Telstra has bought the remaining 40 percent of mobile phone venture Regional Wireless Co. (RWC) that it did not own from Hong Kong's Pacific Century Cyberworks Ltd. (PCCW) for US$475 million, Telstra said in a statement Monday.
RWC is the parent company of Hong Kong CSL Limited (CSL), Hong Kong's second-largest mobile phone company with over 1 million subscribers. CSL was also awarded a 3G (third-generation) mobile license last year.
Telstra and PCCW set up the RWC joint venture (JV) in February 2001, when Telstra paid $1.68 billion for 60 percent of CSL, effectively valuing the company at $2.8 billion. The sharp fall in the valuation of telecommunication companies is indicated by the much lower price Telstra has paid for the final 40 percent of CSL.
CSL has said it focuses on the high-end mobile market, being the first Hong Kong operator to introduce MMS (multimedia messaging service) and generating a higher ARPU (average revenue per user) than the market average.
Telstra's Chief Executive Officer Ziggy Switkowski said the acquisition reflected the company's strategy of expanding its mobile business, especially in Asia.
Hong Kong's mobile market, with six competitors, has achieved subscriber penetration of around 85 percent. Several other markets in Asia such as Taiwan, Japan, South Korea, Singapore, Australia and New Zealand are also heavily penetrated, so that revenue growth must either come from finding new subscribers in Asia's less-developed markets, or offering higher-priced advanced services to existing users in the developed markets.
Switkowski signalled that Telstra may purchase other mobile phone assets in Asia, saying the company has one of the healthiest balance sheets in the telecommunications sector. Last year, RWC negotiated to buy Singapore-based Mobile One Asia Pte. Ltd. (M1), but the deal fell through.
Telstra is also thought to be keen on the Chinese market, where it has been providing advice to the second-largest mobile phone company China United Telecommunications Corp. (China Unicom) on its CDMA (Code Division Multiple Access) network.