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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: Dennis Roth who wrote (19191)	2/17/2002 5:20:00 PM
From: Dennis Roth	Read Replies (1) \| Respond to of 196444

Taiwan's 3G License Auction Settled, Comments Mixed nikkeibp.asiabiztech.com February 14, 2002 (TAIPEI) -- The third-generation (3G) mobile communication license auction was eventually settled on Feb. 6, after 19 days and 180 rounds of bidding. The five winners are Far EasTone Telecommunications Co. for license A, Taiwan PCS Network Inc. for license B, Taiwan Cellular Corp. for license C, Chunghwa Telecom Co., Ltd. for license D and Eastern Broadband Telecommunications Co. for license E. The winning bids totalled NT$48.90 billion, up 45.5 percent from the previously-targeted floor price of NT$33.6 billion. However, it's equivalent to NT$13 worth of unit bandwidth price, the world's most cheapest price. The 3G telecommunication service is set to start up at the beginning of 2003 at soonest. (NT$35.03 = US$1) After the long 19-day auction, the five licenses eventually were awarded at the 180th round of bidding. However, pessimists have begun to worry that the 3G telecommunication in fact is not mature enough to provide well-developed services in lack of 3G-enable systems, handsets and contents, and the consumer potential remains unclear. After the completion of 3G license auction, winners are expected to start up the service as soon as possible at the beginning of 2003, elevating Taiwan to the position as one of the world's telecommunication-advanced countries. However, the experience of NTT DoCoMo Inc. may suggest that the optimistic view for the 3G business expected to be promising will be probably premature. The wideband code division multiple access (W-CDMA) service promoted by NTT DoCoMo has receipted just over 10,000 subscriptions. Separately, the CDMA 2000 1XRTT delivered by Korean telecommunication carriers however has yet to be recognized by international telecommunication-related companies. Accordingly, it is being said that the local 3G telecommunication market may take three years to five years to become ripe. The forerunners' experience shows that the 3G telecommunication business will not be a success around the corner. The expenditure of over NT$10 billion in license acquisition is just an outset before the costly investment on 3G system installation at value of several tens of billions of NT dollars. On the assumption that the 2G telecommunication system installation throuout Taiwan costs a company around NT$25 billion to NT$30 billion, the 3G license winners will face a huge investment, around double their investments in running 2G business. However, what will face them after the huge investment remains questioned. As the introduction into 3G service, the General Packet Radio Service, 2.5G telecommunication version promoted by KG Telecommunications Co., Chunghwa Telecom Co., Ltd. and Mobitai Communications Co., Ltd., goes its way harder than have been expected in lack of mature environment and consumers. Taiwan Cellular Corp. and Far EasTone Telecommunications Co. even have no attempt to announce the start of GPRS service. This suggests that 3G operators may find it difficult to break even. On the other hand, optimists are claiming that the 3G license acquisition was a worthwhile investment. Firstly, taking the franchise fee in the view, every 2G telecommunication company has to pay 2 percent of its total sales every year to the government. On the basis that a 2G company racks up NT$40 billion for annual sales, it should pay NT$12 billion in total as franchise fee for the 2G license valid 15 years. Since 3G licenses are free from franchise fees, the payment for bidding 3G licenses, of which the most expensive is NT$10.57 billion by Eastern Broadband Telecommunication Co., Ltd, is not so expensive than have been expected. Next, compared with other regional countries, Taiwan's 3G licenses are priced relatively reasonably. The Ministry of Transportation and Communications (MOTC) entrusted Nomura Research Institute Ltd. to estimate the value of Taiwan's 3G licenses. The study result is over NT$30 billion for each of licenses. Besides, the MOTC said the winning bid of each of Taiwan's 3G licenses was only a sixth of that paid in Europe, and half the cost of licenses in Hong Kong and Singapore. Also, it is said that the winners are expecting one or other will eventually drop out the 3G market due to the difficulty of raising funds. To the fixed-line network companies, such as Eastern Broadband, it must be worth a try to use the funds raised previously on lucrative mobile phone business rather than plough the money into hard-effort road-digging fixed-line installation. As far as the industrialists in traditional business behind the telecommunication investment are concerned, they are reluctant to place their bet on sunset industries any more, and are inclined to raise the value of the dumpling shares of their companies by developing high-tech business. (Commercial Times, Taiwan)