Mobile phone operator Peoples has denied receiving any offers to merge this year and says it is not involved in talks. Industry consolidation has been expected in the run-up to the launch of third-generation (3G) mobile services but was difficult to achieve, chief executive Charles Henshaw said. Peoples, Hong Kong's smallest mobile operator, did not apply for a licence in last month's 3G auction, increasing speculation it would merge with or be acquired by another firm. 'Last year, everybody talked about M&A [mergers and acquisitions], but nothing really came out. I think with the mature networks we see today, it is not easy to find synergies [among themselves],' Mr Henshaw said. Mr Henshaw said he did not see any benefits in merging. 'It is all down to pure business. Merging two businesses is not like merging two bus companies, [where you repaint the vehicles] and it would work,' he said. 'Peoples is already a financially strong company that can survive [on its own].' Mr Henshaw said Peoples was on target to achieve earnings before interest, tax, depreciation and amortisation - a measure of a company's core cash-generating capability - of HK$200 million by the end of the year. The company's cash flow before depreciation had increased to an average of HK$15 million to HK$20 million a month from HK$2 million to HK$4 million last year, he said. Subscribers increased to 590,000 from 450,000 at the beginning of the year. Post-paid subscribers accounted for 76.27 per cent of its total subscriber base. Average revenue per user (arpu) was HK$240, down from the previous year's HK$260. These numbers appear to be higher than the industry average, although operators calculate arpu differently. Mr Henshaw said Peoples, which has invested HK$1 billion in the mobile market so far, could be a profitable business, although business indicators have changed since the company's launch. 'Tariffs and arpu have had a big drop since 1997. I don't think Peoples would have anticipated that. But no one would have foreseen mobile telephony becoming a way of life either,' he said. The number of mobile users in Hong Kong has reached 5.62 million, 86.4 per cent of the SAR population according to latest figures from the Office of the Telecommunications Authority. Mr Henshaw argued not having a 3G licence did not make Peoples less competitive, as it could concentrate on software and content development, without tying up capital. He declined to comment on whether Peoples had pulled out of the 3G auction because of shareholder opposition. He said all shareholders were happy with the current situation.