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HSBC buys 3UK; announces plans for “true mobile wallet service”– unbelievable! [April Fool]

It’s gone midday in the UK so it’s time to out this story as an April Fool!

Well, goodness me. This one is a market mover and simply unbelievable!

This morning Nigel Smith, Group Chief Executive of HSBC took to the stage to announce the purchase of the UK’s smallest mobile network operator, 3UK. It’s no secret that parent company, Hutchison Whampoa has lately been considering options for their mobile operator portfolio and in HSBC, it seems they’ve found a willing partner. Indeed it looks like HSBC may go on to pick up Hutchison’s mobile operations in Denmark, Italy and Hong Kong.

HSBC’s Smith explained to a packed audience that the company was tired of waiting for the mobile industry to deliver a consolidated approach to the mobile wallet.

“For a few years now we’ve been studying the market,” explained Smith, “And we’re utterly baffled as to why the mobile industry can’t seem to get it’s act together.”

“Whenever we’ve spoken to key operators, they keep telling us that they’re waiting for Apple to do something — or that their hands are tied because they don’t have a banking license.”

“Well,” continued Smith, “We do — and the quickest way to get things moving was to buy an operator. We’re going to make the mobile wallet a reality for 3 million people in the UK starting today.”

Given that mobile operators already effectively have a credit relationship with each of their customers, it’s not that difficult to extend the relationship to that of being a bank.

Smith went on to outline HSBC’s on-going plans:

“Every 3UK customer will — effective 30th April — receive a MasterCard multi-function credit card tied directly to their mobile account.”

That card can be used for any purchase under £10. Purchases will be billed to your mobile account (for contract customers) or be deducted from your credit (for PAYG customers).

It gets better though as Smith explains:

“For HSBC, the medium of mobile is just the delivery medium for financial transactions. We don’t see it as a profit centre. So for that reason, we’re converting all existing 3UK contract customers to a standard unlimited £5 per month tariff. And when we say unlimited, we mean it.”

Smith said he expects customers from other networks to flock to 3UK stores as a result of this move, but that priority will be given to those who already have HSBC bank accounts but are not yet customers of 3UK (or “HSBC Mobile” as the service is to become).

“To begin with, we’ll give priority to our existing banking customers — but starting July 8th, we expect to be able to open access to all customers.”

HSBC is pumping £500m into 3UK this year in an effort to boost the mobile operator’s basic infrastructure and to cope with the anticipated demand which, some fear, could easily overwhelm the company’s existing capabilities.

“This investment will ensure we’re able to meet the expectations of our customers and our shareholders at all times.”

There’s one more twist, though: Smith revealed that integration discussions have already taken place with Google, Apple and Samsung regarding future collaborations (there’s speculation Microsoft and Nokia may come aboard too). This would mean that users of iPhones and Android devices (for example) would, provided they were HSBC customers, be able to swipe their NFC-HSBC-Mobile-enabled devices at over 200m point-of-sale units worldwide.

“Frankly we’re all tired of waiting — so whilst the other operators dither, I’m delighted to say that HSBC is positioning itself at the heart of the mobile marketplace.”

Smith finished his announcement by showing off one of the all new HSBC Mobile branded Google Nexus S devices, declaring, “It’s simply unbelievable!”

I couldn’t agree more.


  1. ho ho

    Seriously though, what do you think could happen to the 3 group? Is Hutch going to hang on to the whole group for the long-term, sell off piecemeal or sell off in one go?

    I know they just announced a profit for the first time and that’s great but that included a number of significant one-off payments/costs associated with network sharing in UK and spectrum sale in Italy. If you strip those out I reckon the underlying profitability is still just negative. So x years after the 3G investment they are still not profitable and now face a bunch of investment in spectrum and LTE kit. I would have thought that this would be a catalyst to try and sell bits of the business. So who would buy? Clearly the existing mobile operators are candidates. I reckon BSkyB would be an interesting acquiror as they could potentially takeover both the UK & Italian businesses. Maybe once News corp fully acquires Sky then 3 could be the next target

    One other thought. Everybody seems very keen on network sharing these days but there seems to be little mention of the regret costs of those types of moves. The deal between T-mobile and 3 is touted as a great network sharing success but what about the fact that 3 is now tied to a business in EE that is the most logical acquirer of their business but the least likely due to antitrust concerns. The most likely acquirors are Voda and O2 but surely 3 is actually worth less to them now because they would have to unpick the MBNL deal to create network synergies. Finally would T-mobile have actually done the deal with 3 if they knew they would be merging with Orange. I think this example shows that the regret costs from network sharing can be significant when there are still more inmarket consolidation opportunities to be had

  2. Great April Fools gag. except for two things – this was an entirely plausible scenario and a bloody good idea.

    Mobile operators are perfectly placed to provide micro payment banking facilities to their customers, either in the form of electronic payments, a credit/debit card tied directly to the mobile account, ot using contactless technology built into a handset.

    HSBC buying 3 (as a VC investment rather than to absorb it and run it day-to-day) could make sense, given the Hong Kong connection both have, and HSBC’s links into the lucrative Asia market that could in turn open additional doors for 3.

    Either way, excellent gag and superbly written.


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