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IRG Technology, Media and Telecommunications Weekly Market Review (Week of 29 Aug – 4 Sept 2011)



         Softbank announced that it was selling its holdings in Yahoo! to Citibank in repayment of a 2004 loan. Softbank currently owns around four percent of Yahoo! Softbank said that the transaction will have no effect on the current co-operation between Yahoo! and Softbank, which also owns more than 40 percent of the independently managed Yahoo! Japan. After the transaction, Softbank will not only pay down its debts to Citibank but will also pocket a profit of approximately 76.4 billion yen ($1 billion).

         NTT Data Corp. has launched an initiative to fund R&D projects at overseas subsidiaries. The NTT group member will invest a total of 100 million yen (US$1.3 million) to support six projects, selected from among 32 proposals, through the end of March 2012. It expects this R&D effort to boost sales by 3 billion yen (US$39 million) over the next five years. A project to standardize methodologies for developing and implementing enterprise resource planning systems is among the six selected by a team of NTT Data technology development headquarters staffers and engineering executives at foreign units. U.S. subsidiary NTT Data AgileNet LLC will serve as secretariat of the projects.


         Sony, Hitachi, and Toshiba have agreed to merge their small and medium-size display businesses into a joint venture that will have a government-backed investment company, Innovation Network Corporation of Japan, as the largest shareholder. The move comes as Japan tries to protect its companies from the rising Yen and competition from other Asian players. INCJ, Hitachi, Sony, and Toshiba have signed a non-binding Memorandum of Understanding to integrate their display businesses, currently operated by subsidiaries, in a new company to be established and operated by INCJ. The display companies make LCDs including ones using TFT technology that are used in computing devices and television sets. All of the issued shares of subsidiaries Hitachi Displays, Sony Mobile Display and Toshiba Mobile Display and other assets are to be transferred to the new company which is to be called Japan Display. INCJ, which provides financial, technological, and management support for next-generation businesses, plans to invest 200 billion yen (US$2.6 billion) in the joint venture in exchange for shares to be newly issued by it as a third-party allotment, the companies said.

         Hitachi Kokusai Electric said its sales in its video and wireless network segment drop by 24 percent in the first quarter ended 30 June. Sales in the segment totaled 12.40 billion yen (US$161 million). The operating loss for the video and wireless network segment widened to 2.26 billion yen (US$29 million). Net sales for the whole company went up 7 percent to 30.82 billion yen (US$401 million) and the company moved to a net profit of 184 million yen (US$2.4 million).




         KT is investing 4 billion won (US$3.7 million) in a fund to boost the development of applications. The Econovation Fund for the Active Development of Superior Applications follows the company's Econovation Application Developer Competition, Smart School for education app developers, the Global Frontier app development project, and OASIS, a programme for supporting application developers' advancement into the global market.

         SK Telecom Co. has been awarded a license to operate services using the 1.8 GHz spectrum in South Korea after placing a bid of 995 billion won (US$934 million) in an auction for the bandwidth. SK outbid KT which said separately it acquired a license for the 800 megahertz spectrum for 261 billion won (US$245 million). KT already has a license to operate using 1.8 GHz bandwidth. Offering services over high-speed networks is seen as a key development for South Korea's cellphone operators. SK Telecom and KT both bid for the 1.8 GHz spectrum, which was being auctioned by the Korea Communications Commission telecommunication regulator.


         LG Electronics Inc. aims to raise its market share for 3-D TVs fivefold this year by pushing its technology for lightweight, battery-free glasses. The company will reach 20 percent of the market for the devices by the end of 2011, up from 4 percent at the beginning of the year, said Lee Kwan Sup, head of marketing for LG’s home entertainment unit. LG aims to pass Samsung Electronics Co. and become the world’s top seller of 3-D televisions next year. LG and competitors including Samsung and Toshiba are pushing 3-D to revive falling demand in major markets. TV shipments will decline through 2015 in Western Europe and Japan and stagnate in the U.S., market researcher IMS Research said. The market will total about 200 million TVs this year, with 3-D accounting for some 10 percent, from 1 percent last year. Sony Corp. cut the sales forecast for its Bravia televisions by 19 percent to 22 million units worldwide this year. Royal Philips Electronics NV said in April it would divest its 80-year-old TV unit to a Hong Kong contract manufacturer.



         Dell announced that it will partner with China's top search engine Baidu to develop tablet computers and mobile handsets. Baidu declined to comment.  Baidu launched a mobile software platform recently that would be a prelude to an operating system.

         Sina Corp. has paid US$66.4 million to acquire a 9 percent stake in Chinese online video company Tudou Holdings Ltd., as the Internet portal operator looks to boost its advertisement revenue from video content. Intensifying competition in China's online video market is pushing up licensing costs for video content and making it harder to retain users, leading executives to predict consolidation in the industry. However portal operators, including companies like Inc. as well as Sina, are looking to video ads as a new potential growth driver. Sina bought about 1.08 million of Tudou's American depositary shares in connection with the company's initial public offering this month, and between Aug. 17-Aug. 25 Sina bought about 1.49 million more ADS for US$35.2 million.

         Tencent-invested business-to-consumer e-commerce footwear retailer is in talks with venture capital and private equity firms with hopes to raise over US$50 million in pre-IPO financing, Sohu reports citing company CEO Li Shubin. The site will start building its logistics capabilities in the fourth quarter, first focusing on Beijing, Shanghai, Guangzhou and Chengdu.  The site completed third-round financing in June, with Tencent investing US$50 million and is targeted to go IPO at end of 2012.
 has ended its cooperation with online payment services provider as of 24 August, reports China Tech News. According to, the reason for its termination of the cooperation with is the service fees charged by the latter are too high. These are four times higher than, another Chinese internet payment service provider. said that from now on users will not be able to login to or pay for their orders with their Alipay accounts.


·             China Telecom Europe confirmed its plan to switch on its latest fibre cable linking Europe and Asia before the end of the year. The cable system has been in the works since July 2010, and will expand the company's Euro-Asia Network Solution, becoming the fourth of its terrestrial routes to span the two continents. CTE's three other fibre networks include the Transit Europe-Asia (TEA) cable built in partnership with Rostelecom; the China-Russia 2 in partnership with Transtelecom; and the Transit-Mongolia cable that connects Beijing to the other two systems. The fourth cable will connect China to the TEA and CR2 fibre links via Kazakhstan, forming what CTE refers to as an Information Silk Road, enabling the operator to support the latest-generation of IP services on behalf of its enterprise and telecoms customers either based in the region, or eyeing potential growth opportunities there.

         ZTE Corporation announced a 21.52 percent increase in operating revenue to 37.34 billion yuan (US$5.8 billion) for the six months ended June 30, 2011. Based on HKFRS, interim net profit declined 12.3 percent to 769 million yuan (US$120.4 million).  Applying PRC ASBEs, operating revenue for the first half also grew 21.52 percent to 37.34 billion yuan (US$58 billion). Net profit declined 12.3 percent to 769 million yuan (US$120 million). In China, the Group had operating revenue to 16.53 billion yuan (US$2.6 billion), accounting for 44.3 percent of the Group's total operating revenue for the first half. Although there was a slowdown in overall investments in the domestic telecommunications industry, the Group ensured growth in operating revenue by improving the competitiveness of its products and by expanding the market share for wireless, data communication, terminal and other products. Strength from the international market was the key driver for the rapid growth in the first half of 2011.

         China Comservice’s first half net profit increase 16.3 percent to 1.05 billion yuan (US$164 million). Revenues went up 16 percent to 25.19 billion yuan (US$3.9 billion). Revenues from telecommunications infrastructure services were 12.19 billion yuan (US$1.9 billion), up 17.7 percent and accounting for 48.4 percent of total revenues, as revenues from business process outsourcing were 10.48 billion yuan (US$1.6 billion), up 13.2 percent and accounting for 41.6 percent of total revenues. Furthermore, revenues from applications, content and other services rose by 19.6 percent and totaled 2.52 billion yuan (US$394 million), representing 10 percent of total revenues. Gross profit totaled 3.95 billion yuan (US$618 million), up 17.3 percent. The company continued to optimize its revenue structure and cost management, which helped to improve the gross profit margin to 15.7 percent from 15.5 percent in H1 2010.

         Huawei Technologies expects to see a strong growth in its Southeast Asia business as mobile operators across Southeast Asia upgrade their networks to HSPA and LTE. The ten markets, namely Hong Kong, Macau, Taiwan, the Philippines, Thailand, Cambodia, Vietnam, Laos, Myanmar, and Sri Lanka are seen to generate revenues of over US$1.39 billion for the company this year, reports citing Yang Shu, Huawei's President and CEO for Southeast Asia region. Last year, Huawei recorded Southeast Asia revenues of US$1.34 billion, up 17.7 percent year-on-year and accounting for 8 to 10 percent of the company's total revenues.

         A court in China sentenced a top official working with the country's leading telecom operator to death with two years' probation for accepting bribes of over US$2 million. Li Hua, former chairman and general manager of the China Mobile Communications Corporation's Sichuan branch, was convicted on the first instance of taking bribes totaling 16.48 million yuan (US$2.58 million), a spokesman with the Intermediate People's Court of Panzhihua City said. The official turned himself in and returned all bribes, which were confiscated and turned over to the state treasury.

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