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Optical/IP

Asia Carriers Live in Interesting Times

The Asian telecom market has been abuzz with activity this week, with IPOs, financial news, and some major fiber investment dominating the headlines.

China Netcom Joins the NYSE
Chinese carrier China Netcom Corp. Ltd. will list on the Hong Kong and New York stock exchanges later this month in an IPO that will raise $1.13 billion and value the firm at $6.9 billion.

Netcom reportedly plans to use half the proceeds on network upgrades and expansion. That could spell good news for the vendors already helping the carrier build its infrastructure. (For examples, see: Shanghai Goes NGN With Nortel, Alcatel Wins NGN Deal in China, Huawei Wins Optical Switch Contracts, Redback Wins at China Netcom, Juniper Scores China Win, and China Netcom Uses Cisco Platform.)

Netcom is the last of the four main Chinese operators to list overseas, following China Mobile (Hong Kong) Ltd. (NYSE: CHL), China Telecommunications Corp. (NYSE: CHA), and China Unicom Ltd. (NYSE: CHU).

Netcom's ADRs (American depositary shares) will trade under the symbol CN from November 16, and were priced at $21.82. Each ADR represents 20 common shares. The stock will then debut in Hong Kong the following day at HK$8.48 (US$1.09) per share, with the code 0906.

Netcom has local and overseas assets. It dominates the fixed-line market in northern China -- while China Telecom is strong in the South -- and took control of the former Asia Global Crossing international operations earlier this year (see Asia Netcom Buys Asia GlobalX and China Netcom Acquires Asia Netcom).

ZTE Eyes $350M From IPO
The latest market buzz about the impending international listing of shares in ZTE Corp. suggests a December listing in Hong Kong that will raise $350 million for the vendor.

The equipment company wants to use the funds for further international expansion, and has been taking slow steps towards placing its shares outside China, where it is already traded on the Shenzhen stock exchange (see ZTE Nears HK IPO and ZTE HK IPO OK'd).

ZTE couldn't be reached for further comment.

Softbank Back in the Black
Japanese service provider Softbank Corp., which has been on an acquisition spree this year, recorded a net profit of ¥11.8 billion ($112 million) from revenues of ¥156 billion ($1.5 billion) in the quarter ended September 30, compared with a loss of ¥42.6 billion ($398 million) a year earlier.

The carrier has been developing a strong position in the broadband access market, currently with about 35 percent of all customers, and has suffered losses in the past from having deeply discounted initial offers for customers to take up its services.

At the end of October, Softbank had 4.54 million customers for its Yahoo BB DSL service, of which nearly 4.3 million had signed up to use the accompanying VOIP service. At the end of September, archrival NTT Group (NYSE: NTT) had 4.74 million DSL customers.

Now Softbank aims to usurp KDDI Corp. as Japan's second largest operator, behind NTT, by increasing the revenues from that broadband customer base and from the business users it has from its acquisitions (see C&W Sells Japanese Unit and Softbank Buys Japan Telecom).

NTT Confirms FTTH Plans
As anticipated, NTT plans to spend ¥5 trillion ($47 billion) to expand its fiber network in the next seven years, and plans to have about 30 million customers, about half its total, hooked up to high-speed fiber connections by early 2011 (see Report: NTT Plans FTTH Blowout). NTT currently has 1.2 million FTTH customers.

The news came as NTT announced lower revenues for the first half of its financial year, running from April to the end of September. Revenues were ¥5.3 trillion ($49.8 billion), compared with ¥5.4 trillion a year earlier. NTT recorded net profits of ¥347 billion ($3.2 billion).

It is now expecting full-year revenues of ¥10.78 trillion ($101 billion) instead of ¥10.9 trillion.

NTT's fixed-line revenues are declining quarter-by-quarter due to competition from Softbank in particular, and it needs something new, such as the extra speed and flexibility that fiber access can provide, to reverse the decline.

— Ray Le Maistre, International News Editor, Light Reading

stillworking 12/5/2012 | 1:05:55 AM
re: Asia Carriers Live in Interesting Times If 40G takes hold in China and Taiwan as we are beginning to see, North America just might be left in the dust. Do the feds know what's going on or even care.
chook0 12/5/2012 | 1:05:45 AM
re: Asia Carriers Live in Interesting Times I'm sure 40G has some traction in the hearts and minds of the engineers and no doubt these guys put 40G in the "desirable" tender specs as a price negotiation technique, but there is no sign of 40G traction in the real world. Heck PRC only installed 10G in 2002 and Taiwan later than that. Given that the fibre in the ground is almost all G.652, I don't see 40G happening in a hurry.

--Chook

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If 40G takes hold in China and Taiwan as we are beginning to see, North America just might be left in the dust. Do the feds know what's going on or even care.
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