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Monday, 17 August 2009, 14:45 HKT/SGT

Source: IRG
IRG Technology, Media and Telecoms Weekly Asia Market Review

HONG KONG, Aug 17, 2009 - (ACN Newswire) - The following is an Asian excerpt from IRG's TMT Weekly Market Review Aug 10 - Aug 16. 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.

- Global sales of smartphones rise in the second quarter as some users sought more features for their money, but the overall mobile phone market declined year-on-year for the third consecutive quarter and the fall in average selling prices is accelerating. Consumers who would usually buy mid-range phones were either now purchasing smartphones or were trading down to less-expensive handsets. An increasing proportion of sales from emerging markets is hurting average selling prices, because several cheap but feature-rich phones have been launched on these markets, giving consumers little reason to trade up. Around 286 million handsets were sold in the three months to end-June. The drop follows a 9.4 percent decline on the year in the first quarter.


- NTT DoCoMo Inc. replaced Softbank Corp. as Japan's No. 1 mobile-phone operator by user additions last month, regaining the top ranking for the first time in three years. DoCoMo added 143,600 users in July, 6,000 more than Softbank's 137,600 new subscribers in the period. Softbank, which released Apple's latest iPhone handset in June, dropped to second place after leading the ranking for 26 straight months. KDDI Corp. led in terms of new subscribers for the nine months preceding that. DoCoMo rose 1.2 percent to close, while Japan's benchmark Nikkei 225 Stock Average added 0.2 percent. Softbank fell 0.9 percent and KDDI gained 0.2 percent. The Aquos Shot handsets made by Sharp Corp. for DoCoMo users sold themost in July, followed by Apple's new iPhone for Softbank users.

- NEC Corp. hired Morgan Stanley and Daiwa Securities SMBC Co. to sell as much as 200 billion yen (US$2.1 billion) in stock and bonds. NEC may offer new shares to Japanese and global investors as early as September. The company is planning to sell securities like subordinated debt. The sale may help NEC repay its debt and finance investments in businesses such as renewable energy as the global recession caused the company's biggest annual loss in seven years. The company lacks growth engines and faces further risks that losses at its semiconductor unit will persist. NEC is looking forward to generate profit of 10 billion yen (US$105.4 million) in the 12 months ending March 2010 after posting a loss of 296.7 billion yen (US$3.1 billion) last fiscal year. To help increase its revenue, the company last year agreed to create a rechargeable-battery factory with Nissan Motor Co. to meet demand from electric and gasoline- electric hybrid automobiles.

- Elpida Memory, Inc. has entered into an agreement with Development Bank of Japan to raise 30,000 million yen (US$314.85 million) through the issue of its Series 1 and Series 2 preferred shares. The proceeds from the offering will be used by Elpida to implement its business restructuring plan, which includes investment in research and development and in capital expenditure.

- Trend Micro posted consolidated net sales of 24,244 million yen (US$249 million), operating income of 7,229 million yen (US$74 million) and net income of 4,028 million yen (US$41 million) for the quarter. The Japan region experienced flat consumer sales, and reduced enterprise sales. In North America, consumer sales increased even though appreciation of the yen against the dollar affected this region. EMEA sales revenues were down slightly along with its local currency, in addition to the strength of the yen, total sales substantially decreased when compared to the same period last year.

- Nintendo Beefing Up Overseas Download Lineup For DSi Portable. Nintendo will make a wider array of software titles available in the U.S. and Europe for downloading to its DSi hand-held game system.

- Kaneka Corp. has broadened its solar cell-related business by taking a controlling interest in Sanvic Inc., a leading maker of solar cell sealing materials. Kaneka recently boosted its stake in Sanvic from 49.5% to 50.2% and turned the company into a consolidated subsidiary.


- South Korea will set up an advanced data centre in Vietnam that aims to enhance the overall competitiveness of the Southeast Asian country. Government Information Data Centre is being developed to improve the performance of the government and facilitate regional and international cooperation that is vital for sustained growth and administrative efficiency. A new memorandum of understand (MOU) was signed which would expand cooperative ties. The MOU reached in Vietnam is a follow-up to a deal iron out in May, and outlines cooperation in information technology-related consulting, exchange of personnel, effective control of data and joint efforts to help related companies. A joint South Korea-Vietnam information communication technology committee will be convened early next year at the latest, which can allow more detailed working-level talks to begin.

- KT Corp.'s second-quarter results were generally in line with our expectations, and are maintaining its fair value estimate. Sales declined 2.7 percent year over year. Fixed-line voice revenue fell more than 8 percent versus the year-ago quarter because of the service terminations and decreasing usage. Heightening competition in the Internet access business resulted in a 6 percent decline in this segment over the same period. Performance was also weak in the wireless segment this quarter, despite 4 percent year-over-year customer growth, as results were dragged down by poor handset sales and lower average revenue per user, which declined 4 percent because of lower voice revenue. The EBITDA margin improved from the same year-ago quarter, from 23 percent to 25 percent.

- LG Telecom will combine its music service, MusicOn, with content from local entertainment company MNet Media which will offer a catalogue of 1.3 million songs and more than 80,000 music videos. With the new mobile music portal, LG will compete with KT's Dosirak and SK Telecom's Melon services.

- Samsung Group' former Chairman Lee Kun Hee was found guilty of breach-of-duty for his role in causing losses at Samsung SDS Co. The Seoul High Court handed Lee a three-year prison sentence because he knew SDS illegally sold convertible bonds to his son Lee Jae Yong in 1999 to transfer control of the group. The sentence is suspended for five years, meaning the former chairman will continue to be free. Lee has one week to appeal the verdict. The judge opted not to imprison Lee, partly because of his role in helping the company' sales and profit grow. Suspending the jail term highlights the tendency by South Korean courts to offer clemency to heads of the nation's family-run business groups for white-collar crimes.


- Singapore Telecommunications' regional mobile subscriber base grew 33 percent from a year earlier to 262.2 million during the fiscal first quarter ended June 30. Indian mobile associate Bharti Airtel added 33 million customers from a year earlier and ended the quarter with 102.4 million subscribers. Indonesian associate PT Telkomsel's customer base grew by 23.6 million to 76 million. The firm's subscriber base in Singapore grew by 238,000 to 2.99 million. SingTel's Australian unit, Optus, saw its subscriber base rose by around 764,000 customers to about 8 million.


- Millicom International Cellular SA has agreed to sell its Cambodian operations for US$346 million in cash to The Royal Group, its partner in the country. The transaction comprises Millicom's 58.4 percent holdings in each of CamGSM, Royal Telecam International and Cambodia Broadcasting Services. It values the Cambodian operations at an enterprise value of US$605 million, representing an estimated 7.1 times 2009 EBITDA. Millicom earlier this year decided to divest its Asian operations and focus on Africa and Latin America. The units in Cambodia, Sri Lanka and Laos will be classified as assets held for sale and that it had received expressions of interest from a number of parties.


- Hutchison Telecommunications (Australia) Ltd. swung to a first half net profit of A$552.0 million (US$465 million), boosted by the sale of its "3" business into a new mobile phone joint venture with Vodafone Australia. The group recorded a A$587.3 million (US$495 million) profit on the sale, which was completed in early June. Excluding the proceeds of the sale, the group's loss for the half ended June 30 narrowed to A$35.3 million (US$29.7 million) from a net loss of A$85.4 million (US$72 million) a year earlier. Hutchison Australia and Vodafone agreed to merge their mobile phone units into a new entity. Vodafone Hutchison Australia giving them more power to take on Australia's mobile phone market leader Telstra and SingTel's Optus unit.


- PT Excelcomindo Pratama's first-half net profit was up 12 percent on year to 706.38 billion rupees (US$14.6 billion) because of the gains from telecommunication equipment leasing transactions. Operating revenue was raised to 7 percent. The slight increase in operating revenue, however, was offset by higher operating costs, which rose 19 percent. Its operating profit decreased 41 percent. Gains from leasing telecommunication equipment of 463.90 billion rupees (US$9.6 billion), compared with zero in the previous year drove net profit higher.


- Bharti Airtel Ltd. is running on a revised offer in its proposed merger with South Africa's MTN Group Ltd., possibly entailing a higher cash outgoing and additional debt to fund the deal. Bharti is working out the revised terms on an MTN share price increase and a rise in the cash component of the deal. The outgoings are likely to be higher than the US$4 billion originally estimated. Bharti will seek more bank loans to fund the transaction.

- India's investigation of the fraud at Satyam Computer Services Ltd. has nearly ended. The government has filed charges against seven people in the case. Satyam Computer Services has been at the center of India's biggest corporate fraud probe after former Chairman Ramalinga Raju overstated the company's assets by more than US$1 billion, triggering a drop in stock. A government-appointed board sold a controlling stake in Satyam to smaller rival Tech Mahindra Ltd. in April to prevent an exodus of clients and employees. Tax and finance ministry officials were continuing investigations into the draining off of funds.

- Bharti Airtel Ltd. plans to outsource the management and maintenance of its 80,000 kilometer-plus intercity optic fiber cable network in a deal worth an estimated US$500 million over five years. Bharti has spoken to several telecom equipment companies and a contract will be issued shortly, the Web site quoted an executive privy to the development as saying.


- Dialog Telecom has launched a mobile phone network in Sri Lanka's former war zone, becoming the first international company to operate in the area. Dialog Telekom, a unit of Malaysia's Axiata Group Bhd. and Sri Lanka's biggest mobile operator has set up base stations in northern areas previously held by the rebel Tigers. The northern expansion drive is part of Dialog's network plans to install 60 base stations in the war-torn areas at a cost of up to US$10 million this year. The government declared the end of fighting with Tamil rebels after crushing the guerrilla leadership in mid-May following a decades-long ethnic conflict.

About IRG

IRG is a financial advisory and investment firm focused on the core growth sectors in Asia with particular emphasis on the telecommunications, media and technology (TMT) sectors. IRG's Financial Advisory business is underpinned by the decades of experience in Asia of IRG's professionals, resulting in a unique network of relationships with global and Asian corporations, government institutions, and public and private equity investors. IRG has developed and structured many of the largest and most innovative transactions in the key growth sectors in Asia over the last decade. IRG's Investment business is supported by its corporate finance experience in Asia with over US$13 billion in completed public and private markets transactions executed by IRG professionals over their respective careers in Asia. IRG's platform covers Greater China (Hong Kong, China and Taiwan), Japan, Korea, Singapore, Southeast Asia, and Australia. For more information, please contact Juliette Chow at Tel: +852 2237 6000 or E-mail: [email protected]

Aug 17, 2009 14:45 HKT/SGT
Source: IRG

Topic: Corporate Announcement
From the Asia Corporate News Network

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