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

To: foundation who wrote (30457)	12/27/2002 7:24:34 AM
From: foundation	Respond to of 197231

China Telecom's New Service Not Expected To Hurt Mobile Companies Friday December 27, 4:53 am ET HONG KONG -(Dow Jones)- China Telecom Corp.'s new call-forwarding service may end up neither boosting the fixed-line giant's earnings nor hurting its mobile rivals in China, while at the same time falling into a regulatory gray area, analysts said. A Guangdong Telecom official said Friday that mobile subscribers in three Guangdong province cities will no longer need to pay for receiving calls originating from fixed lines if they install a special device provided by China Telecom's Guangdong unit. The device physically links a mobile phone to a fixed line. During the initial trial period, the device will be sold at an offer price of 20 yuan (US$1=CNY8.28), he said. After that period, it will cost less than CNY100 each. "We will begin this offer starting Dec. 28 in Shenzhen, Guangzhou and Dongguan," the official said. This raised concerns that income for China Mobile (Hong Kong) Ltd. (NYSE:CHL - News) and China Unicom Ltd. from within one of China's most economically developed regions may potentially be reduced. Analysts are also unsure if the move will fall afoul of industry regulations. "Here is a regulatory concern," said JP Morgan telecom analyst Edison Lee. Lee said China Telecom's new offer will likely have to link with mobile networks in order to operate. However, China Telecom has made no mention of compensating the cellular operators. The new service's earnings impact on the three telecom giants will be minimal, Lee added. He remains skeptical about the strength of the service's threat to mobile operators and its appeal to consumers. China Telecom will benefit from the one-off sales of the special device but will likely forgo recurring revenue from China Mobile and China Unicom in Guangdong. They currently pay China Telecom an interconnection cost of CNY0.06 a minute for mobile calls diverted to its fixed lines. "The service does offer a cheaper call-forwarding and incoming calls alternative, but it lacks mobility," Lee said, pointing out that only low-end, low-mobility mobile users may favor this service. For China Mobile and China Unicom, they still have room to immediately "fight back" by offering discounts in their own respective call-forwarding charges to subscribers, or by using revenue from other services to subsidize the call- forwarding service, he added. A China Mobile spokesman said that its unit Guangdong Mobile has raised the issue with the regulator as the proposed service will involve or affect mobile tariffs, interconnection, and network access. Zhou Jiang Bo, China Unicom's senior investor relations manager, said it is too early to comment on the actual impact of China Telecom's new service. "What we understand is that they claim the new offer as a form of fixed-line value-added service...it is hard to tell if it is against regulations," Zhou said. A DBS Vickers research note also said "the actual impact will be insignificant because cellular users will lose mobility...not favorable to normal consumer behavior." "With the bill charged to mobile subscribers coming down as a whole, this will trigger higher usage volume and hence neutralize the negative impact on mobile operators' ARPU (average revenue per user)," said Wallace Cheung, telecom analyst at DBS Vickers. It makes more sense to interpret China Telecom's move as a way of slowing the loss of fixed-line subscribers to mobile operators, JP Morgan's Lee said. "Effective or not, China Telecom has to make every effort to retain its customers from turning to its mobile rivals," he said. biz.yahoo.com ========== Telecom has the itch. MII can't restrain Telecom for long, and something must give... cdma WiLL... or 3G license? Netcom will receive as Telecom receives.