IF YOU COULD collect a penny for every piece of speculation about consolidation in Hong Kong's crowded mobile phone sector, you would be a rich man.
Inevitably, Telstra's move to take complete ownership of Pacific Century CyberWorks' mobile operations has sparked another round of chattering among investors - and bankers looking to do deals.
Telstra executives themselves added fuel to the fire by saying on a post-deal conference call that 'consolidation was a likelihood' in Hong Kong and they would be looking to participate, according to Mayur Nallamala, a telecommunications analyst with ABN Amro.
The logic for consolidation is inescapable. Hong Kong has six mobile operators for a population of just 6.7 million. This has been great for the 70 per cent of Hong Kongers who own mobile phones, giving them some of the cheapest airtime deals in the world.
For the operators, it has been a nightmare. CSL, now wholly owned by Telstra, did make money last year but analysts believe it was the only one to do so. Even Hutchison Whampoa's local mobile operation, the biggest with 1.7 million subscribers, is thought by analysts to be losing money on a cash basis, though the figures are not broken down in its financial statements.
With mobile penetration at saturation levels, revenues are static. Beyond mergers, paring expenses is the only route to improving the bottom line. But 'there's only so long these guys can keep cutting costs', Mr Nallamala said.