Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : The Critical Investing Workshop -- Ignore unavailable to you. Want to Upgrade?

To: T L Comiskey who wrote (25124)	7/12/2000 12:23:40 PM
From: Sully-	Read Replies (1) \| Respond to of 35685

Korean Phone Licenses to Cost Up to 1.3 Trillion Won (Update3) 7/12/00 3:09:00 AM Source: Bloomberg News Seoul, July 12 (Bloomberg) -- The Korean government will charge the three companies winning new mobile phone service licenses as much as 1.3 trillion won ($1.2 billion) each, which is likely to favor SK Telecom Co. and other existing operators. The government said it will select three companies based on the quality of business plans and charge each between 1 trillion won and 1.3 trillion won per license. It based those charges on an estimate that the new services, which will allow mobile users to surf the Internet and even hold video conferences, will be worth $117 billion over the next 15 years. Korea's 26 million-subscriber market, which had five service providers a month ago, will soon be controlled by Korea Telecom Corp., SK Telecom Co. and LG Telecom Co. Their experience and revenues may give them an advantage in preparing business plans and paying licenses over prospective entrants, including foreign companies. The license fee is ''not as bad for SK Telecom as for the other operators, especially LG Telecom, for whom it's going to be a very big financial burden,'' said Lee Jae Min, an analyst at SC Securities in Seoul. SG's Lee estimated that KT will have to pay roughly twice the amount per subscriber for a new license that SK will, and LG will pay three times as much. Still, Minister of Information and Communication, Ahn Byyong Yeob, said that the government will award points to consortiums in the selection process because the licenses are linked to other parts of the communications industry, such as content development. The Ministry said it expected the 1.3 trillion won upper ceiling for licenses to be roughly equivalent to 3 percent of sales from the new services over the next 15 years. The winners will have to pay half of the fee in advance and the rest over ten years beginning in 2002. ''The number is not a small,'' said Hani Abuali, a telecommunications analyst at Donaldson Lufkin & Jenrette, in Hong Kong. ''However the fact the payments are structured in a way where you can spread them over ten years means that the impact on the discounted cash flow valuations of the cellular operators will be lower than one would have expected at face value.'' Must Have For mobile service providers, a so-called IMT2000 license is crucial for securing revenue and retaining customers. The companies expect future increases in revenue to come mainly from data rather than voice transmission as users demand mobile access to the Internet for functions such as video conferencing. An IMT2000 license will give service providers access to frequencies needed to carry the volumes of data necessary to transmit video and multimedia files at a practical speed. SK, with its acquisition of Shinsegi Telecom Co., has close to 57 percent of Korea's cellular phone users on its books. KT affiliates Korea Telecom Freetel Corp and Hansol M.com Co. have a joint total of 29 percent, leaving LG a distant third. At a press conference, Minister Ahn repeatedly denied suggestions by reporters that the government will intervene in the process of selecting a technology for the new services, reiterating the government's policy of allowing operators to choose freely. ''Whether it is W-CDMA or CDMA 2000, the chosen standard will depend on demand and profitability,'' said Ahn. ''We don't want to intervene in the market or say anything that will impact the price of equipment.'' The three-largest operators have said they plan to use a standard developed by Nokia Oyj Ericsson AB and NTT DoCoMo, called wideband code division multiple access, rather than a Qualcomm Inc. version, called CDMA 2000. The decision, announced by service providers last week, led analysts to forecast that Qualcomm's revenue from sales of chips used in cell phones may decrease in its largest market. The company said its market share of chips may fall but it will continue to collect royalties regardless because both systems are based on its technology. In addition to KT, SK and LG, a group of companies led by Korea's second largest high-speed Internet service provider, Hanaro Telecom Inc. has also said it will apply for a license. The government will receive applications by September and award the licenses by the end of the year. There are no restrictions on overseas companies applying for the licenses. SK Telecom fell 2500 won at the close of trading today. cnetinvestor.com