China's Wireless Operators Getting Ready for 3G

Rocky Start for Wireless Phone Newcomers

Local analysts say the new entry of Thai Mobile and Hutchison CAT is unlikely to affect the revenues or market share of the three main mobile-phone players.

The current players -- Advanced Info Service, TelecomAsia and United Communications -- dominate the mobile sector with a market share of nearly 90 percent.

While stiff competition has led to declining handset revenues and shrinking margins, analysts say the main players' profit and growth prospects remain relatively bright for the near-term.

Thai Mobile, a joint venture 58 percent held by TOT Corp and 42 percent by CAT Telecom, is expected to formally launch its GSM 1900 service in Bangkok in the first quarter of 2003.

In June 2003, Hutchison CAT, 65 percent held by Taiwan Mobile and the rest by CAT Telecom, is expected to follow with its own CDMA 2001 service in 25 provinces.

Padermpop Songkroh, vice-president of Bualuang Securities, said the two newcomers would boost competition only slightly in the mobile sector.

The limited capacity of the two providers in the initial stages made it unlikely that either would gain more than a 1.5 percent market share within the first year of operations, he said.

Amarit Sukhavanij, head of equity research at Merrill Lynch Phatra Securities, said Hutchison CAT was only now going into its first phase of testing with around 1,000 users.

The second phase of network development was still in the bidding procurement process, which is expected to be finalised later this month.

"We believe that Hutchison CAT will not be a serious threat to incumbent mobile operators, at least through the intermediate term. We feel that Hutchison serves more as a regional footprint for the firm's region-wide mobile data service, rather than as an aggressive local operator," Mr Amarit said.

He said Hutchison CAT would look to capitalise on the higher network speeds capable through CDMA technology compared with current GSM networks.

The company has already announced that it would not look to compete on price with incumbent providers, nor would it subsidise handsets. No subscriber targets have yet been announced.

"A high-end subscriber in Bangkok might look to Hutchison CAT for data usage. But we do not believe that there are many such users around," Mr Amarit said.

According to Merrill Lynch Phatra, mobile data revenues comprise less than 1 percent of total service revenues for local providers.

"We believe that the upside for mobile data in Thailand is considerable, but it will be difficult to convince the 15.8 million GSM subscribers to switch to CDMA solely to take advantage of a higher data transmission rate," Mr Amarit said, adding that all three incumbent operators already had capacity for GPRS (General Packet Radio Switching).

Patipat Pattaphongse, an analyst at KGI Securities, noted that net subscriber growth in October for market leader Advanced Info Service was down 45 percent from the previous month.

But he noted that the company had previously announced plans to shift focus from subscriber growth to higher per-user profitability.

"But long-term concerns remain, as the cellular market has already reached saturation and we believe growth will begin to taper off sharply from here on," Mr Patipat said.

"We estimate the market for cellular users at approximately 15 million subscribers. At this level, we can expect very limited real organic growth. It will now be a fight for existing subscribers, with DTAC likely to get squeezed in the process."

Mr Patipat said AIS remained an attractive stock against regional peers, with KGI expecting profitability to improve alongside its new moderate growth strategy.

Even so, he remained cautious on the industry's overall outlook and maintained an underweight recommendation on the sector.

Suwimol Kaewkoon, a top executive at AIS, said the firm expected a cash surplus next year raising the possibilities of higher dividend payments.

She said the firm expected to boost its customer base to between 12 million and 13 million by year-end, and questioned claims that the market was near saturation.

AIS believes mobile phone penetration has room to expand to nearly 30 percent of the population, or nearly 19 million users.

TODAY'S PRESS RELEASES

TTP Communications announces that TCL mobile Communication Ltd, China's largest manufacturer of mobile phones, has licensed TTPCom's GPRS (2.5G) platform.

Local analysts say the new entry of Thai Mobile and Hutchison CAT is unlikely to affect the revenues or market share of the three main mobile-phone players.

China's mobile market is expected to continue to bring in sophisticated technology from overseas network operators, while at the same time, give play to market forces in expanding the country's mobile services.

onix announced its protocol test support feature for the newest Universal Mobile Telecommunications System (UMTS) standard release.

DoOnGo Technologies announced that Matsushita Communication Industrial will license the popular Mobile Intelligence(TM) to be featured on Panasonic's new phones.

Vesper, a Brazilian operator providing services to 17 states in the Southeastern and Northern regions of the country, including Sao Paulo and Rio de Janeiro, is the first Latin American operator to deploy a 3G CDMA2000 1xEV-DO network.

DMA2000 is rapidly expanding throughout the Americas. In the past year, 18 operators in North, Central and Latin America have deployed CDMA2000 and are now delivering 3G services to millions of subscribers.

Ericsson and AT&T Wireless today completed the first WCDMA/UMTS call in a live network environment in the Americas. With initial packet data speeds up to 384 kbps, the call demonstrates true 3G capabilities

okia and Racal Instruments announced that the two companies are working together to deliver test equipment for third generation CDMA2000 1xEV-DV networks.

PT Wireless Indonesia (WIN), a cellular telecommunication network and service provider in Indonesia, has selected Airvana to enable high-speed wireless and broadband data services for its CDMA2000 1xEV-DO network in Indonesia.

Alaska Communications Systems the leading integrated communications provider in Alaska, has selected Airvana to provide high-speed wireless and broadband equipment for its CDMA2000 1xEV-DO

Thin Multimedia, Inc., a leading provider of wireless video streaming solutions, today announced that Reliance Infocomm Ltd. has licensed Thin Multimedia's complete mobile video streaming solution to provide video services to wireless subscribers in India. Reliance Infocomm is a subsidiary of the Reliance Group, India's largest private enterprise.

The CDMA Development Group (CDG) (www.cdg.org) today reported that there were nearly 135 million CDMA subscribers and 24 million CDMA2000 users worldwide at the end of the third quarter of 2002.

Nortel Networks announced the ability to provide integrated solutions for wireless operators that will seamlessly link existing and future Wireless Wide Area Networks (WWANs) with fast-emerging wireless 'hot spots,' also known as Wireless Local Area Networks (WLANs).

Anite announced the availability of 200 3rd Generation Partnership Project (3GPP) conformance test cases. The test cases enable the testing and approval of mobile phones and wireless terminals for use on next-generation cellular networks.

-PHONE announced the launch of Vodafone Global Standard on December 20 to offer customers in Japan unprecedented access to mobile services at home and abroad. This Third Generation (“3G”) service is based on international Third Generation Partnership Project (“3GPP”) standards

A glimpse of the near future can actually be seen by looking at the palm of a South Koreans hand - but the price of a prediction is just too high.

The company expects 10% or slightly more handset market growth in 2003 - while anticipating a challenging industry environment in wireless infrastructure to continue

Fujitsu Limited will demonstrate a variety of advanced broadband and mobile products and solutions at ITU TELECOM ASIA 2002 which will take place in Hong Kong

EuroTel Bratislava announced that the second installment of the UMTS license fee in the amount of Sk 999 million was paid in full to the Telecommunications Office of the Slovak Republic

Airvana Inc and Winphoria Networks Inc will demonstrate push-to-talk applications over a live CDMA2000 1xEV-DO network and interoperability with 1xRTT networks

QUALCOMM Incorporated announced that the Company will be exhibiting and demonstrating its industry-leading wireless solutions at 2002 CDMA Americas Congress

Ericsson and Hutchison have signed a seven-year agreement to implement an innovative services business model that will deliver increased efficiency and significant cost savings.

Telstra launched Australia’s first fully operational third generation (3G) mobile service for business customers, which is faster, more powerful and feature rich than anything they would have experienced before.

After twice delaying a planned launch, Japan's J-Phone Corp is finally set to start commercial third-generation (3G) mobile phone services this month, testing the water for British parent Vodafone Group Plc.

HUTCHISON 3G, the UK’s new entrant mobile operator, is facing growing pressure to merge with another group - possibly MmO2, formerly BT Cellnet - early next year after suggestions last week that it cannot meet its loan covenant requirements by the second half of next year.