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IRG Technology, Media and Telecoms Weekly Asia Market Review
HONG KONG, Oct 08, 2009 - (ACN Newswire) - The following is an Asian excerpt from IRG's TMT Weekly Market Review Sep 28 - Oct 2. IRG is a financial advisory and investment firm focused on the core growth sectors in Asia with particular focus on the telecommunications, media and technology (TMT) sectors.
Japan
- Oki Data Corp. is initiating full-scale sales of printers in the Chinese market as part of an effort to make up for slumping sales elsewhere overseas. The Oki Electric Industry Co. subsidiary had two overseas sales organizations for printers, one for Europe and the U.S., and one for other foreign countries. It will create a third sales team at its headquarters to oversee sales in China. The new team, which is also slated to cover sales activities in Taiwan, will formulate sales plans and conduct market research. An executive responsible for sales in Japan will be appointed chairman of Oki Trading (Beijing) Co., Oki Data's local unit in Beijing, and management-level personnel will also be sent from Japan to branches in Shanghai and Guangzhou. Oki Trading has begun using endorsements from table tennis player Ai Fukuhara, who is popular there.
- Sony Computer Entertainment Inc. said retail sales of its new PlayStation 3 computer entertainment system achieved a total of 1 million units worldwide within the 3 weeks. While maintaining cutting-edge features and functions, such as the ability to enjoy high quality interactive entertainment content including Blu-ray Disc games and movies as well as various content and services downloadable through PlayStation Network, the new PS3 is available at an attractive recommended retail price of 29,980 yen (including tax), US$299 and 299 euros (US$434.70), with a streamlined form factor and a pre-installed 120GB Hard Disk Drive.
- Advantest Corp. will have an increase in orders next quarter as demand from semiconductor and liquid-crystal- display manufacturers rebound. Orders in the three months ending Dec. 31 will increase from 8.9 billion yen (US$99 million) a year earlier and will be about the same as bookings this quarter. Advantest, Applied Materials Inc., and Tokyo Electron Ltd. have increasing orders. Worldwide chip- equipment capital spending will decrease 45 percent this year to US$24.3 billion. Tokyo Electron in July increased its full-year sales outlook 6 percent as orders in the three months to June 30 went up for the first time in six quarters. Bookings at Applied Materials will climb in the current quarter, which ends in October, from the previous three months.
- NEC has bought about 17 percent stake in Wire and Wireless through a private share placement. NEC acquired a 16.8 percent share in the public wireless LAN service provider for almost 200 million yen (US$2.2 million).
- Square Enix Holdings Co. Ltd. has a goal to double its recurring profit to 50 billion yen (US$561 million) in three to five years by expanding the range of its game titles and strengthening its overseas operations. Square Enix, known for game series such as "Final Fantasy" and "Dragon Quest", is in talks with online game operators in China to forge business alliances and offer its game titles in a market with strong growth potential. The company wants to raise the number of its game series that sell more than 2 million units per installment to eight to drive sales and stabilize its revenue. It already has five such titles - "Kingdom Hearts", "Tomb Raider" and "Hitman" as well as "Final Fantasy" and "Dragon Quest". Square Enix has sold more than 4 million units of "Dragon Quest IX" in Japan since its launch in July.
- Taiyo Yuden Co. will purchase the telecommunications equipment component business of Fujitsu Media Devices Ltd. This will help the firm broaden its lineup to include such components as SAW (surface acoustic wave) filters for cell phones. Taiyo Yuden is strengthening its presence in the market for high-frequency devices. The deal will also give Taiyo Yuden access to technologies for telecommunications modules, important for the company because the development and design of devices for high-speed communications requires a means of dealing with high-frequency noise. Fujitsu Media Devices is selling off some businesses to center on its core strength of auto electronics.
- L.M. Ericsson Telephone Co. may win a number of new contracts for Long Term Evolution (LTE), network equipment in the coming year from operators including NTT DoCoMo. Several trials with operators are happening. NTT DoCoMo will have its decision in 2010 whether to choose Ericsson as its supplier of LTE technology. Chinese operators including China Mobile are also eyeing the technology and several emerging markets will become interesting once LTE gets more widespread and the larger scale drives down costs. LTE networks will first be commercially launched in 2010, Ewaldsson said, with volumes expected to increase rapidly during 2011.
Korea
- SK Telecom Co. will sell its entire 3.8 percent stake in China Unicom Ltd. back to the Chinese telecommunications operator for 1.5 trillion won (US$1.28 billion) for the improvement of its financial position after the company had a loss from the investment. SK Telecom will sell its entire 899.75 million holding at HK$11.105 (US$1.4) each. The company will focus to business cooperation with Chinese counterparts instead of purchasing stakes in any particular company. The sale of the stake means that SK Telecom's overall business portfolio is now shifting to broader markets from just mobile communications. SK Telecom may have the transaction closed in mid November after China Unicom's independent shareholders approve the plan. China Unicom will fund the share repurchase from its cash flow and working capital.
- South Korea's telecommunications regulator ordered the country's mobile carriers to slash their mobile service charges from November. This may badly affect the profitability of mobile operators as they are already suffering from weak margins because of the fierce marketing rivalry in a highly saturated market.
- Korea Communications Commission (KCC) commanded the operators to lower various service rates including subscription fees, wireless data rates and bundled product costs, to lessen the burden on subscribers. The move comes as South Korea's three mobile operators have been under fire for charging higher rates than carriers in other member nations of the Paris-based Organization for Economic Cooperation and Development. SK Telecom Co. will cut subscription fees by 27 percent to 40,000 won (US$34) and slash its monthly wireless data rate by 19 percent. The country's biggest wireless operator was also asked to offer discounts for long-term subscribers. SK Telecom will also change its call-charge unit to 1 second from 10 seconds previously. KT Corp. will slash its subscription fees by 20 percent. It will lessen monthly wireless data service fees by as much as 62 percent. KT will also provide discounts for its long-term subscribers and trim rates by 13 percent. LG Telecom Co. will cut its monthly voice call rate by as much as 25 percent.
- KT Corp. will invest 142.7 billion won (US$119.4 million) to become an eco-friendly technology company. Approximately 142.7 billion won (US$120 million) will be spent on energy-saving technologies and the environmental improvement of existing telecommunications facilities. The company will lessen its greenhouse gas emissions by 20 percent by 2013. The company will spend in developing eco-friendly services, such as solutions for green automobiles and eco-buildings, cloud computing, green Internet data centers, green mobile communications and smart grids.
- Yonhap News Agency and SK Broadband Co. will merge to enhance South Korean news agency's real-time news service by creating a new-media platform that includes broadcast and video content in order to aggressively respond to the changing media environment. SK Broadband will then merge with Yonhap to integrate its network infrastructure in the field of Internet-protocol TV (IPTV) with Yonhap's content. IPTV is fast emerging as a significant alternative to traditional ways of watching television, allowing viewers to choose and view content interactively via a broadband Internet connection.
- LG will invest US$3.34 billion in building plants to produce LCD glass and LEDs in Paju, South Korea, which broke ground on the project earlier this week. LG Chemical will invest US$2.5 billion in the glass plants by 2018. LG Display is a major customer of Corning's Samsung Corning Precision Glass Co. joint venture in South Korea. The company expects that other companies will be challenged to meet the large scale production required by LCD panel customers.
India
- Bharti Airtel Ltd. to sharpen 3G focus after MTN deal dropped. Bharti's investors welcomed the collapse of merger talks with South Africa's MTN Group Ltd. as a sign the Indian mobile phone operator would focus on its home market. While Bharti is still committed to pursuing acquisitions in its bid to grow beyond India, analysts said potential targets will be much smaller and less ambitious than MTN, allowing the country's largest mobile phone operator by subscribers to turn its sights on the pending auction of licenses for third generation, or 3G, radio bandwidth at home. The proposed US$24 billion transaction would have seen Bharti acquire a 49 percent stake in MTN, while the South African company and its shareholders would have purchased 36 percent of Bharti, in a deal that would create a telecom giant with the third-most subscribers of any wireless carrier in the world.
- Bharat Sanchar Nigam Ltd. is planning to outsource the management and maintenance of its towers and cable networks, in a deal that could be worth more than US$1 billion over five years. BSNL is finalizing the conditions for a tender for the contract. The company will outsource more than 50,000 towers and more than 100,000 kilometers of fiber optic cable.
- Reliance Infratel Ltd. voided the plan to sell a stake to investors prior to its proposed initial public offering. Attempts to find investors were unsuccessful due to higher valuation. The company aims to raise 50-60 billion rupees (US$1.0-1.3 billion) through the IPO.
- Tata Teleservices Ltd. has sought shareholders' approval to raise up to US$250 million to part fund its expansion programs. The company will elevate funds through overseas convertible bonds, depository receipts or a share sale to institutions. The company had started services using the global system for mobile technology. It will bid for airwaves to provide high-speed third-generation telecom services. The Indian government is expected to auction the bandwidth by the end of November.
- Bharat Sanchar Nigam Ltd. has restructured the company in an attempt to renew its focus on sales and distribution. The state-run telecom company has created a new marketing unit, which currently has 4,000 employees. The company plans to raise staff at its new sales unit to 10,000 by the end of the current fiscal year.
- Aircel Ltd. has signed a deal to share state-owned Bharat Sanchar Nigam Ltd.'s telecommunications towers across the country. Using BSNL's infrastructure will help Aircel meet its aggressive network rollout plans and reduce costs as well. The company will have access to BSNL's 45,000 telecom towers in the country.
- Bharat Sanchar Nigam Ltd. has invited bids to set up three customer call centers for its mobile phone users in southern India. The bidder should pay a bid security of 20 million rupees (US$418980) and provide a performance bank guarantee of 90 million rupees (US$1.9 million), valid for one year, which would be about 5 percent of the estimated total value of the contract. BSNL has set Nov. 11 as the last date for accepting bids and the winning bidders should be able to set up the call center within four months of receiving the contract. BSNL provides mobile telephony services in the southern Indian states of Andhra Pradesh, Karnataka, Tamil Nadu and Kerala. It has 14.14 million users on its global system for mobile communications, and 1.69 million subscribers on CDMA technologies.
Singapore
- Singapore Telecommunications Ltd. had the right to broadcast English Premier League soccer matches for three years from August 2010. This surprised the market and sent rival StarHub Ltd. shares plunging. It secured the rights to a suite of sports networks and services from ESPN STAR Sports for its pay-TV service from mid-2010. The loss of the sports content is a big blow for StarHub, the incumbent pay-TV operator that has broadcast the soccer matches in Singapore since 1997 and currently holds the rights to ESPN STAR Sports content. It submitted a competing bid against SingTel and holds rights for the Premier League matches until the end of the current season in mid-2010. The loss of the sports content will raise questions over the company's medium-term growth potential.
Thailand
- Thailand's National Telecommunications Commission aims to hold an auction by mid-December to sell third-generation service licenses. The NTC will issue the licenses, which were put on a public hearing two weeks after the auction. The four licenses, comprising three with 10 megahertz and one with 15 MHz bandwidth, will be valid for 15 years. Only majority Thai-owned companies are eligible to participate in the auction as bidders are required to comply with existing telecoms laws that cap foreign shareholdings at 49 percent. The minimum price tag for the licenses will be released by the NTC after the public hearing. Winning bidders should pay upfront a lump sum for the license fee, plus 2 percent of their annual revenue and an annual spectrum fee. TOT PCL will not be entitled to participate in the auction as it already has control of the 1.9 GHz frequencies, which can be used for 3G services. The sale of 3G licenses has been postponed several times because of the absence of another independent body to regulate broadcasting frequencies, and changes in state administrations.
Philippines
- Philippine Long Distance Telephone Co. will produce less than 1 million new cellular subscribers in the third quarter, a sharp slowdown from an average 1.65 million in the first two quarters of the year. PLDT added 1.7 million and 1.6 million new subscribers for its Smart Communications and Pilipino Telephone Corp. services in the first and second quarters, respectively. It ended the first half with 38.5 million mobile phone service subscribers.
Australia
- Australia's National Broadband Network Co.'s massive nationwide broadband development is slowly moving forward. The government hired McKinsey & Co. and KPMG for the preparation of the project implementation study. NBN sees possibilities in asset purchases and held early stage talks with potential vendors. NBN has been charged by Australia's center-left Labor government with building a new A$43 billion (US$37.1 billion) national fiber-to-the-home broadband network available to 90 percent of Australia's population, with the remaining 10 percent to be serviced by a combination of wireless and satellite.
- Seven Network Ltd. will sell a stake in its Vividwireless unit in order to part fund the national rollout of its 4G wireless broadband network. Vividwireless will launch in March, with Seven Network planning an investment of A$50 million (US$43.1 million).
New Zealand
- NZ Telecom had over 200,000 3G connections versus 160,000 at the end of June. Customer transfers to the new network from its older network had outstripped similar transitions to third-generation networks by other telecommunications companies in the region.
Source: IRG
Sectors: Media & Marketing, IT Individual, Wireless, Apps
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