mcg and cdma

check this out. just off the press. telstra is to release its future strategy next week. this could be big potential for mcg.
Telstra Could Buy Hutchison Telecom Australia - Citigroup
27/10/2005 12:11PM


SYDNEY (Dow Jones)--Telstra Corp. (TLS.AU) could look to buy Hutchison Telecommunications Australia Ltd. (HTA.AU) to stem the impact of migration to lower-margin mobile services from its core fixed-line phone business, say analysts at Wall Street brokerage firm Citigroup.

In a research report issued Thursday examining defensive initiatives the company could adopt as part of its strategic review, Citigroup said Telstra faces two "very severe waves of risk" going forward: customers switching to mobile from fixed-line services driven by aggressive price competition from Hutchison, and the onslaught of unbundled local loop, or ULL.

Telstra's new chief executive officer, Solomon Trujillo, is putting the finishing touches on his four-month review of the company as he looks to cut down on inefficiencies and reinvigorate growth at Australia's largest phone company.

"Fixed to mobile substitution and mobile cap plans present the greatest risk to Telstra over the next three years from a competitive perspective," Citigroup said. "The mobile threat presented by Hutchison has the potential to destroy A$6.2 billion of value for Telstra across its PSTN (public switched telephone network) and mobile business," it said.

Telstra could acquire Hutchison Telecommunications for between A$4.5 billion and A$6.2 billion and then divest the combined second-generation CDMA networks to a third party to satisfy competition concerns, the broker said.

Possible buyers of the CDMA business include Austar United Ltd. (AUN.AU), Macquarie Communications Infrastructure Ltd. (MCG.AU) or a joint venture between Futuris Corp. (FCL.AU) and Australian wheat marketer AWB Ltd. (AWB.AU), it said.

Citigroup expects margin-eroding capped calling plans would vanish from the Australian telecommunications landscape if Hutchison Telecommunications was taken out by another player.

Hutchison Telecommunications, backed by Hong Kong businessman Li Ka-Shing's Hutchison Whampoa Ltd. (0013.HK), has been particularly aggressive with capped calling plans on its third-generation mobile service "3". Since then, other players including Singapore Telecommunications Ltd. (T43.SG) and Vodafone (VOD) have launched equally aggressive plans, which have resulted in significant margin erosion.

Telstra should also sell its Hong Kong mobile unit CSL, Citigroup said.

While recent press reports have speculated on a tie-up with New World Mobile Holdings Ltd. (0862.HK), Citigroup said a more likely outcome is that China Mobile Hong Kong could acquire CSL to secure a 3G service.

A Telstra spokesman declined to comment on the report, only to say that all of Telstra's operations were under review.

Trujillo will unveil his strategy for Telstra next month.



-By Lyndal McFarland, Dow Jones Newswires