribunal that heard 3UK's viewpoint noted that mobile operators had traditionally set the rates at levels 'much higher' than the costs of connecting calls to their networks. It said the operators had used some of the income to subsidise deals they offered customers.

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