New rival to give HK Telecom rough ride after deregulation

Hongkong Telecom Recommendation: Sell Brokerage: CS First Boston HONGKONG Telecom is Hong Kong's largest telephone operator by far but is facing increasing competition in a deregulated environment.

In a recent report on discount long-distance provider City Telecom (CTI), CSFB examined the ramifications for Telecom of CTI's growing strengths.

Already the largest callback competitor to Telecom, CTI is poised to also be a big player as an international simple resale (IRS) operator when the market opens to IRS next month.

CSFB says IRS will lower the cost base of the delivery fee arrangement - and is a good reason to sell Telecom.

Legend Holdings Recommendation: Long-term buy Brokerage: China Everbright Securities LEGEND makes and sells computers under its own brand name in the mainland and distributes international computer products as well.

While the company's net profit margin has dropped as it competes with a growing international presence in the mainland, Legend has maintained its number-one spot with a 12.2 per cent market share this year.