STOCKWATCH: China Mobile extends losses on fears of price war

HONG KONG (AFX-ASIA) - China Mobile (Hong Kong) extended losses in afternoon trade on fears that a new pricing package offered by parent China Mobile Communications Corp will ignite a price war in China's mobile phone market, dealers said.	    At 3:42 pm, China Mobile fell 1.30 hkd or 3.4 pct to 36.80 hkd on volume of 10.71 mln shares, while China Unicom shed 0.20 to 9.70 on trade of 11.23 mln shares.	    The Hang Seng Index was down 216.54 points at 13,241.15 on turnover of 4.93 mln shares.	    Parent company, China Mobile Communications just launched a seven tier payment package with fixed monthly payments ranging between 30 yuan and 788 yuan, while China Mobile announced earlier this month it would offer a six tier payment package with fixed monthly fees of 98-788 yuan. 	    An analyst with South China Securities said the parent's new tariff rates have imposed psychological impact on China Mobile.	    "But, it is unlikely that China Mobile will cut prices further right after launching the preferential six tier payment package earlier this month. Otherwise, its ARPU (average revenue per user) will be further affected," the analyst said.	    The analyst said the new six-tier billing package is expected to affect 10 pct of China Mobile ARPU, which is estimated at 178 yuan as at the end of 2000.	    China Mobile said earlier today it would not follow the parent to launch a fixed monthly fee of as low as 30 yuan, saying the two companies have different marketing strategies.	     The analyst said although China Mobile has made a clarification on pricing, the psychological impact is expected to continue to affect its share price in the short term.	    The analyst said investors in Hong Kong have witnessed local mobile phone operators being badly hit by an escalating price war, so they have fears that China Mobile will suffer as much impact as its Hong Kong counterparts.	    "However, China is not a market economy. The difficulties the Hong Kong operators are having are unlikely to be seen in China," the analyst said. He added that the networks run by China Mobile's parent still adopt analogue systems, rather than the digital systems China Mobile is using.	    "An Mobile, the financial impact will be greater. I still believe China Mobile will not do the same thing," the analyst said.

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