THREAD ---Interesting article ----Asia's Biggest Phone Companies Will Sign US$1 Bln
Cable Network Agreement
By Linus Chua
Asian Phone Firms to Sign $1 Bln Cable Pact Mid-June (Update4)
(Updates stock prices.)
Singapore, May 31 (Bloomberg) -- Asia's biggest phone
companies will sign a pact in two weeks to build a $1 billion
underwater cable network, allowing speedier phone and Internet
links in the region, three of the companies said.
The network, called APCN-2, is expected to replace the
existing Asia Pacific Cable Network when it's completed in 2002,
and will help the region's dominant phone companies stay ahead as
competition intensifies in their telecommunications markets.
The proposal that could bring together Korea Telecom Corp.,
Hong Kong Telecommunications Ltd. and eight others, is also a
sign that companies are gearing up for a pick up in demand for
goods and services in the region.
''Phone companies realize they have to capture capacity
early to maintain growth, and to maintain their dominance,'' said
Daniel Widdicombe, a telecommunication analyst and managing
director at Bear Stearns Singapore Pte. ''They are rushing to tie
in capacity in expectation of a huge jump in data connections.''
Widdicombe expects data usage to expand between 40 percent
and 50 percent annually in Asia, with more business
communications and a heavier use of the Internet.
The number of Internet users in Asia outside of Japan is
expected to expand 35 percent a year to 57.5 million by 2003,
said International Data Corp. The market researcher also expects
data revenue for the region to increase at an average of 32
percent a year to $18.5 billion by 2002, twice the pace of voice
revenue growth.
''The use of wireless, data and the Internet will continue
to increase in Korea, driving earnings growth,'' said Hong Sung
Han, manager of Korea Telecom's international submarine cable
division. ''Korea Telecom is the most aggressive investor'' in
the project, he said, declining to be specific.
With a capacity of 640 gigabits -- at least twice the
current capacity and equivalent to about 8 million phone lines
transmitting data at the same time -- the new network will
quicken data connections within the region, as well as with the
U.S. The U.S. link will be through existing networks from China
and Japan.
France's Alcatel SA, Lucent Technologies Inc. in the U.S.
and Bermuda-based Tyco International Ltd. are among companies
that have put telecommunications cables under the sea and may bid
for the Asian project after a pact is signed.
Competition
The network will connect Japan, South Korea, China, Taiwan,
Hong Kong, Malaysia and Singapore, with likely extensions
eventually to other countries such as Australia.
The new network will help Asia's former phone monopolies
that are now bracing for competition on their home turf that will
end their control of fixed-line and data-transmission. Singapore
Telecommunications Ltd. for example, will lose its fixed-line
monopoly in April 2000.
The cable network pact will be signed in China in the middle
of June.
Other phone companies involved are likely to be Japan's KDD
Co. and Japan Telecom Co., ChungHwa Telecom Co., Telekom Malaysia
Bhd., Singapore Telecom, Indonesia's PT Indosat, China Telecom
Ltd. and Australia's Telstra Corp. U.S. phone companies are also
expected to join in the plans.
Not all of the companies have ironed out the details of the
extent of their participation in the project.
''We still don't know what our level of participation will
be -- whether it'll be as an initial party, as an additional
party, or as a regular investor,'' said Marwan Batubara, head of
planning for the project at Indosat. ''It depends on the economic
situation, it depends on the performance of our company.''
KDD and Japan Telecom said they haven't decided yet on
whether to participate in the project. Singapore Telecom and Hong
Kong Telecom declined to comment, while the others couldn't
immediately be reached.
Korea Telecom shares rose 2,500, or 4.3 percent, to 60,700
won while Singapore Telecom fell 3 cents, or 1 percent, to
S$2.88,. KDD gained 130, or 2 percent, to 6,680 yen and Japan
Telecom rose 200,000, or 14 percent, to 1.68 million yen. Hong
Kong Telecom was unchanged at HK$17.90. Indosat shares rose 50
rupiah, or 0.3 percent, to 16,550 rupiah.
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