ASIA EMBRACES, REJECTS DEREGULATION BY MARKET;ASIA/PACIFIC;PRIVATIZATION TREND KEEPS GROWING, BUT SOME MARKETS WON'T BUDGE

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Japan's partially privatized Nippon Telephone & Telegraph Co., Tokyo, faces growing competition and possible dismemberment over protests from the business community and within the government.

Such a change would mean increased marketing for the telecom, 35% privatized after the Finance Ministry began selling shares publicly in 1987.

NTT spends more than $200 million annually on TV, print and transit ads. It covered 69% of the long-distance market in fiscal 1995 but is fortifying itself for growing competition from DDI Corp., Japan Telecom Co. and Teleway Japan Corp.

The private NTT Mobile Communications Network held 54.5% of the cellular market in fiscal 1995. NTT-AD handles most advertising, with Hakuhodo handling pagers and Dentsu handling portable phones.

THAILAND

The monopoly state Communications Authority of Thailand is fighting an unusual foe: callback services, which slash user costs-as much as 150%-by relaying them through private phone systems abroad.

Thailand said in November it would consider banning callback services. CAT spent $2.9 million in 1994 on ads by Amex Team, Bangkok, pushing international service.

Thailand's cellular marketing is also volatile, with six hardware and service providers competing for users.

Thailand's commitment to privatization remains slow. In 1991 it granted concessions for 3 million lines to Telecom Asia and Thailand Telephone & Telecommunications-not a lot, as Thailand has almost 60 million potential users. Still, TA overestimated demand and now markets aggressively in ads by Bates (Thailand).

AUSTRALIA

Despite a $1.3 billion profit in 1994, state-owned Telstra is having trouble changing with the times.

Private long-distance rival Optus Communications has already grabbed 15% of Telstra's long-distance market, and full deregulation is expected in July 1997. High costs are expected to deflate Telstra's 1995-96 earnings, and 49% of Telstra may go public if the 1996 federal election results in a Liberal Party administration.

Optus, majority owned by local investors and 24.5% each owned by BellSouth and the U.K.'s Cable & Wireless, is expected to float on the stock market in 1996 for about $450 million. Its success has pushed Telstra, partly deregulated in 1992, to break a $3 million image campaign including a name change from Telecom Australia.

Australia will place no direct foreign ownership restrictions on new players, aside from Optus, which must stay majority-owned by Australian investors.

Telstra spends about $50 million on ads annually vs. Optus' $25 million. Telstra's agencies are DDB Needham, Sydney and Melbourne; John Singleton Advertising and Mojo Australia, both Sydney; and Clemenger BBDO Direct, Melbourne, while Optus is handled by George Patterson Bates, Sydney.

HONG KONG

Last July's deregulation of the private company Hongkong Telecom ended its monopoly on local calls, though it retains its monopoly on fixed-line international calls until 2006.

Competition arises from cellular rivals New T&T Hong Kong, New World Telephone and the Hutchison Group. HT is fighting back with a marketing campaign by J. Walter Thompson Co. to push customer relations and brand identity-and particularly new products.

In 1995 HT started an advanced mobile phone network. This year its new Hongkong Telecom IMS subsidiary plans to start a new interactive media service.

SOUTH KOREA

This year South Korea plans to allow free competition to Korea Telecom in all areas except local call services. Domestic companies get a head start, as foreign rivals can first enter the market in 1997.

International call provider Dacom is expected to begin providing long-distance service this month, and hopes ultimately to win a license to provide local service as well.

Meanwhile, the private Korea Mobile Telecom is upgrading its paging diversity and quality. Competition from Shinsegi this year will affect KMT more directly, and KMT's marketing will change in response, targeting young adults and business users more broadly with ads by Daehong Communications Co. and Changsan Communications, both Seoul.

CHINA, PAKISTAN AND INDIA

China, Pakistan and India are committing to privatization in varying degrees. China has made no concrete deregulation plans, but Western companies are circling in hopes its telecom market will open up within a few years.

Pakistan plans to sell its 26% share of the Pakistan Telecommunication Corp., Islamabad, by March 31, seeking investors in Europe, Asia and the U.S. through international print ads. Parliament's opposition wants to defer the sale until its stock price revives, now lagging at 87 cents a share, from $1.75 in September 1994.

India, struggling to start domestic telecom privatization amidst internal political warfare, offers 937 million inhabitants and a low penetration rate on par with Pakistan's-about one line to 100 people. India hopes to double the phone penetration by 2000, enticing foreign telecoms to crack the market.

Scandal and chaos rage on the Subcontinent, however, involving Himachal Futuristic Communications, a consortium of Israel's Bezeq and Thailand's Shinwarta, which bagged nine of India's 21 available regions in basic services.

Himachal, with $57 million in revenues, bid $24 billion for regional licenses in August, raising allegations of favoritism from the Minister of Communications.

The scandal rocked India's privatization. Basic service bidding, first scheduled to end in December, now faces delays for new bids this year.

Contributing to this story: Mir Maqbool Alam Khan, Bombay; David Butler, Bangkok; Pamposh Dhar, Hong Kong; Yoo-Lim Lee, Seoul; Geoffrey Lee Martin, Sydney; Jack Russell, Tokyo.

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