BT likes the sound of Chinese telephone numbers

VIEW FROM HONG KONG

Peking's China Daily newspaper has just published a slew of figures which give some idea why BT is so keen to merge with Cable& Wireless to secure a foothold in the Chinese telecommunications market. It should be noted that Chinese numbers always tend to dazzle, even if they sometimes look better on paper than in reality.

So, with this caveat, here is a sample of what China's posts and telecommunications ministry has in mind for the next few years: 79 million new telephone lines are to be installed by 2000.

China plans to have the world's largest telephone network by the end of the decade with 420 million lines. Even then the network will cover only 10.5 per cent of the country.

Meanwhile the Chinese are enthusiastically plugging into mobile communications, with 2.06 million subscribers signing up last year, bringing the total of users up to 3.64 million and a target of 14-18 million users by 2000.

The growth in pager ownership is even more fantastic. There were a mere 430,000 pager users in 1990. Last year 25 million were at the beck and call of these tiny bleeping machines with 50 million expected to be signed up by the end of the decade.

BT is running corporate image-building advertisements in East Asian newspapers at the moment. This is no coincidence.

It had to happen. Not only has Hong Kong's office price bubble burst but developers are holding back on acquiring new office sites and are showing reluctance in developing those they already have in hand. According to property consultants Vigers the capital value of offices in the prime central district has fallen from a high of HK$15,500 (pounds 1,336) per square foot in the second quarter of 1994 to HK$8,400 at the end of last year.

Meanwhile, office rentals, still in the outer stratosphere, dropped by over a quarter last year to a monthly rental of around HK$66 per square foot.

These price falls push Hong Kong off its uncomfortable perch of having the world's highest prices for office space. The dreaded word "glut " is creeping into the vocabulary of estate agents as they contemplate the short-term future with up to 12 million square feet of grade A office space coming on to the market in the next couple of years at a time new supply is running at about double demand.

Companies are simply refusing to pay the kind of prices demanded in the central district and are moving out to fringe areas or, in the case of regional operations, quitting the colony altogether.

Many of the big firms are heading in the direction of Singapore, which is steadily building its own office price bubble, making it increasingly less cost-competitive.

Stockbrokers' analysts - who are always most happy when moving as a herd - seem to have decided that Hong Kong's newspaper price war is over after an exchange of hostilities lasting about six months, which has left a trail of casualties, including half-a-dozen publications that gave up the fight and folded.

Listed newspapers were given a hammering at the end of last year after the price war was launched by the Oriental Press Group, striving Murdoch- style to retain its market leadership.

Its flagship Oriental Daily Newspaper was under threat from the brash new Apple Daily, which zoomed from nowhere to the number two position in the readership stakes after its launch last summer.

As Oriental Press Group cut the prices of its publications to below the costs of production, investors took fright. However, cover prices are inching up again and good news about falling newsprint costs have led the analysts' herd to conclude that media stocks are a buy. OPG is now among the year's best share performers.

The herd seems to have overlooked the simple fact that the reason for the price war has not gone away as Apple and its sister publications continue to make headway.

Meanwhile a new paper, called Mad Dog Daily, was launched as the price war started to peter out. The title says a lot about the state of the newspaper market in Hong Kong these days.