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Wednesday, 11 November 2009, 21:05 HKT/SGT

Source: IRG
IRG Technology, Media and Telecoms Weekly Asia Market Review

HONG KONG, Nov 11, 2009 - (ACN Newswire) - The following is an Asian excerpt from IRG's TMT Weekly Market Review Nov 2 - Nov 8. 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.

- The global number of mobile phone deliveries fell by 4 percent in July-September 2009 from same period. Mobile phone deliveries totaled 291 million items. Nokia delivered 108.5mn devices, which decreased the company's market share to 37.3 percent from 38.8 percent. South Korean Samsung delivered 60.2 million mobile phones, raising its market share to 37.3 percent from 17.1 percent a year earlier. LG's deliveries increased to 31.6 million devices, with market share increased to 10.9 percent from 7.6 percent. Sony Ericsson's mobile phone deliveries totaled 14.1mn items, and its market share fell from 8.5 percent to 4.9 percent. Motorola delivered 13.6 million mobile phones, decreasing its market share from 8.4 percent to 4.7 percent.

- Subscription television in Asia Pacific now reaches more homes than the rest of the world combined. Having added 26 million more this year, the region now has 326 million pay-TV households. Digital pay-TV subscription households now account for over 115 million homes. China and India have spearheaded much of the growth, accounting for 90 percent of all Asian pay-TV subscribers in 2009. India now has 19 million digital pay-TV households, while China has 69 million digital video connections. Asian digital penetration stands at 35 percent across 14 markets.


- Aurora Feint has agreed to sell a 20 percent stake to Japanese online and mobile commerce and entertainment provider DeNa. DeNA gaming industry partner Hudson, has agreed to use OpenFeint in their game lineup starting with Bomberman for the Christmas season.

- United Microelectronics (UMC) decided to obtain the common stocks, preemptive rights and stock acquisition rights in UMC Japan through a tender offer to be made by UMC's 100 percent owned subsidiary, Alpha Wisdom Limited. UMCJ operates a semiconductor manufacturing plant in Tateyama City, Chiba, Japan with a monthly production capacity of 20,000 eight inch wafers. UMC acquired a majority interest in UMCJ, with the goal of utilizing UMCJ as a strategic manufacturing and sales base in Japan.

- NTT Communications completed its acquisition of 100 percent of Pacific Crossing , an operator of trans-Pacific undersea cable network, PC-1. NTT Communications with the completion of the deal, will control the PC-1 trans-Pacific cable. NTT Com will retain the Pacific Crossing management team and Pacific Crossing will continue as a business within the NTT Communications group selling network capacity in the wholesale carrier marketplace. Pacific Crossing's customers will see an immediate extension of network reach beyond PC-1 with extended domestic capability in Japan and the U.S. as well as the ability to leverage NTT Com's international network to offer turnkey solutions for Asia to U.S. connectivity.

- Unity had the landing of its Trans-Pacific fiber optic cable system in Chikura, Japan, marking an important milestone in the construction of a new system which will deliver significant increase in capacity between the U.S. and Japan. With construction on schedule, the new system will be ready for service in the first quarter of 2010. The cable ship KDDI Pacific Link reached the Japanese coastline in Chikura earlier this week after two months spent laying the newly manufactured cable from the middle of the Pacific Ocean. There will be a period of intensive end-to-end testing before the system is put into commercial service. Trans-Pacific bandwidth demand has grown at a compounded annual growth rate (CAGR) of 62.8 percent between 2002 and 2008, and demand is expected to continue on a strong growth trajectory, with an estimated tenfold increase from 2008 to 2013.


- The South Korean government will license more operators for the country's homegrown mobile Wimax technology Wibro to increase uptake. Currently, KT and SK Telecom provide Wibro services and have just over 250,000 subscribers after three years of commercial services. The Korea Times reports that the Korea Communications Commission (KCC) has said that KT and SK Telecom will be required to open their Wibro and WCDMA networks for roaming for the new operators. The KCC will offer licences for nationwide services as well as for local services and will also allow VoIP on Wibro-enabled handsets. KT and SK Telecom have been reluctant to offer voice on their Wibro services for fear of cannibalizing 3G voice traffic. The government will further encourage development of other mobile internet services such as IPTV and will push mobile operators and handset makers to introduce low-priced Wibro/Wi-Fi handsets.

- KT Corp. said its third-quarter net profit rose 80 percent from a year earlier to 351.4 billion won (US$298.3 million) as a stable local currency helped cut foreign-exchange losses. KT absorbed its mobile affiliate KTF Co. in June and the figures were calculated on the assumption that the two companies became a single entity on Jan. 1, 2008. Sales climbed 3.9 percent on year while operating profit declined 11.7 percent. The rise in its revenue came from increased sales of mobile and Internet phone services. The number of its mobile service subscribers reached 14.9 million in the third quarter, up 4.5 percent. Subscribers of KTs Internet phone service, part of its fixed-line business, nearly quadrupled on year to 1.26 million.

- LG Electronics Inc.'s mobile-phone unit plans to have a 20 percent growth in shipments for 2010. Brisk sales of handsets at both Samsung Electronics Co. and LG Electronics, contrast sharply with an industry-wide recession. LG Electronics boosted in third-quarter net profit due to increasing sales in cellphones, flat-screen televisions and panels. Handset shipments for the quarter jumped 37 percent over the year-ago period. Profit margins declined. Marketing expenses and pricing pressures, including in handsets, would further decelerate its profit in the fourth quarter.

- Pantech Group will begin its handheld multimedia device business next year and is also considering venturing into manufacturing of netbooks. These business expansions are interpreted as moves to diversify the company's revenue sources using the brand recognition and the distribution channel of its mobile phone business. Insiders said that Mantech C&I, an affiliate of Pantech Group, is releasing a WiFi-enabled multimedia device in April, next year. Pantech organized a task force team for the development of a new device in Pantech C&I early this year. The team has developed a new multimedia device under the code name of Mobile Tabloid. The team consists of 20 members and is expanding for new members. Vice Chairman Park Byeong-yeop is told to have significant interest in the new business as a new breakthrough for the company.

- LG Electronics Inc. is investing heavily in smartphones and seeking to forge an alliance with a U.S. mobile carrier to make inroads into a market dominated by Blackberry and Apple Inc.'s iPhone. LG is also focusing on green energy and health care which includes providing lighting and energy control, television security, laundry and storage solutions to hotels and other businesses that will draw in steady commission. LG television sets grabbed 13 percent of the global market this year from 6 percent last year and the company's refrigerator market share rose to 20 percent from 7 percent last year.

- Hynix Semiconductor Inc. forecasts the market for dynamic random access memory (DRAM) chips would maintain its strength in the fourth quarter and contract prices could rise further in November before stabilizing in December. As the industry's supply growth is limited, a shortage in DRAM is seen for 2010 overall, Hynix executives said during an investor conference call. Low-power, high-speed DDR3 chips would become the mainstream in the DRAM market by the first quarter of next year.

- Singapore's state investor Temasek Holdings Private Limited will pay 284.7 billion won (US$242 million) to buy 12 percent stake in South Korean light emitting diode (LED) company Seoul Semiconductor and 9 percent stake in affiliate Seoul Optodevice, according to a brokerage that advised on the sale said. Temasek also confirmed the investment, saying that investing in the South Korean companies fits well with Temasek's investment theme of supporting emerging champions. Temasek's move comes almost two months after Abu Dhabi's state fund ATIC offered US$1.8 billion to buy Chartered Semiconductor , which was 62-percent owned by the state investor.

- Reports showed that South Korea lags far behind Japan in terms of core technology and manufacturing know-how in the rechargeable lithium battery sector. The basic technology levels of South Korean firms such as Samsung SDI Co. and LG Chem Ltd. are estimated to reach just 30 percent those of their Japanese rivals like Sanyo Electic Co. In terms of component and material development, the level of South Korean firms amounts to about 50 percent that of the Japanese companies. Lithium batteries are widely used in notebook computers, mobile phones, various wireless information technology devices, and electric-driven automobiles.


- Maxis Bhd's IPO of up to US$3.7 billion is attracting investors' interest on sheer size and a promising dividend despite the company's limited growth potential and lofty valuation. The company is seeking to re-list after a two-year absence, in what will be Southeast Asia's largest IPO ever. It will begin trading on the Malaysian stock exchange Nov. 19, entering the market without its high-growth overseas operations. While the company is on a much stronger footing now, having grown its earnings 21 percent on-year in 2008 and expecting 16 percent growth this year, some investors question whether Maxis deserved the same valuation it had before it stripped off its prized assets in India and Indonesia. Maxis' existing shareholders are offering to sell 2.25 billion shares, or 30 percent the company's capital, in part to raise funds to finance their overseas operations which include India's Aircel and Indonesia's PT Natrindo Telepon Seluler.


- Globe Telecom Inc. said its third-quarter net profit rose 2 percent to 2.61 billion pesos (US$54 million) from a year earlier, with lower income tax helping offset a decline in revenue as the company continued to clean its cellular network of marginal subscribers. The income tax rate this year declined to 30 percent from 35 percent last year. Third-quarter net profit was 20 percent lower than the second quarter as Globe trimmed the number of its mobile subscribers to 23.1 million at the end of September from 25.02 million at the end of June. In the nine months to September, net profit rose 12 percent, even as service revenue only rose around 1 percent in the first three quarters of this year.

- Philippine Long Distance Telephone Co. said its third-quarter net profit rose 49 percent on year due to a steady growth in cellular and broadband services as well as a lower corporate income tax rate. The country's largest telecommunications group by sales said that while bottom line numbers for the year will likely be better than those in 2008, group revenue might take a hit in the fourth quarter as consumers adjust spending in the wake of devastating typhoons in September and October. PLDT net profit in the July-September quarter increased to 10.3 billion pesos (US$215.9 million). In the nine months to September, net profit climbed 15 percent while revenue rose 3 percent. Core profit was up 11 percent. Provision for income tax in the January-September period declined 16 percent.


- Advanced Info Service PCL had a 7.7 percent drop in third-quarter net profit to THB4.18 billion (US$125.1 million) from a year earlier mainly due to lower sales and service revenue. Sales and service revenue in the third quarter dropped to THB24.97 billion (US$748 million) due mainly to slowing the economy and a saturated mobile phone market.


- Tata Teleservices Ltd. will buy third generation and WiMax services for 12.5 billion rupees (US$266.1 million) in Mumbai and Maharashtra. The funds will come from the currency convertible bonds, global depository receipts and qualified institutional placements.

- Bharat Sanchar Nigam Ltd. ("BSNL") is not considering inviting fresh bids now for its network expansion plan to add 93 million lines and has already ordered equipment for the southern zone. The company is in the process of awarding contracts for adding 93 million lines on the global system for mobile communications, or GSM, platform. Some media reports had said recently that the federal Department of Telecommunications has asked BSNL, to invite fresh bids. BSNL is facing a scarcity of GSM lines in its bid to match the subscriber addition pace of bigger rivals such as Bharti Airtel Ltd., Reliance Communications Ltd. and privately held Vodafone Essar Ltd. BSNL is still interested in bidding for Kuwait's Mobile Telecommunications Co., with or without India's Vavasi Group as a partner. BSNL may bid for Vavasi even after the end of the exclusivity period.

- Tata Teleservices Maharashtra Ltd. expects to regain its earlier EBITDA margin soon. The company's profit after tax for the July-September quarter was hit by marketing expenses, depreciation in the global system for mobile communications network, and interest costs from loans which were earlier being capitalized. The telecom operator's EBITDA margin for the April-September period this fiscal year through March 2010 slipped to 26 percent.

- Idea Cellular may have declining margins in coming quarters as the companies will lessen call rates. Idea Cellular and Bharti Airtel Ltd. and Reliance Communications Ltd. recently lessened tariffs to attract customers in the world's fastest growing telecom market by users.

- Intel Corp. is among interested parties preparing bids following an invitation by Indian Telecom Industries to set up joint ventures based on Worldwide Interoperability for Microwave Access, or WiMAX, and IT core systems. ITI plans to take a 26 percent stake in the joint ventures, and interested parties have been asked to participate before Jan. 29. Huawei, Alcatel-Lucent, Samsung and Hitachi have also shown interest in participating in the process.


- Telstra Corp. is having meetings with the Australian government over its potential sale of the telecommunication company's fixed-line assets into a new A$43 billion (US$39.4 billion) open-access. The government plans legislation that would either see Telstra divide its network assets from its retail operations or commit to stricter regulation. The planned reforms will improve competition in the fixed-line broadband sector, which Telstra dominates, ahead of the rollout of Canberra's planned network.

New Zealand

- Telecom Corp. of New Zealand Ltd. had a higher fiscal first-quarter net profit than expected, helped by a NZ$35 million dividend from its half-owned cable company Southern Cross Cable and NZ$39 million (US$28.2 million) of relief on taxes from the year-ago quarter. New Zealand's largest fixed-line phone company by subscribers and revenue said that in the three months ended Sept. 30 net profit rose to NZ$163 million (US$118.2 million). The company lifted its net profit estimate for its fiscal year ending June 30 to NZ$400 million (US$290 million)-NZ$440 million (US$319 million) due to tax changes. It maintained its estimate for EBITDA in a range of minus 1 percent to growth of 2 percent.


- Egypt's national telecommunications regulator said that the total number of mobile subscribers in Egypt reached 53.43 million at the end of September 2009, a jump of around 40 percent from the previous year. The total mobile penetration in the most populous Arab country reached around 69.8 percent, the National Telecommunications Regulatory Authority. Mobile subscribers were 38.1 million at the end of September, 2008. Subscribers of Mobinil, the country's largest operator, reached 24.64 million by September 2009, giving it a 46.1 percent market share. Subscribers of Etisalat Egypt, a subsidiary of United Arab Emirates based Etisalat, were 6.30 million in September 2009, with an 11.8 percent market share. Subscribers of Vodafone Egypt reached 22.49 million by September 2009, a 42.1 percent market share.

Topic: Research / Industry Report
Source: IRG

Sectors: Media & Marketing, Consumer Electronics, Wireless, Apps
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