— Improving prospects for commercial satellite-fleet operators in Asia along with indications of merger pressure from the Chinese government have fueled speculation that consolidation in this market now may be possible.

Opinions still differ over whether classic consolidation – one company buying out another – is politically feasible in Asia, where satellites

still are viewed as symbols of national identity and independence.

But even if conventional mergers and acquisitions are not permitted, other types of deals are possible.

At least some stock investors think so. In recent weeks, two Hong Kong-traded companies, APT Satellite Holdings Ltd. and Asia Satellite Telecommunications Holdings Ltd. (Asiasat) have seen their share values shoot up and down in large volume in the kind of trading activity that often accompanies rumors of a big deal.

told investors Oct. 8 it was negotiating the purchase of additional shares of broadband-services provider SpeedCast Holdings, a company in which it already owns a majority stake. But other than this deal, which had been expected, Asiasat said it had no other transactions in the works – or at least none it was obliged to tell the market about.

“I am completely flummoxed by this,” Asiasat Chief Executive Peter Jackson said in an Oct. 9 interview. “I can’t explain it.”

APT issued a similar no-imminent-deal statement Oct. 5 following a two-week period in which its stock doubled in price in heavy trading volume.

“We are not aware of any reasons for such increases,” APT said in a statement requested by Hong Kong Stock Exchange authorities. “We also confirm that there are no negotiations or agreements related to intended acquisitions” that the company is legally bound to disclose.

Some industry officials speculated that investors had bid up the price of APT, and perhaps Asiasat as well, in the belief that the Chinese government is seeking to consolidate its satellite-television broadcasters under a single corporate roof.

Such a move, which according to these officials would start with combining Sinosat and Chinasat, could extend to publicly traded companies, in which case the Chinese consolidator may offer a premium in exchange for control.

APT, which already is part-owned by companies affiliated with the Chinese government, would be next in line, according to this reasoning.

The idea of consolidation in Asia long has

been promoted by Wall Street financial analysts, who favor merger deals in general and see potential synergies in rolling East Asia’s half-dozen satellite operators into a smaller group of two or three.

SingTel of Singapore, which owns 20 percent of APT and also owns Australia’s Optus Networks satellite operator, has the financial resources to be a market aggregator but sees no reason to make such a move, according to PohKwee Lin, SingTel’s director of business development and solutions.

“There are not too many candidates available for consolidation,” Lin said Sept. 5 at a satellite finance conference organized by Euroconsult here. “It is not easy to be consolidated into an international operator. Many national operators are viable. Operators based in the United States or Bermuda don’t have regional roots. We are profitable, and with the national interests in mind, I don’t think shareholders want to think about this question.”

Jackson agreed, saying today’s satellite service customers are more aware of the terrestrial and satellite choices available to them than they were several years ago, making the consolidation arguments less compelling.

currently is owned by the financial-services subsidiary of General Electric of the United States and China’s government-controlled CITIC investment house, with a minority of its equity traded on the Hong Kong and New York stock exchanges. Global satellite-fleet operator SES of Luxembourg sold its stake in Asiasat to General Electric earlier this year. Since then, General Electric has not made clear what it intends to do with its newly acquired asset.

“We will have to become more local,” Jackson said of Asiasat’s strategy following the SES sale. “We now have the freedom to work with any satellite operator in the world, or use terrestrial links. I think you will see more alliances among regional operators.”

Several regional operators recently have demonstrated that becoming larger players does not necessarily mean buying or being bought. Asia Broadcast Satellite, a one-satellite operator that in 2006 completed the purchase of an in-orbit spacecraft, recently struck a capacity-sharing agreement with Vietnam Telecom International.

Vietnam’s first satellite, Vinasat-1, is scheduled for launch in 2008.