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| Friday, 26 June 2009, 22:22 HKT/SGT | |
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Source: IRG | |
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HONG KONG, June 26, 2009 - (ACN Newswire) - The following is an excerpt from IRG's TMT Weekly Market Review June 15 - June 21. 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 entertainment and media spending will increase by 14 percent over the next four years to US$1.6 trillion by 2013. The increase will come at a compound annual growth rate of 2.7 percent. The U.S. entertainment and media market will grow at a 1.2 percent compound annual growth rate. PricewaterhouseCoopers' new report suggested that the key to sustainable revenue streams in 2013 lies in providing a content experience that cannot be readily duplicated elsewhere, whether the revenue model is ad-supported, subscription, or a combination. The economic downturn that began in earnest during 2008 has accelerated digital spending, due to digitally driven segments such as Internet advertising and pay television subscriptions. Digital spending will grow from 17 percent of U.S. industry revenue last year to 25 percent by 2013. Also by 2013, worldwide digital and mobile platforms will account for 78 percent of total consumer-end user-access growth to US$387 billion, as consumers take more control over the content they want to experience.
- Of the world's top 20 broadband markets by subscribers, India recorded the fastest growth in the first quarter of this year, adding 1.13 million lines. That compares with the addition of 16.6 million new connections worldwide, taking the global total to 429.2 million. India posted subscriber growth of 13.4 percent, ending the quarter with 6.11 million connections, making it the 15th largest broadband market in the world. Neighboring Sri Lanka recorded the biggest growth at 18 percent, albeit from a small base. At the end of Q1 the country was home to 118,000 connections, putting it in 71st place globally. China and the U.S. remain ahead of other markets by some margin with 88.09 million and 83.97 million lines respectively. Growth in China was 5.66 percent during the quarter and 4.14 percent in the U.S. China added 4.8 million lines in Q1. Third-placed Japan recorded growth of just over 1 percent to 30.63 million lines, while ninth-placed Brazil was the only member of the top 10 to see bigger growth than China, at 5.81 percent.
- Chipmakers are likely to double capital expenditure on wafer-fab factories and invest 90 percent more to buy equipment next year than they do this year. SEMI, which represents over 2,200 manufacturers in semiconductor and liquid-crystal display segments worldwide, estimates 2009 spending on wafer fab constructions to drop 56 percent to US$2 billion from last year, the lowest outlay in 10 years by the industry, and capital expenditure on equipment to lose 50 percent. However, first-tier chipmakers including Taiwan Semiconductor Manufacturing Co. (TSMC) will begin to increase spending on fab construction and manufacturing equipment in the second half of this year. SEMI ascribes the equipment-procurement recovery mostly to the introduction of a low-priced 3G iPhone and mainland China's subsidizations for household appliances and information-communications technology products, which have stimulated consumptions of these products.
Japan
- Japanese operator KDDI is merging its South Korean subsidiaries Prism Communications and KDDI Korea. Following the merger, the merged entity will use the KDDI Korea name. KDDI decided to merge the subsidiaries to efficiently expand the ICT business in Korea.
- The number of mobile phone shops in Japan is expected to contract by 5 percent this year, the Nikkei reports, citing research firm Seed Planning. The number of shops operated by thirty major retailers is expected to fall by 5 percent to 4,600 in fiscal 2009, from 4,866 in fiscal 2008. This would be the second year of decline. Furthermore, shops selling handsets for different carriers are forecasted to drop by 50 percent to 400 while shops specializing in one carrier are expected to increase by 3 percent to 4,200. The new pricing schedules introduced by the mobile operators, which offered higher handset prices but cheaper calling plans, have made things more difficult for mobile retailers.
- Elpida Memory Inc. plans to apply for public funds to shore up its depleted capital. Elpida, which plans to tie up with a new memory chip firm set up by Taiwan, has been battered by low dynamic random access memory prices even as it chases bigger rivals Samsung Electronics Co Ltd and Hynix Semiconductor Inc.
- Orders for Japanese chip-making equipment rose for the third straight month in May, suggesting conditions may be leveling off in the semiconductor sector, which has been weakened by slow demand and low prices. In the latest sign of bottoming out, orders for tools used to make microchips rose 22 percent in May from the previous month to 31.4 billion yen (US$326 million). Orders were still down 65 percent from a year earlier. The ratio of the three-month moving average of orders to sales stood at 0.66 in May, preliminary figures from the Semiconductor Equipment Association of Japan showed, meaning that for every 100 yen (US$1.00) of sales, chip makers placed new orders worth 66 yen with Japanese equipment makers. That was up from 0.44 in April, but still well below 1.00. A reading above 1.00 shows that orders are outpacing sales, signaling a recovery in subsequent months.
- Toshiba Corp. said it plans to mass produce 28-nanometre system chips in the next business year as it fights to stay relevant in an area dominated by the likes of Intel Corp and Texas Instruments Inc. Toshiba is hurrying to restructure its system chip business, which has been smarting from shrinking demand, high costs and falling prices. Toshiba and NEC Electronics would extend their development agreement with an IBM-led group of firms to develop 28-nanometre chips together. Toshiba had previously said it planned to start mass-producing 32-nanometre chips next year, but it now plans to skip 32-nanometre production altogether at its system chip plants in southern Japan. Systems chips control multiple functions in electronics or cars and look like a maze of circuits on a single sliver of silicon. Producers have been racing to shrink their chips while packing more power into each unit.
- Toshiba Corp. will shoulder US$307 million in restructuring costs from shutting down its old system chip and discrete chip lines as it seeks to unload losses. Toshiba plans to cut production capacity for lines that process 150-millimetre or smaller silicon wafers by 30 percent in the year to March 2010. The move comes after talks to merge Toshiba's system chip operations with NEC Electronics Corp floundered at the end of last year, with NEC Electronics announcing in April that it planned to merge with Renesas Technology Corp. Toshiba, which expects losses to continue on its chip operations this year, plans to scrap two lines at its Kitakyushu plant in southern Japan, to stop production at two lines in Himeji in western Japan, and to reduce production at two more plants.
- Sony Corp. chief executive Howard Stringer said the Japanese electronics conglomerate's turnaround efforts, which include job cuts, plant closures and a management reshuffle, were advancing well. Sony last month forecast a second consecutive year of losses as the global slump hits demand for electronics. To get back to growth, it is implementing far-reaching restructuring such as a headcount reduction of about 16,000 people and closure of eight of its 57 manufacturing sites. Mr Stringer took the helm at Sony in 2005 vowing to deliver growth and get its various divisions to work closely together to compete with new rivals such as Apple in portable music and Nintendo in games. Mr. Stringer's efforts have been hampered by a stronger yen and sluggish demand for its electronics products, which include Bravia liquid-crystal display televisions, Cyber-shot digital cameras, and the PlayStation 3 game console. Sony shareholders also approved a new management set-up at the company that will center power around Mr. Stringer and a team of younger executives.
- Rakuten Inc. now intends to take on 100 more new college graduates in the spring of 2010 than previously planned, for a maximum of 400, thanks to growing online sales operations. The virtual mall operator, which hired 307 college graduates this spring, had earlier eyed a similar number for next year. Its development division, which creates online services, will hire 150 graduates, up 40 percent from the spring of 2009. The other 250 are bound for sales and administration. Roughly 30 percent of this class of 2010 will have science backgrounds. Rakuten headquarters will employ six Chinese in the fall and seven Indians next January. In midcareer personnel, the company is keeping the 2009 figure on a par with last year's, which came to 690. The Rakuten group employs about 5,500 workers overall, a figure that the company says will top 10,000 within a few years.
Korea
- MagnaChip Semiconductor said its parent companies filed for Chapter 11 bankruptcy protection in the U.S., after a South Korean investment fund acquired assets of the troubled chip maker. MagnaChip had signed a deal with a fund led by KTB Securities to acquire MagnaChip and its operating and sales affiliates. Its South Korean operations for production and sales, and sales units in Europe, Taiwan and Japan, are not part of the Chapter 11 filing. The chip maker, formerly a unit of Hynix Semiconductor and bought by CVC and Francisco Partners in 2004, was put up for sale as it struggled under heavy debt and a severe industry downturn. The U.S. parent firms hold all debt owed by MagnaChip, while the KTB fund is acquiring assets, goodwill, and employees of the company. Magnachip, which makes image sensors for mobile phones and display driver chips for flat-screens, supplies to major Asian technology companies including LG Display Co Ltd and Sharp Corp.
- Samsung Electronics Co. expects the global handset market to remain weak for the rest of 2009 but remains on target to hit its handset shipments goal set for the year. The second half of this year is unlikely to be much different from the first six months, with Samsung Electronics vice president of overseas marketing for mobile communication Younghee Lee adding that contraction will likely continue. The global handset market will likely contract around 5 to 10 percent this year, in line with industry experts' forecasts at the end of last year. Samsung remains on target to achieve its goal of 200 million handset unit shipments for the year. Samsung had shipped 45.8 million handsets in the first quarter. The global mobile phone market has been hit hard by the broad economic downturn. ABI Research said in a report that worldwide handset shipments fell 11.9 percent during the first quarter from a year earlier to 255.6 million handsets shipped. But Lee said Samsung remains positioned for growth as the company continues to introduce new products in various categories to meet consumer demand, as opposed to concentrating on a specific product or region.
- Samsung Electronics Co. said its target for 20 percent of the global handset market this year remains intact and it will continue to maintain its market share in the industry next year. The company is very confident it will increase its market share in advanced nations such Europe and the U.S., and in emerging economies. As of the first-quarter of this year, Samsung Electronics had an 18.7 percent market share for handsets globally, following Nokia Corp.'s 38 percent. In 2008, Samsung's market share was 16.7 percent. The company will continue to focus on the high-end handset segment, especially the smartphone business, in which Samsung is largely considered to be a latecomer compared to other global rivals such as Research In Motion and Apple Inc. Despite the economic downturn worldwide, the company is concentrating on smartphones, touchscreen phones, and message phones this year.
- Samsung and LG Electronics are scrambling to make up for a late start in a red-hot smartphone market epitomized by blockbuster devices such as the iPhone and the BlackBerry. The Koreans, who are respectively No.2 and No. 3 in the overall mobile phone market, may have the technological prowess and branding power to take a leap into this fastest-growing segment, but they may have to invest significant chunks of time and effort to become top-ranking global players. Samsung Electronics this week unveiled new phone models boasting features comparable to Apple's iPhone as it tries to muscle in on a smartphone market that could grow 10-20 percent this year against an expected decline in sales of traditional cellphones. "It's going to be very tough for Samsung to grow share later into 2009 and even more so in 2010 as they'll face competitive pressure from smartphone makers," said Avian Securities analyst Matthew Thornton. The Koreans may also be hampered by a lack of global reach for mobile content and services, vital for smartphones, which are commonly defined as handsets with computer-like capability.
- Arima Communications Corp. and Mediatek Inc. will benefit from LG of South Korea's effort to raise global shares in the cellphone market. LG promised to become one of the world's two-largest cellphone brands by 2012, with market share reaching 10 percent this year. Because of the growth in sales of CDMA (code division multiple access) cellphones to the U.S. market and the booming sales of touch cellphones in both the U.S. and Europe, LG sold over 100 million cellphones worldwide as the worlds' third-largest brand, only behind Nokia and Samsung last year. LG has set a goal to sell over five million of their Arena smartphones to become one of the world's top-two brands by 2012. Skott Ahn, president and CEO of LG's mobile phone section, said he is very confident of LG's development in China this year, stressing that while LG had a mere 2 percent share in China's cellphone market last year, the company will see the market share triple this year due to its promotion of third-generation cellphones.
- The number of Korean internet phone users has surpassed 4 million since beginning service two years ago. Since beginning services in June 2007, the number of internet phone subscribers has increased to 2.5 million as of the end of 2008 from a mere 370,000 at the end of 2007. The number of subscribers has grown to 3.95 million at the end of May, and industry watchers estimate that the figures have already surpassed 4 million. By company, LG Dacom has the largest number of subscriptions with 1.57 million; KT came in second with 640 thousand subscribers and SK Broadband came in third with 510 thousand. Korea Cable Telecom and Samsung Networks had 450 thousand and 430 thousand subscriptions, respectively. The number of subscriptions is expected to increase further as the time it takes to switch over to internet phones will decrease from the current five days, starting in September this year.
- According to report by comScore, local South Korean companies represent the majority of top Internet properties in the country. NHN Corp. ranked as the top Internet destination in South Korea with 22.7 million visitors in April 2009, reaching 81 percent of the total online population. Daum ranked in second place with 20.5 million visitors (73 percent reach), followed by SK Group, which includes CyWorld, with 20.2 million visitors (72 percent reach). According to comScore qSearch, 3.4 billion searches were conducted in South Korea in April, a 61-percent increase versus year ago. NHN, which includes Naver.com, led the search market with 2.1 billion searches conducted on its sites (62 percent search market share), followed by Daum with 680 million searches (20 percent) and Google Sites with 251 million searches (7 percent).
- LGD and Samsung Electronics have decided to increase LED BLU application to 7 units out of 10 among LCD panels for notebook PCs that will be rolled out in the second half of this year. The two firms have started active LED BLU shipment and are expected to shift the light sources for LCD panels for notebook PCs from CCFL to LED in the second half of this year. LGD and Samsung Electronics, No.1 and 2 in the LCD panel market for notebook PCs will increase the share of LED BLU note LCD panel to 70 percent of overall shipment in the second half. Samsung Electronics plans to carry LED BLU in 2.5 million units of notebook PC LCD panels a month on average in the second half. As the two companies have expanded aggressively into high added-value LED BLU notebook panel shipment, existing CCFL light source will be rapidly replaced with LED in the second half. Display Search, a market survey firm, expected a 53 percent increase in distribution rate for LED BLU notebook panels for the third quarter.
Singapore
- Singapore Telecommunications Ltd. is in discussions with the Australian government about divesting its fixed-line assets to a new national broadband network company being formed by the government. SingTel wants up to a 30 percent stake in the new company that will be set up by the Australian government. The fixed-line assets are worth around A$1.7 billion (US$1.4 billion). The talks are expected to be completed by November. SingTel's Australian unit, Optus, had initially sought to build Australia's national broadband network as part of a consortium. But the government said in April that it will scrap the tender process and instead plans to back the A$43 billion (US$34.9 billion) high-speed fiber-to-the-home broadband network with investments from the private sector, as the global
- StarHub has joined a consortium comprising major Asian telecommunications companies that have agreed to jointly plan and develop a proposal to build an international submarine cable system in the Asia Pacific region. The cable system, known as the Asia-Pacific Gateway (APG), will span 8,000 kilometres across the region, linking nine countries, namely Malaysia, Singapore, Thailand, Vietnam, Hong Kong, the Philippines, Taiwan, Mainland China, Japan and Korea. The APG will use the latest Dense Wavelength Division Multiplexing technology with a minimum design capacity of 4 terabits per second of data bandwidth that will provide additional bandwidth capacity to the carriers.
India
- India's telecommunications minister expects at least 250 billion rupees (US$5.2 billion) from the auction of radio bandwidth for third generation, or 3G, mobile phone and broadband wireless services. Minister Raja's estimate is higher than the 200 billion rupees (US$4.2 billion) projected in the interim budget in February. Clarity on the number of licenses to be auctioned and the reserve price to be set will emerge after a meeting between officials of the telecommunications department and the finance ministry. The telecommunications ministry's plan to auction radio bandwidth for 20 of India's 22 telecom service areas has been delayed after the finance ministry suggested that the starting auction price of 20.20 billion rupees (US$421 million) planned earlier be doubled.
- Bharat Sanchar Nigam Ltd. has sought initial bids from over 150 retail companies for partnering with the state-run telecommunications services provider to sell its services. To increase its reach in the world's fastest growing telecom market, BSNL plans to sell its basic mobile telephony and third-generation mobile phone services, and broadband services through its retail partners. Retail companies such as Vishal Retail Ltd., Essar Group's The Mobile Store, Aksh Optifibre Ltd. and Happy E-zone Ltd. have submitted their bids, according to two BSNL officials involved with the process. Retailers intending to bid must have a minimum of 50 outlets operating in India with an annual turnover of 500 million rupees (US$10.4 million) each year for the last two years. BSNL is trying to catch up with bigger rivals such as Bharti Airtel Ltd., Vodafone-Essar Ltd. and Reliance Communications Ltd., which have been able to expand their subscriber base by reaching out to customers through retail outlets. BSNL, India's fourth largest mobile phone services provider with 53.18 million subscribers, now sells its services across the country through 1,200 franchisee outlets. India had 403.66 million subscribers at the end of April.
- MTN Group Ltd.'s proposed 25 percent stake in India's Bharti Airtel Ltd. will be via global depository receipts. The GDRs will be listed on the Johannesburg Stock Exchange. MTN will buy a 25 percent stake in Bharti, with another 11 percent held directly by MTN shareholders.
- Tata Teleservices Maharashtra surged as much as nine percent on the Bombay Stock Exchange a day after Tata Teleservices, in partnership with Japanese firm NTT DoCoMo, announced the launch of its GSM services. Shares of Tata Teleservices Maharashtra (TTML), the listed entity of telecom operator Tata Teleservices, opened firm on the bourses and witnessed a high of 39.95 rupees (US$0.84), up 8.56 percent over previous close. Over 11.1 million shares changed hands on both bourses.
- According to Mumbai local report, Switzerland-based bank UBS is believed to have put its business process outsourcing (BPO) and knowledge process outsourcing (KPO) units up for sale. The bank, which has centres in Poland and Hyderabad, is in talks with Indian IT companies such as Infosys and Wipro, said a person familiar with the possible transaction. The UBS India Service Centre (ISC), along with its Krakow (Poland) centre, is valued at around $200 million, according to another source. The story was first reported by ET NOW. When contacted, Infosys CFO V Balakrishnan denied that they were in talks with UBS, while Wipro chief strategy officer and head of M&A KR Lakshminarayana declined to comment on the deal. A UBS spokesman in an e-mail response to ET said: "UBS continually seeks to explore commercial opportunities in all jurisdictions in which it operates that have the potential to be of benefit to the company and its component businesses. However, UBS remains committed to all its activities in India."
- Macquarie Communications Infrastructure Group, an investment company that focuses on investing in communications infrastructure asset, said that suitor Canada Pension Plan Investment Board (CPPIB) has agreed to sweeten its bid in a move that is seen as likely to win over investor support. Macquarie Communications said CPPIB will allow the group to pay a special distribution of 50 cents a security if holders approve CPPIB's A$1.36 billion (US$1.1 billion) takeover offer. The special distribution is on top of the A$2.50 (US$2.03) a security CPPIB is offering for Macquarie Communications. Macquarie Communications shares rose sharply on the revised offer amid expectations that previously reluctant shareholders will be swayed by the extra payment. Macquarie Communications, which is part owned by Macquarie Group Ltd., was trading up 26.3 percent at A$2.93 (US$2.4). The revised offer represents fair value. Credit Suisse analysts said that while they still view CPPIB's offer as opportunistic, there's a very high likelihood that the deal will be approved by security holders.
Topic: Corporate Announcement
Source: IRG
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