hobbes
04-06-2002, 19:45
Tuesday, June 4, 2002 SmarTone slashes roaming fees
Fixed-line international call-forwarding services pushing mobile carriers to price war
HUI YUK-MIN
SmarTone Telecommunications Holdings has cut its international roaming charges by as much as 77 per cent in a bid to lure mobile-phone users.
Douglas Li, chief executive of Hong Kong's third-largest mobile carrier, also said yesterday the company would open up automatic international roaming services to customers without registration or deposits.
The plan would include the return of HK$100 million in deposits that SmarTone had collected from customers, he said. "We are proactively contacting our clients to return their deposits."
Most of Hong Kong's mobile carriers require users to register for roaming services and put down deposits for international calls ranging from HK$1,000 to HK$3,000 if they settle their bills in cash.
However, most carriers have waived the deposit requirement if customers pay their bills by credit card.
As part of its plan, SmarTone will launch a new service - *131*PhoneHome - which allows customers to make international long distance calls at a substantial discount to regular international direct dial (IDD) prices.
The discount per minute would cut charges by between 10 and 77 per cent, depending on locations, SmarTone said.
It claimed the move was in response to users' increasing needs for roaming services due to more frequent travelling as well as technological enhancement.
However, analysts said that like other mobile carriers, SmarTone was under tremendous pressure to cut prices due to competition from rival carriers and international call-forwarding services offered by fixed-line carriers.
"The emergence of international call-forwarding services has taken away market share and exerted downward pricing pressure," CLSA Emerging Markets telecommunications analysts Edison Lee and Stephen Lee said.
International call-forwarding services are offered by IDD operators such as City Telecom, Wharf New T&T.
With such services, roaming charges are reduced to about HK$1 per minute compared with normal roaming charges of between HK$4 and more than HK$20 per minute.
SmarTone management has told analysts it is facing significant pressure on roaming and IDD revenue, despite Mr Li saying yesterday that the latest move had nothing to do with international call-forwarding operators.
Roaming and IDD revenue account for 25 to 30 per cent of the company's revenue.
Analysts believe other mobile carriers will follow SmarTone's move to slash roaming charges and return users' deposits in order to be competitive. Another price war is inevitable, according to CLSA.
Sunday Communications, New World Mobility and Peoples Telephone said they were reviewing SmarTone's plan and had yet to decide what action to take.
The competition in the mobile business will only further intensify when the six Mobile Virtual Network Operator (MVNO) licencees gradually roll out their services, DBS Vickers telecommunications analyst Wallace Cheung said.
MVNOs will provide mobile services by leasing network capacity from other carriers.
He said intensified competition would probably result in mergers and acquisitions among the smaller carriers.
Mr Cheung believes Sunday will merge with one of smaller players by the end of the year.
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Fixed-line international call-forwarding services pushing mobile carriers to price war
HUI YUK-MIN
SmarTone Telecommunications Holdings has cut its international roaming charges by as much as 77 per cent in a bid to lure mobile-phone users.
Douglas Li, chief executive of Hong Kong's third-largest mobile carrier, also said yesterday the company would open up automatic international roaming services to customers without registration or deposits.
The plan would include the return of HK$100 million in deposits that SmarTone had collected from customers, he said. "We are proactively contacting our clients to return their deposits."
Most of Hong Kong's mobile carriers require users to register for roaming services and put down deposits for international calls ranging from HK$1,000 to HK$3,000 if they settle their bills in cash.
However, most carriers have waived the deposit requirement if customers pay their bills by credit card.
As part of its plan, SmarTone will launch a new service - *131*PhoneHome - which allows customers to make international long distance calls at a substantial discount to regular international direct dial (IDD) prices.
The discount per minute would cut charges by between 10 and 77 per cent, depending on locations, SmarTone said.
It claimed the move was in response to users' increasing needs for roaming services due to more frequent travelling as well as technological enhancement.
However, analysts said that like other mobile carriers, SmarTone was under tremendous pressure to cut prices due to competition from rival carriers and international call-forwarding services offered by fixed-line carriers.
"The emergence of international call-forwarding services has taken away market share and exerted downward pricing pressure," CLSA Emerging Markets telecommunications analysts Edison Lee and Stephen Lee said.
International call-forwarding services are offered by IDD operators such as City Telecom, Wharf New T&T.
With such services, roaming charges are reduced to about HK$1 per minute compared with normal roaming charges of between HK$4 and more than HK$20 per minute.
SmarTone management has told analysts it is facing significant pressure on roaming and IDD revenue, despite Mr Li saying yesterday that the latest move had nothing to do with international call-forwarding operators.
Roaming and IDD revenue account for 25 to 30 per cent of the company's revenue.
Analysts believe other mobile carriers will follow SmarTone's move to slash roaming charges and return users' deposits in order to be competitive. Another price war is inevitable, according to CLSA.
Sunday Communications, New World Mobility and Peoples Telephone said they were reviewing SmarTone's plan and had yet to decide what action to take.
The competition in the mobile business will only further intensify when the six Mobile Virtual Network Operator (MVNO) licencees gradually roll out their services, DBS Vickers telecommunications analyst Wallace Cheung said.
MVNOs will provide mobile services by leasing network capacity from other carriers.
He said intensified competition would probably result in mergers and acquisitions among the smaller carriers.
Mr Cheung believes Sunday will merge with one of smaller players by the end of the year.
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