Interview: Drug stocks
>> singapore telecom expects most of its customers to use high-speed mobile phone handsets ahead of its three-year target. it introduced 3g mobile phone services yesterday. haslinda amin spoke with singtel chief executive, poh chuan lim.
>> it has shifted slightly and recently we have seen the way that manufacturers have brought in more models of handsets. you can tell they are putting a lot of r&d resourcesinto it. this is good because it means more choices, lower prices, it also means more capabilities that can fully exploit the 3g technology so we have buildup. i would say that our previous projection of three to five years may change. it may be sooner than three to five years but we don’t know until this thing is more firm, until we see more development put in place in the market . they are talking about six to 12 months there will be these handsets coming to the market but until we see them and test them in our network, we can’t make a true projection. but the initial projection remains true. first year, unlikely a major impact. hopefully within a shorter period than three to five years, we’ll see more contribution coming back to us.
>> given that you’re expecting to meet goals earlier, can we say that maybe you’ll see the numbers in two to three years?
>> hopefully.
>> looking at your market share, currently singtel mobile has 40% of the cell phone market . do you expect 3g services to help it grow to maybe 50% or beyond?
>> market share is beginning to be coming quite meaningless. if you were to look at market share today, it’s the aggregation of post- and pre-paid customers. likely, you’ll hold more than multiple post-paid accounts but pre-paid, i’m suspicious. if i hold three pre-paid card, does that mean i have three pre-paid customers? i think this is distorted so if you look at market share in reality, i think one should look at revenue market share rather than subscriber market share. in fact, some operators are already looking at average margin per user, average revenue per user because even revenue becomes scary when you look at the way some people compute revenue. in our case, for example, our revenue is net with commission in the pre-paid market . in other operator, the revenue is inclusive of commission so it leads to a different accounting and gives a different picture altogether. but we are looking at market share more as a reference and today are tracking at 43% for our post rate, 80% of our base, and continuing to be more in terms of revenue contribution so obviously, 3g in the initial months, will mainly focus on the post-paid customers. it will help to increase the usage in terms of data. we’ve been tracking well on data usage on post-paid customer base. with 3g, with the highest fee and lower price we’re announcing today, 30% cheaper than traditional g.p.s., obviously, we’ll encourage more data usage and more applications and therefore more providers coming into the market , hopefully translated into higher usage and revenue on a per-user basis on data if not just on voice.
>> do you expect a price war to develop when your rival comes on board?
>> they have not announced data prices yet, i think. they have announced video core price and obviously ours is the same for local calls. will there be a price war? i can’t predict what my competitors will do.
>> do you expect a price war?
>> there have been examples they have been irrational. if they want a price war, i say good luck to them because they will not be able to withstand it. if you were to cut below the current voice rate, the direct impact on the bottom line, it’s not just a case of winning more market share.
>> can we expect profit margins to fall given that your prices are lower than your competitors?
>> we are not working towards diluting our margin, obviously. i think singtel as a company has been quite clear that we aim to preserve our margin and we are always very conscious about managing costs so obviously in working out the business case and now business projection, we are driving toward not diluting margin but increasing volume or increasing subscriber usage.
>> given what you have just said, how long will it take you to recover your investments in 3g? [laughter]
>> that’s a good question but like i said, these are all tantamount to giving financial guidance which we are not as liberty to do.
>> singtel mobile’s chief executive, poh chuan lim. consumer confidence reports from the university of michigan and conference board may move markets , but should they? i will teak with a―speak with a former federal reserve official up next.
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outpost in asia. why singtel mobile expects high-speed mobile phone services to catch on. and do consumer confidence reports really matter? we’ll hear from a former fed official. the dollar stages a comeback after japan, korea and taiwan say they’re not selling the u.s. dollar portions of their more than $1.25 trillion in for-ex reserves. traders interpreted u.s. consumer price figures to mean inflation remains tame and the fed will not speed up the pace of rate increases. oil prices close at a four-month high, holding above $51 a barrel. kuwait’s oil minister says opec may be forced to boost production. australian gasoline light and brambles may be active after earnings reports. we’ll go straight to stuart kelly in sydney. it appears today’s the busiest for companies’ profit reports there in australia?
>> it certainly is. we expect reports from 28 companies today, some of those have already reported this morning, keeping us on our toes here. brambles industries reported late yesterday. it said first-half profit climbed 71% to 234 million australian dollars, slightly under the 230 million that analysts surveyed by bloomberg expected. interesting to see what the share price will do today because the company did say second-half growth will slow. merrill lynch, in a report this morning, said it expected the shares to rise 7% in the next 12 months to $8.10 a share. publishing and broadcasting has reported this morning, the owner of australia’s top-ranked television network, saying first-half profit rose 24% to $339.7 australian. that included a gain from the sale of the company’s stake in wizard mortgage corp. if you take the gain out, $61 million, the profit comes in at 278 million, somewhat under the 288 million australian dollars that analysts surveyed by bloomberg news expected. australia gas and light said first-half profit rose more than fourfold to 887 million dollars, with a capital return to shareholders of 515 million australian dollars. also looking elsewhere, insurance australia group, nation’s biggest car and home insurer, said first-half profit rose 48% to 446 million after surging stock market boosted investment earnings and also macquarie infrastructure group turned to a 582 million australian dollar profit from a loss of 386 million last year. interesting to see what those share price moves do. i’ll return with an update shortly after the market opens in 20 minutes or so from now. back to you.
>> thank you, stuart. fannie mae says its federal regulator uncovered more accounting errors, raising concern about the soundness of the government-chartered business. the regulator examining whether fannie mae improperly sold mortgages. the mortgages were supposed to be held to maturity. those mistakes will likely result in a profit restatement. apple computer cuts the price of the ipod mini by 20% and introduces new models, cutting the price of the 4 gigabyte ipod mini and a new version of the 60 gigabyte stores photos and as many as 16,000 songs. it may help apple widen their lead over competitors such as dell. for news outside the business word, ron madison returning with us from tokyo.
>> u.s. president george w. bush and german chancellor gerhard schroeder agree that iran must not have nuclear weapons. the two showed solidarity on the issue, saying they would cooperate to persuade iran to abandon the pursuit of nuclear weapons, agreeing that diplomacy must be given a chance.
>> diplomacy is just the beginning. iran is not iraq. we’ve just started the diplomatic efforts and i want to thank our friends for taking the lead and we will work with them to convince the mulas that they need to give up thrower ambition―nuclear ambition.
>> france, germany and the u.k. have been in talks with iran. iran agreed to suspend enrichment of uranium. the u.s. prohibits american companies from investing in iran. president bush has arrived at the final stop of his tour, slovakia, to meet with the nation’s president as well as hold talks with russian president vladimir putin. bush is expected to express concern about russia’s continued support of iran’s construction of a heavy water nuclear reactor. putin said last week that russia will continue to help iran on the 800 million dollar project, dismissing opposition from the u.s. and european allies. a u.k. court finds british soldiers guilty of abusing iraqi soldiers. the three stood trial in a court martial in germany. the trial at the british court brought to light about 20 pictures showing british soldiers humiliating iraqi civilians, sparking outrage in the u.k., where the pictures were compared with photographs of u.s. guards abusing and humiliating inmates at the abu ghraib iraqi prison. southern california has received a much needed respite after seven days of storms dumped a year’s worth of rain on the region. the u.s. national weather service says california will have a brief dry spell for the rest of the week. recent mudslides are blamed for at least nine deaths and has caused at least $100 million in damage. an official in los angeles said the city has no seen this much rain in more than a century. that’s the latest look at world news. back to you.
>> thank you, ron. singapore telecom taps into the high-speed mobile handset market . the chief executive will tell us more.
