Tue, Mar 12, 2002 - Page 17 News List

Only the fittest 3G firms may survive after 2005

By Annabel Lue  /  STAFF REPORTER

Limited market size may leave only three to four third-generation wireless service operators standing in the Taiwan market after 2005, a telecom analyst said yesterday.

"Since 3G investment costs are sky high and the revenue generated by the local market base is relatively small, it will be hard for the five players in the sector to survive," said Nathan Lin (林宗賢), an analyst at National Securities Corp (建宏證券).

Taiwan reported about 90 percent mobile-phone service penetration or 19 million cellphone users, last year.

According to Lin, the capital needed to establish a nationwide 3G network is about NT$5 billion to NT$6 billion.

"Taking into consideration the time needed to establish a network, for testing, to make handsets and to adopt applications, 3G service is not expected to come on-line by 2005," he said

Another industry watcher at the Market Intelligence Center, Lin Yu-feng (林育烽), agreed with Lin, saying "five operators is really too many."

It will be easy to see who the major players will be one year after services are launched, Lin said.

"The winners will probably be the companies that attract the most customers within the first few months," he said, adding that it will be difficult for small players to catch up.

Taiwan issued five 3G licenses in February, with bidding prices totaling NT$48.9 billion.

Yesterday, all license owners complied with the government's regulation and paid their license fees.

According to the Directorate General of Telecommunications, three of the licensees -- Taiwan Cellular Corp (台灣大哥大), Chung-hwa Telecom Co (中華電信), Yuan-Ze Telecom Co (遠致電信) -- paid their bidding prices in full at NT$10.281 billion, NT$10.179 billion and NT$10.169 billion respectively.

Asia Pacific Broadband Wireless Communication Inc (亞太行動寬頻) and Taiwan PCS Network Inc (聯邦電信) paid 30 percent of their license fee at NT$3.17 billion and NT$2.31 billion respectively. The remaining 70 percent will be paid in installments.

The heavyweights are expected to lead the market.

"The big telecom players will dominate because they already have a solid customer base, brand recognition and industry know-how," Lin said.

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