Qualcomm Inc (QCOM)

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Around Asia's markets: 3G outlays put phone firms back on track
- Young-Sam Cho and Aiko Wakao Bloomberg News

FRIDAY, AUGUST 12, 2005

http://www.iht.com/articles/2005/08/11/bloomberg/sxasia.php

Shares of Asian mobile phone operators like NTT DoCoMo and SK Telecom, the worst-performing industry last year, may extend a rebound in the past month as investments in high-speed networks begin paying off.

Profit in the latest quarter at DoCoMo and SK Telecom, the biggest wireless operators in Japan and South Korea respectively, rose more than analysts had predicted as costs to promote so-called third-generation services fell and the companies signed up more users.

DoCoMo and SK Telecom, which started the world's first 3G services, are among 158 operators globally that have spent an estimated $14 billion since 2002 on networks enabling users to download music, video conference and browse the Web.

The number of high-speed mobile phone users will increase 39 percent to 406 million next year, according to the researcher Strategy Analytics.

"People will start doing things on their mobile phones, such as music downloads and restaurant reservations, that they used to do on their PCs," said Naoki Fujiwara, a fund manager at Shinkin Asset Management in Tokyo. "When people become more aware of what high-speed access can allow, data traffic will rise, contributing to revenue."

The Morgan Stanley Capital International Asia Pacific Telecommunications Services index is the second-best performer after energy among 10 industry groups in the regional benchmark in the past month. SK Telecom and DoCoMo are among the top five contributors to the telecom index's gain in the period.

As of June, the world's 3G service operators had signed up 187 million customers worldwide, according to 3GToday.com, a Web site operated by Qualcomm.

In October 2000, SK Telecom became the first company to launch 3G mobile phone services. A year later, DoCoMo became the first operator to launch 3G services based on a technology known as wideband code division multiple access, the most common standard for 3G.

SK Telecom and DoCoMo plan to offer the world's fastest mobile networks when they introduce so-called high-speed downlink packet access services next year.

Vodafone Group, the world's largest mobile phone operator, began its 3G services in Europe last year. Singapore Telecommunications started in its home market this year.

Shares of DoCoMo have risen 5.2 percent since it reported July 29 that fiscal first-quarter profit rose 22 percent, helped by rising sales from 3G subscribers. The Nikkei 225 stock average has gained 0.2 percent in that period.

KDDI, which has more 3G users than DoCoMo, on July 25 reported its third consecutive gain in quarterly profit after adding more high-speed subscribers. The Japanese company's shares have gained 11 percent since its results.

In South Korea, SK Telecom's stock has climbed 2.7 percent since July 25, when it reported the first profit increase in five quarters. The Kospi has gained 1.4 percent in that period.

KT Freetel and LG Telecom also had results that topped estimates, helped by rising wireless Internet revenue as more people used phones to download pictures and songs.

The latest quarter "with its suggestions of a bottom in earnings, will likely mark a turning point in the sector share-price performance," Hitoshi Hayakawa, a Tokyo-based analyst at Credit Suisse First Boston, wrote in an Aug. 3 report.

Investment in 3G networks worldwide will be $15 billion this year, more than the total spent in the past three years, according to the researcher iSuppli. Spending will climb 59 percent to $24 billion next year, it said.

Shares of Asian mobile phone operators like NTT DoCoMo and SK Telecom, the worst-performing industry last year, may extend a rebound in the past month as investments in high-speed networks begin paying off.

Profit in the latest quarter at DoCoMo and SK Telecom, the biggest wireless operators in Japan and South Korea respectively, rose more than analysts had predicted as costs to promote so-called third-generation services fell and the companies signed up more users.

DoCoMo and SK Telecom, which started the world's first 3G services, are among 158 operators globally that have spent an estimated $14 billion since 2002 on networks enabling users to download music, video conference and browse the Web.

The number of high-speed mobile phone users will increase 39 percent to 406 million next year, according to the researcher Strategy Analytics.

"People will start doing things on their mobile phones, such as music downloads and restaurant reservations, that they used to do on their PCs," said Naoki Fujiwara, a fund manager at Shinkin Asset Management in Tokyo. "When people become more aware of what high-speed access can allow, data traffic will rise, contributing to revenue."

The Morgan Stanley Capital International Asia Pacific Telecommunications Services index is the second-best performer after energy among 10 industry groups in the regional benchmark in the past month. SK Telecom and DoCoMo are among the top five contributors to the telecom index's gain in the period.

As of June, the world's 3G service operators had signed up 187 million customers worldwide, according to 3GToday.com, a Web site operated by Qualcomm.

In October 2000, SK Telecom became the first company to launch 3G mobile phone services. A year later, DoCoMo became the first operator to launch 3G services based on a technology known as wideband code division multiple access, the most common standard for 3G.

SK Telecom and DoCoMo plan to offer the world's fastest mobile networks when they introduce so-called high-speed downlink packet access services next year.

Vodafone Group, the world's largest mobile phone operator, began its 3G services in Europe last year. Singapore Telecommunications started in its home market this year.

Shares of DoCoMo have risen 5.2 percent since it reported July 29 that fiscal first-quarter profit rose 22 percent, helped by rising sales from 3G subscribers. The Nikkei 225 stock average has gained 0.2 percent in that period.

KDDI, which has more 3G users than DoCoMo, on July 25 reported its third consecutive gain in quarterly profit after adding more high-speed subscribers. The Japanese company's shares have gained 11 percent since its results.

In South Korea, SK Telecom's stock has climbed 2.7 percent since July 25, when it reported the first profit increase in five quarters. The Kospi has gained 1.4 percent in that period.

KT Freetel and LG Telecom also had results that topped estimates, helped by rising wireless Internet revenue as more people used phones to download pictures and songs.

The latest quarter "with its suggestions of a bottom in earnings, will likely mark a turning point in the sector share-price performance," Hitoshi Hayakawa, a Tokyo-based analyst at Credit Suisse First Boston, wrote in an Aug. 3 report.

Investment in 3G networks worldwide will be $15 billion this year, more than the total spent in the past three years, according to the researcher iSuppli. Spending will climb 59 percent to $24 billion next year, it said.