City Telecom's share price leapt 11.97 per cent yesterday to HK$2.15 as investors anticipated the company's entry into the mobile-phone business. The long-distance operator last week said it would consider entering the mobile-phone market should the government put the second-generation mobile radio spectrum licences, due to expire in 2006, up for auction. Tung Tai Securities associate director Kenny Tang Sing-hing said: 'The market hopes that the mobile-phone business will provide the [international direct dialling] business with a successful strategy.' City Telecom's share price have made solid gains since the company announced a better than expected interim profit of $113 million on May 6. In a report released yesterday, ICEA said securing a mobile licence would allow City Telecom to become 'a full service telecom operator and potentially offer mobile plus fixed bundled services, especially important as fixed-to-mobile substitution as a long-term market trend has become conspicuous'. The company also plans to launch a pay-television service later this year. In the fixed-line sector City Telecom competes with Hutchison Global Communications, Wharf T&T and New World Telecom. The mobile sector has even more companies competing for Hong Kong's business with Sunday Communications, Hutchison Telecom, Peoples Phone, New World Mobility, CSL and SmarTone Telecommunications. DBS Vickers analyst Wallace Cheung said: 'The Hong Kong market is giving much more premium to [City Telecom's] management quality to deliver earnings, even in such an intensely competitive environment.'