Boston, MA -- (ReleaseWire) -- 04/11/2014 -- Hong Kong has many positive characteristics including comparatively high purchasing power and a business-friendly environment, and it was the first to launch a commercial long term evolution network in Asia. Mobile subscriber numbers have long passed the 200% penetration mark and, despite the latest data from operators and the regulator showing continued growth, this rate is slowing down, prompting a downgrade in our forecast. 3G and 4G, however, are the key drivers of growth, outperforming our expectations for the year. Fixed lines continue to post declines at a more rapid pace, although IP lines are a bright spot for the industry.
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- Mobile subscriptions continued to grow despite the high penetration rate. We forecast 18.974mn mobile subscribers by the end of our five-year forecast in 2018, a 254.3% penetration rate
- Full-year data from the regulator for broadband subscriber numbers saw further declines that were unexpected. We believe subscriber numbers will return to growth over the course of our forecast period to 2.57mn broadband subscribers by 2018.
Hong Kong remains in fourth position in BMI's Asia Pacific Telecoms Risk/Reward Ratings with a telecoms rating score of 65.0, slightly lower than the previous quarter.
Key Trends And Developments
In December 2013, Hong Kong Telecom (HKT) is to reacquire mobile network operator CSL in a US $2.245bn deal that would make the incumbent the clear leader in Hong Kong's highly competitive and saturated market and augment its ability to offer comprehensive converged fixed-mobile services to consumers and businesses. HKT's principal shareholder, PCCW Ltd, is expected to hold a market share of around 31% out of a total subscription base of 17.445mn post-acquisition.
In November 2013, the Office of the Communications Authority announced its intention to launch a hybrid administratively assigned/market-based approach to reassign 118.4MHz of paired 3G spectrum in the 1,900MHz-2.2GHz band, which has been idle since 2001. The approach will offer each of the four current 3G mobile operators the right of first refusal of 19.8MHz of the spectrum, with the remaining frequencies to be tendered through an auction to be opened to all interested parties and scheduled for Q414. SmarTone has already expressed its disappointment with the decision, arguing it does not benefit consumers. China Mobile is reportedly aiming to acquire 3G spectrum in Hong Kong.
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