Morgan Sees 2-3 Small Mobile Phone Operators Consolidate in Late Q3
May 31, 2001 - 12:17:49 HKT
Quamnet News Service
Two to three small mobile phone operators are likely to consolidate before the Hong Kong government starts its 3G mobile phone license auctions in late third quarter, said Morgan Stanley Dean Witter in a note to clients dated today.
"Hutchison Whampoa Ltd. (0013) and Pacific Century CyberWorks (0008) are constrained from further acquisitions by regulatory rules," said the U.S. house. "It is more plausible that smaller PCS operators consolidate, a process that could be protracted in view of various shareholder interests."
Operators do not expect GPRS handsets to be available in bulk until the second quarter of 2002, implying nine more months' wait for 2.5G services, it added.
According to Merrill Lynch's estimates in April, Hutchison accounted for 32 percent of the local mobile phone market as at December 2000, followed by SmarTone (0315) with 20 percent, and then PCCW with 19 percent, New World (0017) with 12 percent, unlisted People's with 9 percent, and lastly Sunday (0866) with 8 percent. Market speculations are that People's and Sunday, the smallest, are most likely to be takeover targets.
Morgan has neutral ratings on both PCCW and SmarTone but gives no rating to Sunday.
The city's 3G mobile phone license issues could be delayed further to November, from September, because industry participants want the license price to be fixed after the auction is left with just four participants, instead of the currently proposed three participants, according to industry sources.
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