PCCW's Growth Limited by Small Market, High Penetration: Merrill
Aug 09, 2001 - 16:22:13 HKT
Quamnet News Service
Merrill Lynch said it maintained Neutral rating on Pacific Century CyberWorks (0008), Richard Li's Asian communications vehicle, on belief that its growth is still limited by the small market and high penetration.
In a note to clients today, analysts Agnes Ho, Francis Cheung and Alistair Scott said PCCW's management continues to emphasize that profitability and not market share is what matters and highlighted that their ARPU (average revenue per user) is the highest in Hong Kong at about US$50. "Going forward they will focus on data and VAS to grow/support revenues," it said.
PCCW's launched only two GPRS phones currently with limited quantities and service appears pricey at HK$98 per 1MB downloaded, it said.
Though PCCW will be rolling out more data services, nothing is really new, such as e-mail/messaging service, downloads, but now at faster speeds, it added.
3G capex cost is falling, it said. It quoted PCCW's CEO Hubert Ng as saying that 3G capex to cover most of Hong Kong will be about HK$2 billion but is likely to be lower as prices are falling. This is much less than they spent on their 2G network.
"Mr Ng believes the industry must consolidate as smaller operators cannot afford to roll out 3G," the house said. "He does not believe MVNOs (Mobile Virtual Network Operators) will work and you cannot make a business case unless an operator can have ARPU's of HK$400 (US$50). In his view, industry average ARPU is about HK$220 which is not enough to justify new capital investment."
The house expects PCCW to post earnings per share of 12 HK cents and 19 HK cents in full-year 2001 and 2002. |
