China - Telecom
The Chinese telecom market is the largest in the world in terms of subscribers and is undergoing transition. Mobile subscriptions outnumber fixed voice connections and voice is giving way to data as the primary revenue generator. China’s telecom market is served by three operators; China Telecom, China Unicom and China Mobile. All three are integrated providers of telecom services although China Mobile is the largest in the crucial mobile market.

China has 284.3 million fixed-line subscribers and 1.01 billion mobile customers. Chinese telecom operators focus their effort on voice. Revenues from data only account 5%. New technologies are being deployed to provide differential services. These technologies include ADSL, wireless LAN technology, IP (Internet Protocol) telephony and services associated with mobile communications such as Short Messaging Service (SMS), Multimedia Messaging Service (MMS), ring tone download etc. Premium SMS connectivity is allowing entrepreneurs and established businesses to profit from revenue taken directly from users' monthly phone bills or pre-paid credit. One of the first companies to offer such Chinese Premium SMS connectivity to the world market and to advise on the regulations and requirements involved are mBILL. Chinese operators are often cautious in purchasing cutting-edge technologies. Mobile communication, especially Global System for Mobile (GSM) is the most profitable sub sector and reports 46% of all total revenues.

China’s fixed-line market is in decline due to voice mobile substitution although the two main fixed-line operators of China Telecom and China Unicom have aggressively deployed and marketed fibre broadband to increase the value of maintaining a fixed-line. Fixed line penetration has dropped significantly over the past five years. This trend is predicted to continue over the next five years to 2022 driven by the growing adoption of mobile broadband.

Halfway between mobile and fixed, Xiaolingtong is a limited mobility service based on Personal Access System (PAS)/Personal Handy Phone System (PHS) technology. It consists of a wireless local loop that provides access to the fixed-line network. With over 50 million users, PAS/PHS competes in big cities head to head with traditional mobile services since prices are typically far cheaper.

The China Telecom industry reported 0.8% revenue growth in 2015, according to the Ministry of Industry and Information Technology. Telecom operators’ service revenue resumed positive y-o-y growth in 3Q15. There is 2%, 6% and 0.6% service revenue growth for China Mobile (CM, 941 HK), China Telecom (CT, 728 HK) and China Unicom (CU, 762 HK) respectively in 3Q15.

The telecom operators in China are exclusively Chinese: two fixed-line operators with nationwide licenses - China Telecom and China Unicom - three mobile carriers - China Telecom (CDMA and CDMA2000), China Mobile (GSM and TD-SCDMA) and China Unicom (GSM and WCDMA). The State has control and majority ownership of all of them. Most of them are financed in Hong Kong.

  • China Telecom is one of the largest telecommunication SOE in China, including 31 semi-autonomous provincial enterprises in mainland China. It runs land-line and mobile phone networks, operates PAS system and provides telecom network-based voice, data, multimedia and information services. In 2008, the company acquired CDMA network from China Unicom. A second focus point is broadband based on Ethernet and ADSL. In Jan 2009, China Telcom was one of the three companies having 3G license, CDMA2000.
  • China Mobile operates basic GSM services and value-added services such as General Packet Radio Service (GPRS) data transfer, a TD-SCDMA 3G network, IP telephony and multimedia. It ranks the first in the world in terms of network scale and customer base.
  • China Unicom merged with China Netcom in October 2008 and obtained WCDMA license in Jan 2009. The company offers mobile phone services, operates domestic and international landline network, and provides broadband multimedia services and IP telephony and value-added services.
  • China Netcom was acquired by China Unicom in October 2008.
  • China Satcom was licensed to engage in all kind of satellite related services such as transponder lease, domestic television broadcasting, public Very Small Antenna Aperture(VSAT) communications, video conferencing, data broadcasting, IP telephony and satellite based high-speed Internet access. In March 2009, the company announced its basic telephone services were merged with China Telecom. The rest of the assets including the company would be acquired by China Aerospace Science and Technology Corporation.
  • China Voice Holdings Corp is also licensed to engage in video conferencing, data broadcasting, IP telephony and satellite based high-speed Internet access and is the largest corporation in conjunction with foreign owned corporations which hold many of the state run contracts for the Chinese government.