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To: Dealer who wrote (7216)	10/11/2000 9:25:35 AM
From: Dealer	Read Replies (1) \| Respond to of 65232

QCOM--S.Korea's 3G mobile phone battle seen far from over By Yang Sung-jin SEOUL, Oct 11 (Reuters) - South Korea's telecoms sector, roiled by government demands two competing platforms be adopted for third-generation phones, faces further turbulence as the government could push one carrier to adopt cdma2000. With lucrative contracts for next-generation wireless service licences on the line, three top carriers have all balked at adopting cdma2000 in favour of W-CDMA, an evolution of the GSM standard that now holds 70 percent of the world market. Only two of the consortia bidding for third-generation (3G) licences would be able to go that route, the Information Ministry announced on Tuesday, touching off sharp stock price falls and speculation about the government's next move. ``The government's decision on adopting Qualcomm's cdma2000 system could put the loser in the upcoming 3G auction in a serious rut,'' said Brian Yang, a telecom analyst at Shinhan Securities. W-CDMA (wideband code division multiple access), being developed by Nokia and Ericsson , competes with Qualcomm's (NasdaqNM:QCOM - news) cdma2000. Yang said the carriers' preference for W-CDMA was understandable as one of the selling points of 3G service is roaming capability. In contrast, equipment makers are keen on supplying cdma2000 handsets based on models they already produce. MOVE RAISES DOUBTS ``The government's decision is disappointing to the stock market as well as the telecom industry,'' said James Kim, a telecom analyst at Jardine Fleming in Seoul. ``The market wants a transparent regulatory environment.'' Information Minister Ahn Byung-yub apologised for the government's inconsistent policy on Tuesday. Top-ranked mobile service provider SK Telecom leads one consortium seeking a 3G licence, as do Korea Telecom and LG Telecom . SK shares fell 6.64 percent to 239,000 won ($213.6) on Wednesday. Korea Telecom shed 6.16 percent to 64,000 and LG 12 percent to 12,850. Analysts said the government's switch from allowing consortia to choose their own technology to a demand for both has raised concerns it might make further demands. Though all three bidders have said they will stick to W-CDMA bids, analysts say the government may not simply wait and speculated which bidder might be pressured to accept Qualcomm's cdma2000. ``The Information Ministry may try to persuade SK Telecom to adopt Qualcomm's system (before the formal auction) as it's the world's largest second-generation CDMA service provider,'' said Suh Yong-won, a telecom analyst at Hyundai Securities. Korea Telecom, as a state-run firm, could be most susceptible to the government's push for Qualcomm's cdma2000, many analysts said. Alternatively, LG Telecom, which as holder of the smallest mobile market share of the three at about 13 percent, may have the least clout to repel the government's request. SAMSUNG COULD BENEFIT Shares of Samsung Electronics plummeted 12 percent on Wednesday in line with international chip share woes, but analysts said the decline overlooked the fact the company, which makes handsets based on the forerunner of cdma2000 technology, stands to benefit from the government's support of the format. Samsung Electronics Vice-chairman Yun Jong-yong said prior to the government's move that prospects for South Korea going strictly W-CDMA were a ``heavy concern''. Analysts said support for cdma2000 could provide a boost to handset makers, especially if China opts for the format for its huge market. They also said Seoul could be stressing support for the Qualcomm standard to help induce China to adopt a standard that favours South Korea's handset makers. The 3G wireless telecom services, called IMT-2000 in Korea, will allow global roaming, faster Internet access, multimedia and real-time video conferencing. South Korea has one of the highest mobile phone user rates in the world and more wireless phones than land lines.