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Sunday backs consolidation, denies merger talks

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Sunday Communications says it still hopes to see consolidation in the mobile market, although it is not in talks with other operators.

Hong Kong's smallest mobile operator denied yesterday that it planned to merge with Telstra's CSL or Pacific Century CyberWorks (PCCW) - the two operators that could trigger a fresh round of acquisitions in the competitive market.

Two weeks ago, Telstra agreed to acquire a 40 per cent stake in CSL from PCCW, giving it 100 per cent of Hong Kong's No 2 operator. Now it is thought Telstra could make more moves to become the SAR's largest mobile phone player.

'I don't think in the short term it [Telstra] is a significant factor. I maintain the view that consolidation is inevitable in the industry. There are four guys with 3G licences, but we have six guys in the market. Whether two of these guys die, are acquired, or become obsolete remains to be seen,' said Sunday group managing director Bruce Hicks. Mr Hicks said consolidation, which has been discussed in the industry for the past two years, would be good for Sunday, but it had not been involved in any recent discussions.

In particular, there had been no talks with PCCW on any form of co-operation. As part of the CSL sale, PCCW ruled out operating a rival mobile business within 18 months.

Mr Hicks said valuations in the mobile sector were 'ridiculously low', and the recent CSL deal was more indicative of what they should be. Telstra paid an effective US$1,100 per subscriber for CSL, more than 10 times the value of a Sunday subscriber, based on the smaller company's current market value.

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