The spectre of a fresh price war in the UK mobile phone market was raised yesterday when Hutchison Whampoa vowed to plough more money into winning customers for its 3G businesses.

The Hong Kong conglomerate, which is flush with cash after selling its Indian mobile business to Vodafone, said that it planned to increase its level of promotional discounts on contract tariffs this year in an attempt to win higher-spending customers.

Separately the group announced that proceeds from the sale by its affiliate, Hutchison Telecommunications International, of its stake in India’s Hutchison Essar could be used to pay down its near US$20 billion (£10.2 billion) debt.

Overall losses at the group’s mobile operations, which include the UK, Italian, Australian and Swedish markets, narrowed by 45 per cent to HK$20 billion (£1.3 billion) in the year to December 31. Revenues in the 3G businesses grew 35 per cent to HK$50.7 billion.

The conglomerate, whose interests span ports, property and retail, reassured investors that it was on track to break even in its worldwide mobile operations, after taking into account subscriber acquisition costs, in the first half of this year. Li Kashing, the chairman of Hutchison Whampoa, said: “We have full confidence in the 3G business today because the losses are shrinking.”

However, the group, whose bet on next-generation 3G mobile technology has been a continual drag on its share price, continues to struggle with fierce competition. Last year a planned flotation of its Italian mobile business was pulled, and its British business, 3 UK, is regarded by analysts as a prime consolidation target.

In a sign of the vulnerability with which the business is viewed by rivals, Vodafone, the world’s biggest mobile player, declared late last year that it would look at 3’s European assets if they come up for sale.

Hutchison, whose UK customer base surged 14 per cent to more than 3.9 million, said that it would seek to fight for quality contract customers with a “tactical” increase in the level of promotional discounts.

Hutchison group profits jumped 40 per cent in the year to HK$20.03 billion. Last year the company was forced to push back its breakeven target. It had hoped the 3 group as a whole would achieve breakeven in the 2006 year.

Analysts had warned that another postponement of the target in yesterday’s results would have further raised expectations of a sale of some of its mobile businesses.

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