Gossip

How do you divide "3" between two?

The real mystery about the German visitors to Hutchison 3G's Maidenhead offices is not whether they are from T-Mobile or from Deutsche Telekom (OK, nobody knows, but that doesn't create a mystery). No, my sources inside the reception area there say that what puzzles them, is why none of them claim to be Virgins.

"If the Chinese knew how to play this game," said my source, puzzled, "they'd at least dress some of them up as Virgins" - because without a little competition, nobody in the German telco market is going to show any enthusiasm.

That's not a mystery, either. Some unkind ex-exmployee (that is to say, "freelance consultant" formerly tasked with trying to turn Hutchison's UK operations around) has been going around suggesting that it would be a waste of time for anybody to ask to see the Maidenhead accounts. That's a nasty trick, because of course the figures are private, and the only way of proving that the rumour is false, would be to make them public.

The conversations between the Germans and the Hong Kong owners are said to be "informal" at this stage, and nobody is saying anything about exactly which bits of "3" would be of interest to T-Mobile if the conversations were to become formal, and start being about the sale of the company. But unless the Hong Kong people are prepared to open the books, of course, people are going to assume that they aren't worth looking at.

The absence of hard facts, of course, never stopped people gossipping! And the general tenor of the chat (if you're listening, in Hong Kong?) is that you won't get the Germans to part with much money unless you scare them a bit. So: what would scare Deutsche Telekom, or scare T-Mobile?

That's easy! The Hutchison 3G network in the UK isn't big enough to run a mobile phone company, obviously. If it were big enough, "3" would not need to have the roaming agreement it has (with Telefonica's O2 network) for GSM. But it is a bigger UMTS network than the one T-Mobile has in the UK, and therefore of some value.

So it makes sense to gossip about its value to T-Mobile - but it makes even more sense to wonder who else might benefit from picking it up. Ask what "Virgin" - otherwise known as NTL - would gain from buying it, for example.

Well! That's easy, say the idlers around the coffee machine. NTL paid way, way over the odds for the Virgin name, and needs to put some real assets behind it. If Hutchison's UK network became available at "a good price" then Virgin would probably want to join the queue. And that would push up what T-Mobile would be prepared to spend.

The trouble is, it still might not be very much. Your Sniffer doesn't actually know anybody in the UK telco business who honestly thinks "3" would be a going concern if Hong Kong stopped pumping money into it.

"But it must be!" say some, "or else why would Hong Kong keep it going?"

Good question! - and one possible answer is the sad one: "They won't."

If that were the right answer, it would pose another one. Who in the UK (or Germany!) would want the rest of Hutchison's European assets? Specifically, the Italian operation? - and the Hunkymouse can only think of - well, someone in Egypt, perhaps, but nobody else would want to spend money on it. The "3" Italy business is probably a going concern, say ex-consultants, but it's not worth spending real money on for anybody else except the WIND owners.

So here's free advice for the Hong Kong brigade from the Hunkymouse: if you can't get anybody from NTL to "accidentally" have an appointment on the same day that the "informal negotiators" from Germany are waiting in reception, why not get Charlie Dunstone to dress up in red and hang around in Maidenhead for an afternoon?

You can tell him that if he does, he can keep the "3" franchise for another six months...