Home > Market Research > Mobile Networks > Asia Market Perspective/ Vol. 7, Issue 9, October Edition

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Market Briefing
Published: October 2007
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Research from: Pyramid Research
Sector: Mobile Networks

On October 15, 2007, Hong Kong fixed-line incumbent PCCW was the surprise winner of the territory’s newest mobile license to provide CDMA services in the 850 MHz band.

The outcome was largely unexpected, given that China’s No. 2 mobile operator had publicly stated its intentions to enter the market and because the move seemed to make sense for China Unicom, which offers CDMA service in mainland China and which would have been able to reap profits from cross-border roaming revenue.
PCCW’s decision to bid for the CDMA license was a curious move by the operator, and there are several different scenarios that could emerge from the purchase. Operators that offer both CDMA and GSM services are few and far between in the global telecom space, with the vast majority of those still offering both technologies doing so because they are phasing one out (almost always a CDMA-to-GSM migration). There are some exceptions, of course, notably in South Korea with SK Telecom and KT Freetel, and the aforementioned China Unicom. The obvious reason to phase one out is that offering two technologies unnecessarily adds to Opex and Capex. Therefore, the purchase begs the question of why PCCW ? which reentered Hong Kong’s mobile market last year with the purchase of Sunday Communications ? would even bother? We believe that PCCW had several motivations for the purchase, the most prominent being to secure roaming revenue from mainland China, to prevent further competition in an already cutthroat market and to explore a niche market domestically.

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