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Chinese Mobile Market Forecast and Carrier Strategy 2005-2010, Full Year 2006
ROA Holdings, July 2007, Pages: 83
Chinese Mobile Market Forecast and Carrier Strategy 2005-2010 is a regular report published by ROA Holdings, focusing on the latest developments and carrier strategies in the Chinese mobile market.
Executive Summary
Market Dynamics in 2006
The delay in 3G licenses became the most important issue in the Chinese mobile market during 2006. The leading mobile carrier, China Mobile has conducted tests for 3G and 3.5 G and is ready to launch the services. Guangdong Mobile has invested approximately 80 million RMB to introduce EDGE in the Guangdong area and decided to carry out TD-SCDMA tests in Xiamen. China Unicom, the second largest carrier has also made considerable investments in 3G, and once the company is issued 3G licenses for TD-SCDMA or WCDMA standard, it will be put in a financial bind, and there have been speculations about a possible merger between China Unicom and China Netcom. Considering groundwork being laid including TD-SCDMA tests conducted in the mid 2006 and 3G plans set up and network built by telecommunications companies, 3G licenses are likely to be issued at the end of 2007 regardless of the Chinese telecommunications market restructuring. Once the service is launched, the number of subscribers is expected to reach 33.79 million in 2008 and to increase to 230 million by 2010.
In 2006, the two carriers were engaged in severe competition and were focusing on variety of services to increase their subscriber base. China Mobile introduced new services including ‘M.Music Wireless Music Club’, ‘V Wireless Motive Music’, PUSH Email, mobile IM, 3G experience room and WAP Mobile bank. In response to new services offered by China Mobile, China Unicom has focused on various service developments. It began a new ring tone service in partnership with Warner Music and introduced other services including Push Email (Redberry) and mobile navigation. In addition, the company launched mobile TV service and requested license while providing EGPRS service through partnership with Nokia. While mobile carriers provided contents exclusively in the past, they are working with other companies in the same industry to create various new services these days.
In terms of strategic investment, China Mobile purchased a 19.9% stake of Phoenix TV; a Hong Kong based satellite broadcasting company from News Cooperation while forming alliance with the company. When it comes to strategic partnership, China Unicom has been more aggressive than China Mobile. SK Telecom, South Korean mobile carrier purchased a 6.6% stake of China Unicom in 2006.
The carriers are trying to offer stronger handset-line ups for their customers to expand their market shares. In 2006, China Mobile announced that the company and other well known global carriers will be involved in “3G for All” project in an attempt to develop a 100 dollar WCDMA handset. China Mobile who has the largest number of GSM subscribers said that it plans to introduce dual-mode (GSM-GSM) handsets. In addition, the company plans to export low cost 3G handsets to overseas emerging markets.
In 2006, China Unicom announced that the company plans to introduce 3 types of CDMA1X QQ handsets and offer dual-mode (CDMA-GSM, GSM-GSM) handsets as well as low cost dual-mode handsets.
Market Forecast (2005-2010)
As of the end of December 2006, the number of mobile subscribers in China reached 443.5 7 million, according to The publisher forecast. The number of GSM users reached 407.07 million in 2006 and after peaking at 480 million in 2008, it is expected to decline gradually from 2009 with a rapid migration into 3G. As for CDMA, the figure of subscribers reached 36.49 million in 2006 and this will increase to 40.12 million by 2010. The number of prepaid users in China was estimated to be 284.05 million in 2006, and the number is forecasted to exceed 470 million by 2010. The Chinese mobile market is growing rapidly and the annual growth rate is expected to reach 9.07% after 2006. Based on this growth trend, ROA estimates that 711.6 million Chinese people, which is 52.5 % of the total population, will subscribe to mobile communications service by 2010. The Capex of the Chinese mobile market is forecast to reach 108.55 billion RMB in 2006 and 127.45 billion RMB by 2010.
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