Operators eyeing larger market share
By Xiao Chen (China Daily)
Updated: 2004-03-24 09:26

China's telecommunications market will witness a new round of consolidation and acquisitions this year as all the nation's telecom operators are expected to make great efforts to grab a larger market share, analysts say.

"The situation is foreseeable since the country pledges to further relax government control as the sector has become quite competitive," said Chen Jinqiao, director of the China Academy of Telecommunications Research under the Ministry of Information Industry (MII).

According to him, consolidations this year will centre on the areas of mobile, fixed-line, data communications, VoIP networks, broadband and 3G-related services.

He believes this year is of pivotal importance for domestic telecom operators to adjust their businesses and get ready for global competition.

"More integration, consolidation as well as mergers and acquisitions will be seen this year," he projected.

According to the MII, market shares occupied by the country's six major telecom operators last year were: China Mobile 37 per cent; China Telecom 30.7 per cent; China Netcom 16.2 per cent; China Unicom 14.5 per cent. China Satellite Telecommunications Corp and Railcom command the remaining 1.6 per cent.

China Mobile and China Unicom, the country's duopoly mobile operators, both pledged in January to further adjust their business through enhanced partnerships with telecom-related service providers and equipment makers.

China United Telecommunications Corporation is the country's second-largest mobile operator and the only one which has both GSM (global system for mobile communications) and CDMA (code division multiple access) networks.

Wang Jianzhou, the company's chairman and president, expected that competition within the mobile business will be "extremely intense."

"For China Unicom, we will watch closely on the development of the market and adjust our strategies accordingly," he said.

He stressed that boosting value-added services based on its CDMA 1X networks will top the company's agenda this year.

Company figures indicate that by the end of last year, it had recruited 70 million GSM subscribers and 19.06 million CDMA subscribers.

According to Wang, China Unicom is to introduce a new solution connecting both GSM and CDMA networks this year. With two chips in one handset - one SIM card and one UIM card, users are able to transfer between GSM and CDMA networks automatically.

The service is scheduled to be officially kicked off in 15 major cities including Beijing, Shanghai and Guangzhou in the middle of the year.

As for China Telecom and China Netcom, the country's two largest fixed-line phone operators, both are vowing to increase investment on "Xiaolingtong"(xiaolingtong) wireless phones service or personal access system (PAS), an effective way to bite into the wireless market this year.

The "Xiaolingtong" is built onto the existing fixed-line network and has attracted users with low per-minute rates, one-way charges and cheap monthly fees. Figures from China Telecom indicate that there were about 20 million xiaolingtong users at the end of last year.

Si Furong, managing director of China Telecom Corp Ltd, a listing arm of China Telecom Corp, believes that being a complement to the company's fixed line telephone, there is still huge market potential for the development of xiaolingtong as it meets the demand of low-end customers.

While for China Netcom, the most important move this year is to debut on the Hong Kong and New York stock markets, which is expected to take place in the third quarter of this year.

"To go public will be one of the most effective ways for us to raise capital for our future development," said Zhang Chunjiang, general manager of China Netcom Group Corp.

China Netcom is now the only one among the four major telecom operators to not have been listed.

China Railcom, which was separated from the Ministry of Railways last month, also vows to become a strong telecom operator in the coming three to five years.

Analysts believe that to seek partnerships with other major telecom operators is likely the most effective way for China Railcom to achieve its goal.

Distinguished from other parts of the world, China's telecommunications industry maintained a high growth momentum last year.

Figures from the MII show that the country's telecom industry fulfilled a revenue of 461 billion yuan (US$55.5 billion), up 13.9 per cent from the previous year. Fixed asset investment fulfilled last year reached 221.52 billion yuan (US$26.6 billion), up 8.6 per cent from a year earlier.