A week in tech - part 2

All the latest tech news from China, Hong Kong, Malaysia, Singapore, Philippines and Indonesia.


Information Technology

- First Data Corp. has won its first big outsourcing contract in China, agreeing to manage the bankcard system of China Everbright Bank. The Denver provider of electronic commerce-and-payment services will supply the Chinese bank with a software platform and other back-end services to process credit card and debit-card transactions. China Everbright Bank has issued more than 10 million debit cards and is planning to launch its first credit cards later this year.

Mobile / Wireless

- Chinese are expected to send up to 200 billion text messages this year. China could wind up accounting for roughly half all short message services (SMS) globally. Last year, mobile phone users worldwide sent off a total of 360 billion messages. The increased SMS traffic would be good news for mobile operators, who could expect revenues of 15 billion yuan (US$1.8 billion) even if the total number of Chinese messages this year was limited to 150 billion. Apart from allowing for instantaneous exchanging of messages, SMS can also be used to deliver information on demand, such as news, sports results, and weather information.

- China Mobile announced its first quarterly decline in net profit, warning of limited growth and intensifying competition in the mainland mobile phone sector. Second-quarter net profit fell 5.4 per cent to 8.5 billion yuan (US$1.0 billion). Revenue was up just 3.6 per cent quarter on quarter to 39 billion yuan (US$4.7 billion). Half-year earnings increased 13.1 per cent year on year to 17.5 billion yuan (US$2.1 billion). Although in line with analyst expectations, earnings were boosted by the acquisition of eight provincial networks in July last year. On a pro-forma basis, the world's largest mobile-phone operator recorded profit growth of just 3.5 per cent.

- Siemens Mobile has completed the first trial of China's own version of third-generation (3G) technology - TD-SCDMA - with network operators China Mobile and China Railcom. Siemens tested the technology in May with good results. Deployment is expected as early as next year. To speed up the development process, Siemens hoped to soon unveil another TD-SCDMA partnership in the mainland. The company is also co-operating with Datang Telecom Technology.


- Transmeta is set to expand its presence in China after entering into a joint venture with Hong Kong-listed eForce Holdings and Culturecom Holdings. The venture will produce a Chinese-language version of Midori Linux, Transmeta's Linux operating system (OS) for mobiles and embedded devices. Transmeta said the venture with Culturecom and eForce would have a total valuation of HK$216 million (US$27.7 million). Transmeta will hold a 16.7 per cent stake in the venture and eForce will have 42.5 per cent and Culturecom will own 40.8 per cent. The venture's Chinese version of Midori Linux will be targeted at the Greater China market.


- Datang Telecom Technology's report poor first-half performance citing keen competition and a reduction in the expenditure of telecommunications operators because of SARS as factors. The Shanghai-listed telecommunications equipment and computer-networking products maker said that its first-half net loss widened 25 per cent to 19.9 million yuan (US$2.4 million), compared with 15.9 million yuan (US$1.9 million) previously. Turnover for the six months dipped 7.3 per cent to 829.2 million yuan (US$100.7 million), against 894.3 million yuan (US$108.6 millon) a year ago.

- KDDI Corp. will start offering data communications services for corporate clients in China, where the gradual deregulation of the telecommunications market is expected to begin at the end of this year. The company will establish a joint venture that will handle data management and other operations in the Shanghai area by as early as year-end. It will also set up a sales office in Wuxi later this month and another one in Liaoning Province's Dalian early next month. By establishing one of the largest business operations for a foreign telecom firm in China, KDDI aims to tap demand from the estimated 17,000 Japanese companies there.

Hong Kong

Information Technology

- Digital China Holdings, a systems integrator and technology product distributor, said it expected a "material loss" for its first quarter to June, largely due to the impact of the SARS outbreak. The company recorded a net profit of HK$36.2 million (US$4.6 million) in the same period a year ago. The company, which was spun off Legend Group, earned 86 per cent of its revenue last year from distributing information technology products, such as handsets and laptop computers.


- Tom.com Ltd. posted its first-ever net profit, thanks in large part to a jump in revenue from wireless data services. Tom.com recorded a second-quarter net profit of HK$10.2 million (US$1.3 million), compared with a loss of HK$49.6 million (US$6.4 million) a year earlier. Revenue rose 9.8 per cent to HK$455.5 million from HK$414.7 million (US$58.4 from US$53.2 million). For the first half, tom.com's loss narrowed to HK$36.7 million (US$ 4.7 million) from HK$124.5 million (US$16 million).


- PCCW is poised to privatize the Internet data center unit it listed 29 months ago at a deep discount to its IPO price. In yet another move intended to tidy up the firm's venture portfolio, PCCW confirmed it planned to buy the 52.1 per cent it does not own of iLink Holdings, a direct competitor to the company's wholly owned data center brand Powerbase. Sources at PCCW and iLink suggested the privatization was good for both sides because it helped realize value for their shareholders.

- New World Telecommunications plans to acquire mainland companies to accelerate its China expansion plans. The New World Development fixed-line unit said it was looking for opportunities to provide value-added telecommunications services in China after the signing of the closer economic partnership arrangement (CEPA). New World has been actively expanding into China and overseas markets, setting up 29 bilateral interconnection arrangements in 16 countries. This year, it started operating systems integration and call center businesses in China.

Singapore / Malaysia / Philippines / Indonesia

Mobile / Wireless

- Singapore's more than three million mobile phone users would be the eventual winners in the latest price war waged by all three telecom operators in one of the region's most competitive cellular markets. SingTel fired the first salvo, offering new pricing plans featuring free incoming calls and extra talk time. MobileOne (M1), which has the second-largest share of mobile subscribers, promptly followed suit, also offering free incoming calls with two new pricing plans. In line with the heighten competition, StarHub offered free international calls to the United States, Hong Kong and China. StarHub was the pioneer in offering free incoming calls three years ago. With subscribers now able to retain their mobile phone numbers without being heavily penalized when they switch operators, the competition has become fiercer then ever.


- Singapore Telecommunications Ltd. said it has signed an agreement with China Telecom Corp. to provide customers with telecommunications services to China. The companies will target multinationals and business users who have operations in China, offering them a range of services that will allow them to communicate with their offices in the rest of the world, including major financial centers like London, New York and Tokyo. Services will include Internet-based networks, technical support and single billing and are expected to be available from October.

A week in tech is brought to you by FinanceAsia, and IRG, Asia's boutique investment bank to the telecoms, media and tech sectors. More can be found at www.irg.biz

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