re: M&A & Consolidation & Twist & Turn in Asia Pacific
Asia stuff for you.
Can't tell the players without a scorecard.
India - Australia - New Zealand - New Zealand - Malaysia - Japan
AT&T - Vodafone - DoCoMo - Hutchison Whampoa - Telstra
There will be a quiz later in the week. <g>
>> Asia Pacific Telecoms Watch: AT&T's Indian Mobile Venture To Challenge Hutchison
Michael Newlands
Wireless Today
July 2, 2001
The planned merger between foreign-invested Indian mobile phone operators BPL Communications and Birla-AT&T-Tata has met with a decidedly mixed reaction from competitors and the local media.
Bangalore-based BPL Communications will own 49.3 percent of the new entity, while U.S. telecom giant AT&T and local conglomerates Birla and Tata will each hold 16.9 percent.
AT&T will actually have more clout than its partners, however, as its Media One subsidiary holds a 49 percent stake in one of BPL's two operating subsidiaries, BPL Cellular. France Telecom holds a 29 percent stake in the other subsidiary, BPL Mobile, but according to Indian press reports it will not have a stake in the merged entity.
The merger will create the country's largest mobile phone company, overtaking current market leader Hong Kong conglomerate Hutchison Whampoa's subsidiary Hutchison Telecom.
The partners have valued the merged entity at more than $2 billion, and it will have about 1.1 million subscribers, or around 25 percent of the country's total. It will take three to six months to clear regulatory hurdles and come into being under a new, yet to be decided name.
Although these figures are small by international standards and tiny compared to the more than 110 million mobile users in China (which has a similar population), the market is growing rapidly and the potential is immense.
Some analysts see the merger as the start of much-needed consolidation in the market, which will see smaller regional mobile operators swallowed by the now three major players - Singapore Telecommunications-invested Bharti group is the third. But others worry it could result in cartel pricing to the detriment of consumers. State-owned fixed line telcos that have ventured into the wireless sector have performed so poorly that analysts generally rule them out of the equation.
Mobile licenses in India are not awarded nationwide, but for "cellular circles" covering states or large cities, and operators have to bid many times over to develop their networks. Each cellular circle is restricted to four operators, and one license is reserved for state-owned telcos.
The influential Economic Times in an editorial Friday called for the introduction of a fifth license in each circle, pointing to the situation in India's wealthiest state, Maharashtra, where both of the partners have networks, but they are the only two operators. As a merger in this state would have resulted in a monopoly, it has had to be excluded from the merged entity, but the Economic Times comments: "On paper, the two companies will compete against each other, but this 'competition' could turn out to be a friendly match, with neither company seriously interested in taking on the other because of their alliance elsewhere."
Although an auction for a fourth entrant into Maharashtra began on Friday, the Times points out that in view of the poor record of state-owned operators this will still restrict the number of effective competitors to two.
"So there is a case for introducing a fifth operator in each cellular circle. Experience shows that the state owned companies are duds in the mobile market, so four operators are effectively three; and possibly less if more mergers come along," the newspaper argues.
However the third largest operator, the Bharti Group, was surprisingly bullish on the merger news. "This signals a significant step in the inevitable consolidation of the cellular industry in which Bharti has always believed. The industry will now have only a few large serious players, which is truly good for both the industry and the consumer. Bharti welcomes this realignment in the Indian telecom industry," Chairman Sunil Bharti Mittal told the Business Standard.
Also in the Standard, Manoj Kohli, chief executive of smaller regional operator Escotel, said: "This is a major development in the cellular industry. The new company is a colossal entity covering the entire west and the south. Serious players like Tata and Birla have consolidated, which is a good sign for the industry."
In The Land Down Under
The subject of mergers and Hutchison Telcom also made the news in Australia, with rumors and speculation to the effect that the Hong Kong company's local subsidiary is in the running to absorb Vodafone Pacific, driving its share price sharply higher in Friday trading.
If the merger did go ahead, and the Australian government approves Singapore Telecommunications' takeover of Cable & Wireless Optus, then incumbent Telstra would be in a three-way battle in its home market with telcos from Singapore and Hong Kong.
Ironically, Telstra owns 60 percent of Huthchison's main competitor in Hong Kong, CSL Ltd., in joint venture with Pacific Century CyberWorks Ltd.
Hutchison, which recently came to an agreement with Telecom of New Zealand to jointly develop 3G networks in Australia and New Zealand, owns 3G mobile spectrum in all of Australia's major cities.
In the Australian mobile market, Vodafone is in the unaccustomed position of being a pretty distant third with a 19 percent share, behind Telstra with 45 percent and Cable & Wireless Optus with 33 percent, while it is the second mobile operator in New Zealand. Hutchison still is rolling out CDMA and GSM networks in Australia where its main business to date has been as a reseller.
The Australian Associated Press quoted Shaw Stockbroking research director Scott Marshall as saying: "It's a logical outcome of the current situation of both Vodafone and Hutchison having what I would describe as untenable situations in Australia with their low market shares, compared to their market shares elsewhere in the world."
When announcing its 3G joint venture last month, Hutchison and Telecom New Zealand said they were not against a third partner taking a stake. Said Marshall: "If Vodafone folded its subscriber base in and got a part of the joint venture as part payment, that would be compatible with that statement."
In a report issued on Thursday, ABN AMBRO analysts predicted Vodafone would exit the market, despite its public statements reaffirming its commitment to remain an Australian operator. "Vodafone missed out on acquiring Optus to SingTel and it must now reassess its strategies," the report said. "The signs are building that Vodafone may decide to exit the market."
Japan Gears Up For 4G
In Japan, the government and private sector continue to plan for 4G while the country's first 3G service is still having a trial run. The Telecommunications Ministry has announced it will gradually reallocate part of the spectrum used by mobile phone carriers from 2004 to prepare for the 2010 start of 4G.
A Japanese official said high-speed mobile Internet services are expected to start in 2005, with actual 4G mobile phone services launched in 2010. The 4G mobile phones would be capable of instant video downloads, among other functions, he said.
The government is considering compensating the carriers for wireless transmission equipment rendered useless after the spectrum requisition, the official said. Carriers that would be asked to gradually give up their spectrum rights are Nippon Telegraph and Telephone West, Nippon Telegraph and Telephone East, NTT Communications, NTT DoCoMo, KDDI and Japan Telecom. The ministry's estimate of total compensation is 40 billion to 50 billion yen (about $330 million to $420 million) by 2010.
Last month, the Telecommunications Ministry, top mobile carriers NTT DoCoMo Inc, KDDI Corp and Japan Telecom Co and equipment makers Sony, Matsushita Communication Industrial, NEC and Fujitsu jointly compiled the basic specifications for 4G mobile phone technology.
In Korea, state-run telco Korea Telecom (KT) announced it had raised $2.24 billion through the issuance of American depository receipts (ADRs), having postponed pricing them for 24 hours on Wednesday.
Although the amount raised was not as much as the $2.5 billion the Ministry of Information and Communications had been hoping for, it still beat analysts' predictions that the shares could not be sold at a premium to the underlying share price. The premium was, admittedly, only 0.35 percent compared to the 20.4 percent premium the Ministry achieved in 1999 when it raised $2.49 billion from an ADR issue.
Recently, the world's two largest mobile operators, Japan's NTT DoCoMo Inc and the UK's Vodafone Group, issued ADRs at respective discounts to their share prices of 3 percent and 2.5 percent, so by comparison Korea Telecom did very well.
Malaysian Merger Mania
Further to the West, talk of acquisitions and mergers are swirling in Malaysia and Singapore. Malaysia's biggest mobile network operator Maxis Communications did not deny a wire service report that it had made a bid for Singapore's second-largest mobile operator MobileOne (M1), and an official said an "appropriate announcement" would be made sometime in the coming weeks.
Maxis has about 1.8 million subscribers in its home market, while M1, with around a third of the Singapore market, has about half that number of subscribers.
Both Maxis and Regional Wireless Company, a joint venture between Telstra and Pacific Century CyberWorks Ltd, had reportedly put in bids of at least $1.2 billion for M1.
In another possible cross-border deal, Malaysia's Technology Resources Industries (TRI) has confirmed it is in talks with Singapore Telecommunications over a possible alliance with its mobile phone operator Celcom.
The Singapore Business Times reported SingTel hopes to emerge with a large stake in Celcom, as it continues to try and break into the Malaysian market after several failed attempts. SingTel also has reportedly held talks with Maxis, which could lead to an interesting situation for telecom regulators if Maxis buys M1.
In yet another proposed deal, Norway's Telenor ASA wants to raise its 33 percent stake in another Malaysian mobile operator, DiGi.com Bhd, to as much as 61 percent. Malaysia's minister for energy, communications and multimedia, Leo Moggie, said he favors more foreign investment in the country's mobile operators, but would not comment directly on the Telenor situation, which would give the Norwegian company the largest stake of any foreign firm in a Southeast Asian telco.
Moggie did point out that, under existing rules, if Telenor does get permission for the 61 percent stake it will have to reduce this down to 49 percent over a five-year period.
Mike Newlands has been covering business and technology in the Asia Pacific region for the past 20 years. Based in Hong Kong until 1995, he now lives in Perth, Australia. Newlands is a former Asia Pacific Bureau Chief for an international news and research agency specializing in IT and telecommunications. << |
