Pacific Internet's Shares Surge
On Their First Day of Trading
January 5
Shares of Pacific Internet Ltd., an Internet-service provider based in
Singapore, surged on their first day of trading Friday amid investors' hopes
that the Asia-Pacific region could see a boom in online users.
The company priced three million shares at $17 each, the high end of the
anticipated price range; the stock closed at $48 Friday on the Nasdaq
Stock Market.
Despite the gains, Pacific Internet's shares had been much higher -- the
stock hit $88 at one point Friday before falling back in the afternoon.
Pacific Internet is a unit of Singapore's diversified conglomerate
SembCorp. Industries Ltd.
The offering is the first in American equity
markets for an East Asian Internet concern,
and the first on the Nasdaq Stock Market by
a Singapore-founded company. A portion of
the proceeds is earmarked for expansion into
diverse Southeast Asian markets.
Pacific Internet's business model is
comparable to that of small U.S.
Internet-service providers such as EarthLink
Network Inc. and MindSpring Enterprises
Inc., both of which have benefited from the
recent surge in the U.S. for Internet stocks.
Investors were unfazed by industry experts'
warnings that Pacific Internet faces a tough road marked by deregulation in
its home market of Singapore and increased competition in the region.
Last month, a Hong Kong-based media analyst with a U.S. investment
bank said that Pacific Internet wouldn't have seen such investor enthusiasm
if it had listed its offering in Asia, noting that U.S. investors know very little
about Pacific Internet or the overall Internet-access market in Asia.
The company, whose customers are now primarily in Singapore, Hong
Kong and the Philippines, reported earnings of $6 million on revenue of
$31.5 million for the first nine months of 1998.
============================
January 21, 1999
Pacific Internet Gets U.S. Cheers,
But Asian Experts Have Doubts
By CONNIE LING
THE WALL STREET JOURNAL INTERACTIVE EDITION
HONG KONG -- Thanks to the frenzy surrounding Internet-related
stocks, Pacific Internet Pte Ltd. is receiving the kind of welcome for its
initial public offering from U.S. investors that it can only dream of getting
back home.
The IPO, to be launched on the Nasdaq Stock Market at the end of the
month, has been at least 25 times oversubscribed, sources close to the deal
said. The stronger-than-expected demand has prompted the
Singapore-based Internet-service provider to raise both the size and price
of its offering.
Many U.S. investors are looking at the numbers and seeing Pacific Internet
(www.pacific.net.sg) as a rare opportunity to directly invest in a potentially
vast market at a seemingly low price. According to Framingham, Mass.,
market-research firm International Data Corp., at the end of 1998 there
were 10.74 million Internet users in the Asia-Pacific region (which includes
Australia and New Zealand), but that number is expected to more than
triple by the end of 2002. Meanwhile, the offering price for Pacific
Internet's IPO price is between $15 and $17, while most other
Nasdaq-listed Internet-access providers trade at several times that.
But in this case, numbers may not tell the whole story. Industry experts in
Asia warn that Pacific Internet faces a tough road marked by deregulation
in its home market of Singapore and increased competition in the region.
A Hong Kong-based media analyst with a U.S. investment bank said that
Pacific Internet wouldn't have seen such investor enthusiasm if it had listed
its offering in Asia. Investors in the U.S. know very little about Pacific
Internet or the overall Internet-access market in Asia, he noted.
Pacific Internet, part of a government-controlled conglomerate, is one of
only three Internet-service providers in Singapore, and has about 40% of
that nation's Internet-access market. But the comfortable position the
company has enjoyed for the last few years is expected to be challenged
by a new era of increased competition: Singapore's government announced
three months ago that it would liberalize the Internet-access market, setting
no cap on the number of licenses it would grant.
"There will definitely be an increased level of competition in the consumer
sector, which is good for the market," said Pete Hitchen, a regional analyst
with IDC Asia Pacific. Internet users in Singapore now pay about 100
Singapore dollars a month, or $59, for unlimited access, compared with
the average $14 for Internet users in Hong Kong and $26 for users in
Japan. The fees will most likely drop as soon as more competitors enter
the market, Mr. Hitchen noted.
"Singapore so far is the only market where ISPs can make some margin, as
prices are three to five times more expensive than in Hong Kong," said a
senior executive with Pacific Internet, who declined to be named. "So there
is a lot of room for prices to drop in Singapore and hence the profit margin
going forward is going to be tough to keep."
Pacific Internet's chief executive officer, Nicholas Lee, turned down
interview requests, citing the pre-IPO "quiet period," during which U.S.
regulators require companies to limit their statements about business
matters.
Industry experts don't think looming competition back home is Pacific
Internet's only problem, though: They believe the company's ambitions to
become a truly regional player may be too optimistic.
It's much harder to create an Internet-service provider that serves the
entire Asia-Pacific region than it is to create such a thing for the U.S., said
Charles Mok, chairman of Hong Kong Internet Service Providers
Association (www.hkispa.org.hk), a nonprofit organization representing the
Internet-access industry in Hong Kong.
"Asia is not a homogeneous market like the U.S.," Mr. Mok said, noting
that there are great differences among Asian countries in terms of language,
politics, culture, government regulations and household income. Even in the
case of Pacific Internet, which has presence in Hong Kong and the
Philippines, it is more like "a patchwork of very separate operations rather
than a unified service like [America Online Inc.]," said Mr. Mok.
Pacific Internet has operations in Hong Kong and the Philippines, but
neither is as successful as its home market. Its Hong Kong operation, Hong
Kong Supernet (www.hk.super.net), is one of the city's largest ISPs, but
the intense competition there -- Hong Kong has 131 licensed ISPs -- has
limited its profits. Pacific Internet entered the Philippines market in
mid-1997 through a local partnership, but is still struggling to become one
of the bigger operators in that nation.
The company also suffered a setback in its regional expansion in early
1998 when it divested its stake in Pacific Internet Indonesia, citing
concerns about the currency instability there. And while company
executives talk of plans to enter other Asian markets such as China and
Taiwan in the next few years, there are obstacles to those plans, such as
the closed market in nations like China and the dominant presence of
fixed-line telephone companies as Internet-access providers in the likes of
Taiwan and Australia.
And above all, there is the problem of the Asian market's diversity. "How
do you compete with seasoned players in these specific countries that
know the local markets?" asked an executive at a large Hong Kong-based
ISP.
================================
February 5, 1999
Singapore Leads Asia in Going
Online, ACNielsen Survey Says
By S. KARENE WITCHER
Dow Jones Newswires
SYDNEY, Australia -- Twice as many people in Singapore are wired
regularly to the Internet as in Hong Kong, according to a just-released
global survey.
The survey by ACNielsen, a U.S.-based market-research firm, also
showed that the number of regular Internet users is soaring in China.
The survey found that Singapore and Australia lead the Asia-Pacific region
in Internet usage with one in four people in each country, or 25% of the
targeted age group, being regular users of the Internet.
Hong Kong, Singapore's main rival in the region as a communications hub,
had half the number of regular Internet users at 12.5%. In the U.S., by
comparison, 25% of respondent were regular Internet users.
Steve Garton, ACNielsen's director of media services in Hong Kong, said
he was surprised at "just how well Singapore has got its act together."
The results are part of a global survey of Internet users that covers 16
countries and is based on almost 150,000 respondents.
Indicator for E-Commerce
In Asia, the survey measured Internet usage among people aged 15 years
and over. Internet usage is a major indicator for the potential of
e-commerce in the region.
ACNielsen's Mr. Garton said that closer comparison of the typical user
profile in Hong Kong and Singapore gives Singapore an even greater
edge.
While both cities have professionals and students as the main user groups,
ACNielsen said that 58% of professionals, managers, executives and
business people use the Internet in Singapore compared with just 44% in
Hong Kong. Among students, 54% in Singapore use the Internet
compared with 34% in Hong Kong. The comparable figures for Australia
are 47% and 58%, respectively.
In China, Mr. Garton said the increase in the number of regular Internet
users has been "incredible." The penetration rate currently stands at just
2.9% for the key cities of Beijing, Shanghai and Guangzhou. But it's
growing fast. Between surveys ACNielsen conducted in July 1997 and
May 1998, the number of regular users jumped 72% to 457,000.
'Gigantic Opportunities'
What it underscores, Mr. Garton added, is that there are "gigantic
opportunities" for international providers of services, goods and
information to reach Chinese consumers. But he said there is a "desperate
shortage" of Chinese-language Web sites.
Here's how other markets in Asia ranked in terms of the total penetration
rate of Internet users: Malaysia at 6.3%; the Philippines 2%; Thailand
1.5%; and Indonesia 1.2%. Taiwan, meanwhile, came in at 12%.
Elsewhere, Canada posted a 38% rate, which Mr. Garton attributes to the
cold weather encouraging people to pursue indoor activities; the U.S.
showed a 25% rate; and Germany had a 14% rate. |
