Hong Kong, Mar. 12, 2009 (Japan Corporate News) -- Hong Kong, Mar 12, 2009 - (ACN Newswire) The following is an excerpt from IRG's TMT Weekly Market Review March 2 - March 8. IRG is a financial advisory and investment firm focused on the core growth sectors in Asia with particular focus on the telecommunications, media and technology (TMT) sectors.
Internet
- Google Inc. (NASDAQ:GOOG) saw its share of the Chinese online search market climb 3.5 percentage points year on year to 20.7 percent in 2008. Baidu., (NASDAQ:BIDU) the world's biggest Chinese-language search engine, again took the lion's share in the year, with its market share increasing 0.6 percentage points from 72.6 percent in the previous year to 73.2 percent. Following the two outrunners came Tencent (HK:0700) Holdings and Yahoo!China (NASDAQ:YHOO), which had 3.3 percent and 1 percent of the Chinese online search market, respectively. Notably, China saw 46.8 billion web search requests in the fourth quarter of 2008, up 25.8 percent from the previous quarter. The requests surged 63.2 percent from 91.1 billion in 2007 to 150 billion in the entire year, averaging the monthly requests to 12.5 billion.
- Tencent Holdings Ltd. expands its service to 16 areas across China, on the strength of general packet radio service of China Unicom (HK:0762). China Unicom's GPRS users can install the latest version of Mobile QQ, a cellular messaging service provided by Tencent, in their mobile phones and chat with their friends anytime. The latest version will be available in succession in other areas in the country. The latest version is expected in the 16 areas including Guangdong Province, Zhejiang Province, Hubei Province, Shanghai, Jiangsu Province, Fujian Province, Tianjin, Jilin Province, Henan Province, Shandong Province, Hebei Province, Hainan Province, Jiangxi Province, Heilongjiang Province, Xinjiang Uygur Autonomous Region, and Guangxi Zhuang Autonomous Region.
- Alibaba.com (HK:1688) is in talks with China's three major telecom operators China Mobile, China Telecom and China Unicom, to launch a web-enabled mobile payment service. Alibaba recently launched a trial 2G mobile service for its online store owners who subscribed to its TrustPass identity verification system. The service allows subscribers to respond to messages from Alibaba users by SMS. Even though the 2G mobile service does not include mobile payments, it is expected to bring the company closer to setting up its 3G mobile transaction service. However, it will take years to establish a mobile B2B market in the country since China's 3G market is still in its infancy. He concluded that the time is right for Alibaba to prepare a 3G mobile transaction service as commercial 3G services are getting more popular in China.
Mobile/Wireless
- China will see 20 percent of its mobile phone subscribers to choose 3G networks in three years. The construction of 3G networks in China is less expensive. It would a long time to gain returns from the investment on 3G networks. Chang also said that the price of 3G service is still under discussion. China Unicom obtained the 3G license earlier this year. It plans to invest as much as 95 billion yuan (US$13.9 billion) this year in expanding and upgrading its existing networks, including 3G networks based on the WCDMA technology. In addition, the company is in talks with Apple Inc, expecting to sell iPhone in the country in May, when the telecom operator will launch the 3G services nationwide.
- A Motorola (NYSE:MOT) unit in east China is stopping cell phone production after the first quarter of this year, underlining the extended woes of the U.S. communication giant's troubled mobile phone business. Hangzhou Motorola Cellular Equipment Co Ltd, a joint venture between Motorola Inc and Hangzhou Eastern Communications (SHA:900941), said its cell phone sector would be integrated into production lines in Tianjin Motorola after the first quarter of this year. The company will instead focus on TV set-top-box business, broadband and mobile network equipment. On January 15 this year, Motorola announced plans to lay off 4,000 employees worldwide, the bulk of which would be from its mobile device department. Motorola posted a full year loss of more than US$4.16 billion in 2008. The mobile devices sector contributed to more than half of that loss and eroded the business revenue of other sectors including enterprise mobility solutions and home and networks mobility.
- China Mobile Ltd. (HK:0941) will focus on the domestic market for the time being, but it still sees opportunities to acquire telecommunication assets abroad. The comments mark a shift in emphasis for Chairman Wang, who has stated several times recently that telecom assets abroad look cheap and the world's largest mobile operator by subscribers will take advantage to invest overseas at the opportune time. Wang reiterated that he believes international telecom assets are cheap currently. China Mobile bought 100 percent of Paktel in 2007 for US$460 million, renaming it from CMPak Ltd. Wang still sees room for growth in China's rural areas without impacting profit margins. Though average revenue per user is lower in rural markets, costs are lower too. China Mobile earned an average revenue per user of 83 yuan (US$12.1) per month. During the same time period, China Mobile posted an EBITDA of 159.2 billion yuan (US$23.3 billion) on revenue of 301.4 billion yuan (US$44.1 billion), for an EBITDA margin of 52.8 percent, down from 53.9 percent a year earlier.
- China Mobile plans to invest 58.8 billion yuan (US$8.6 billion) this year to build 60,000 3G base stations. The plan would increase the number of China Mobiles 3G base stations to more than 80,000 across China. The Ministry of Industry and Information Technology awarded China Mobile a license to operate a 3G network based on the domestically developed TD-SCDMA standard. At the same time the ministry gave approval to smaller rivals China Unicom and China Telecom to develop WCDMA and CDMA 2000 networks, respectively. Spending on 3G equipment by carriers would total US$41 billion over the next two years. Intel began offering its partners a discount bundle deal including a Core i7 CPU and solid state drive (SSD) hoping to increase demand of the two product lines and to clear stockpiled inventory. Intel is offering a 10-15 percent discount on the combined price of the CPU and drive as part of the promotion which is mainly targeting markets in China, Europe and North America.
- China Unicom Ltd. is in talks with Apple Inc. about introducing the iPhone in China. An exclusive deal with Apple to distribute the popular phone in China would give China Unicom a much-needed competitive edge over its larger rival The third-generation iPhone runs on Wideband CDMA, which China Unicom is rolling out in China currently, making it a natural partner for Apple. China Mobile is the world's largest mobile phone service provider by subscribers, which makes it an attractive partner for Apple in China. However, the 3G iPhone isn't compatible with China Mobile's locally developed TD-SCDMA network.
