Wide Telecom in bold transition from pager maker to CDMA phone producer
Wide Telecom, Inc. has developed and mostly exported various models of pagers since its founding in July 1996. So far, its revenue has come from sales of pagers, and the company recently advanced into the manufacture of mobile phone sets.
Last year, the company posted 30.8 billion won and 1.2 billion won in sales and net profits, respectively. Despite a sharp reduction of the domestic pager market due to the explosive growth of personal mobile phones, it has recorded stable sales growth.
Keeping up efforts to increase pager exports, the company will push its new business of developing and marketing mobile phones. By taking over a domestic firm with CDMA (code division multiple access) technology late last year, Wide Telecom formed an outline of its mobile phone business strategy.
The PCS (personal communication service) mobile phones developed by Wide Telecom will be released to the market under the brand name of MITZ next month. Wide Telecom signed a contract with Korea Telecom Freetel in July 1999 to supply 100,000 units of MITZ, worth about 25 billion won.
In the PCS phone set division alone, the company expects 39 billion won in annual sales revenue. This year, its total sales are expected to increase by 156.5 percent to 79 billion won, affected by a projected 444.2-percent increase in operating income.
On Jan. 10 of this year, it signed a 60-billion-won export contract with Four Seas Telecom of Hong Kong. Under the contract, Wide Telecom will export 300,000 units of the PCS phone model to Hong Kong.
In addition to the purchase of MITZ phones, the contract calls for Four Seas Telecom to burden 800 million won in development cost for the CDMA handsets.
Currently, CDMA mobile phones account for a small 20 percent of the world mobile phone market, but the number of countries, which have adopted CDMA communication system, is on the rise.
Wide Telecom plans to take advantage of its well-established overseas beeper sales network in marketing its mobile phones. China and Latin America, where demand for mobile phones is fast rising, are its major target markets.
Out of 83 billion won in planned sales for this year, which is up 170 percent from last year, the company expects to see 53 billion won coming from its new business, mobile phone sets.
Recently, Wide Telecom signed a contract with SK Telecom, a leading domestic telecom company, to jointly develop phone sets for the next-generation telecom service, IMT-2000. When international standards on IMT-2000 will be fixed around March of this year and SK Telecom will be designated as an IMT-2000 business, Wide Telecom will be given priority in supplying IMT-2000 phone sets to SK Telecom. If so, the status of Wide Telecom in the ultimate telecom market will be greatly enhanced.
It listed it shares directly on the KOSDAQ stock market on Dec. 14. It was the first time that a venture firm has directly listed its stocks without a public offering. Wide Telecom is accessible at www.widetel.co.kr.
Accelerating product developmentThe company is working on five CDMA/PCS models: WSH-200, WSH-100, WCH-110, WPH-1210 and WSH-300. The WSH-200 model, a combination of CDMA and AMPS, will be released in export markets only, first in the United States and China. Development of the WSH-200 model is completed and the model is scheduled to come off the line soon.
Another CDMA plus AMPS model, WSH-100, is being developed. The single band, dual mode model of mobile phone handsets is targeted at U.S. and Latin American markets, where a large number of analog subscribers is expected to switch to digital services for years to come. The model will be noticeably lighter than the WSH-200. Development of the WSH-100 is more than 95 percent complete.
WCH-110 will be a CDMA-only model targeting a handful of markets, including China and Korea, and its development is about 95 percent complete.
Wide Telecom is in the process of developing the WPH-1210 model, a CDMA/PCS model designed for the Korean market. The company expects to sell the model to KT Freetel. It is more than 95 percent complete.
The WSH-300 model is similar to the WPH-1210 model, except minor modifications in radio frequency.
Bright business prospectFinancially, Wide Telecom is healthy, with a debt ratio marking 78.41 percent in 1999, much lower than an industrial average of 281.94 percent. Its net profit-to-sales ratio was a good 5.81 percent, compared with a negative 0.35 percent for the industry.
Sales growth was 32.74 percent year-on-year for last year and 56.09 percent a year earlier. Boosted by the marketing of CDMA/PCS handsets beginning this year, the company estimates sales figures to more than double to 84.57 billion won this year and 168.47 billion won next year.
Net profits rose from 1.44 billion won in 1998 to 1.73 billion won in 1999, and is projected to swell to 5.32 billion won and 16.25 billion won this year and next, respectively.
Owing to aggressive export marketing since 1996 in the pager business, the company has established a solid footing as a market leader in Singapore and Thailand. It plans to hold the grip over the market by releasing pagers with various functions, such as voice and character transmission and interactive models.
The CDMA handset market is expected to be in short supply. This year, the United States and Latin American countries are moving fast from analog communication mode to the CDMA mode.
Domestic market of CDMA/PCS phone handsets grew a whopping 95.7 percent over the past three years, propelled by strong marketing efforts of PCS service providers.
Industry observers predict the growth trend to continue for years, dismissing concern that the market is saturated. They say that demand for more fashionable and multifunctional handsets to replace existing models dies hard.
In 2000, the company expects to improve its revenue base prominently with the addition of CDMA/PCS handsets with high value-added modes. With the sales of mobile phone sets, its operating income is expected to rise 501.8 percent to 8.69 billion won.
Updated: 02/16/2000 |
