Analysts have raised questions over the future of New World Mobility (NWM) after it unexpectedly failed to take part in Hong Kong's third-generation (3G) mobile phone auction. The New World Group mobile arm was widely tipped as the wild card to win the fourth licence after Hong Kong's big three operators. Instead, Sunday Communications emerged as the fourth winner. The other three winners were: Hutchison 3G HK, a 75-25 venture between Hutchison Whampoa and NTT DoCoMo; CSL, a 60-40 venture between Telstra Corp and Pacific Century CyberWorks; and SmarTone Telecommunications. NWM's failure to participate in the auction raised questions about the long-term commitment of its battered parent New World Development to the mobile phone business. NWM managing director Pierre Fitzgibbon said on July 19 his company would submit an application for the auction. He said yesterday the decision not to take part was made after weighing the return on equity. 'It is not an issue of money [from our parents] but rather the returns. We understand quite fully that the cost of capital has risen recently,' Mr Fitzgibbon said. 'No licence does not mean you are dead. We don't think that not owning a 3G network destroys [our shareholders'] value.' He said New World Development, which had already put about HK$2.5 billion into the mobile network, remained committed to the business, and had no intention of selling. Operating as a mobile virtual network operator (MVNO) is an alternative NWM is considering to play the 3G market. Insiders close to NWM said the company's 3G team had been working hard until early this week and it was a surprise the company did not submit an application to take part in the auction. But Mr Fitzgibbon said the decision to pull out was made last Friday evening. Analysts said the decision was made to please investors, whose concerns over the additional capital commitment for 3G on top of the company's HK$27 billion gross debt had sent the stock falling 37.1 per cent since September. Ironically, the New World share price fell 2.91 per cent yesterday to a 14-year low of HK$5, against a 2.69 per cent rebound in the blue-chip index. All the Hong Kong-listed licence winners saw their share prices rise yesterday. Sunday Communications led with a 9.09 per cent, or 2.5 HK cents, surge to 30 HK cents. SmarTone Telecommunications gained 4.88 per cent, or 40 HK cents, to HK$8.60. Hutchison Whampoa rose HK$2, or 3.74 per cent, to HK$55.50, while Pacific Century CyberWorks gained 2.96 per cent, or five HK cents, to HK$1.74. 'Do we have enough money? Do you guys really have money?' asked Sunday group managing director Craig Ehrlich. 'I keep on hearing that after five years [since getting a mobile licence in 1996] . . . and now a 3G licence should give Sunday the next step to its long-term pledge in wireless service.' He said Sunday, which had HK$580 million in cash and net debt of less than HK$200 million as of June 30, would be able to finance its 3G commitments with no equity partnership. The smallest listed mobile operator had budgeted at least HK$1.5 billion, mainly for licence fees, over the next three to four years, but the capital expenditure would not be in Sunday's financial statements until at least 2003. He said it would be more economical for Sunday to own the network, rather than operate as a MVNO.