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DAIWA
DAIWA INSTITUTE OF RESEARCH LTD.
IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS,ARE PROVIDED ON THE LAST TWO PAGES OF THIS REPORT.Global Equity Research
July 2004
(No. of pages: 52)
Global Telecom Monthly
This month
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Global
– Another turgid month, as the market’s sense of impendingdisappointment grew. Our exposure to Yahoo! and Yahoo! Japan did us nofavors this month, though the emerging markets names with exposure to SE Asia,India, and Africa did us proud. In another off-road theme piece we look at howchanges in information flows and sources may diminish the added value elementof traditional telecom research. We think the brokers need to adapt their tools andhabits to a more immediate, interactive style, or risk being marginalized.
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Europe
– BT and Yahoo! announce Communicator launch/EC reportedly to press France Telecom for EUR1.1bn tax payment/Virgin Mobile files for IPO/BIICL regulatory study reveals Germany as the slowest to resolveregulatory disputes/Tiscali sued by Belgian artists’ rights group as an "enabler"of P2P piracy/Studies show European countries hold seven of the top ten spotsin illegal file sharing rankings.
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US
– Sprint cuts jobs, reiterates guidance/Cablevision launches aggressively priced Triple Play/Verizon asks FCC for recognition as an information service provider, rather than common carrier/SBC announces $4-6bn investment program in all-IP networks and FTTH/Sprint to spend $1bn on EV-DO/AT&T pulls back on local service offering and lowers guidance/Cingular reportedlyaccepting RFPs for UMTS/Nextel-public safety agency interference issueresolved.
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Asia
– DoCoMo regains top share of net adds for first time in ninemonths/KDDI announces handset and tariff changes/China Netcom reportedlyto list by September/China government reportedly considering plan for carrier consolidation as resolution for 3G licensing problem/Unicom discloses terms of proposed rights issue/MIC cuts mobile interconnection rates retroactive toJanuary 1/Singapore upholds leased line price cuts for Singtel/TelstraClear reportedly still planning 3G launch/Telstra and Hutch reportedly in talks on 3Gnetwork sharing.
C
ONTENTS
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Global Telecom Monthly
Contents
Regional/subsector investment stance summary
P. 3
Global perspective
This month’s focus is on the changing nature of information flow in the sector, and the issues traditionaltelecoms analysis will face in adapting itself. We also include an analysis of European telecom analysts’collective track record in calling the direction of the sector, and provide clients with a partial list of usefuland helpful RSS-based information sources. P. 4
News
A round-up of global telecoms events over the past month P. 13
Statistics and valuations
Cellular Subs, Cellular Penetration, Cellular ARPU, Broadband Internet Subs,Valuation – Integrated, Valuation – Cellular, Share Price Performance,Corporate Earnings, Earnings Revisions, Rating Revision P. 19
Monthly stats
P. 37
Forthcoming events
P. 45
Appendix
Equity relationships among global telcos P. 47
I
NVESTMENT
S
TANCE
July 2004
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Regional/subsector investment stance summary
Wtd. stockRegion/segment Stance recommendations* Top picks Comments/action
Europe Integrated WEAK NEUTRAL 3.22 Telenor Q2 results may offer further grounds for concern. We favor operators with minimalgearing to home markets and high exposureto mobile/emerging markets.Europe Wireless NEUTRAL 2.80 TIM We favor companies with a strong domesticposition, minimal domestic competitiveconcerns, and good exposure to emergingmarkets.US Integrated WEAK OVERWEIGHT 2.72 Verizon Proactive stance towards product bundlingand some recent regulatory victories makeus marginally more positive.US Wireless OVERWEIGHT 1.00 Nextel Consolidation is driving the sector at themoment, but we favor Nextel's uniquemarket positioning.AsiaPac Integrated OVERWEIGHT 2.21 KT Corp, NTT, Going for yield and restructuring potential.TelstraAsiaPac Wireless OVERWEIGHT 1.69 China Mobile, KDDI, The combination of balance sheet strength,NTT DoCoMo secular growth and strong data results setsthe sector apart from counterpartselsewhere.Source: Daiwa estimates*Based on DIR 1 - 5 rating system
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