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China Telecommunications Report Q3 2011
Business Monitor International, May 2011, Pages: 113
BMI has incorporated the latest data released by the Chinese telecoms regulator and operators in our forecasts for the country's telecoms industry. Not surprisingly, this report expects China to continue on its impressive growth momentum in the mobile, 3G, internet and broadband sectors, while the fixed-line market is the only one that is expected to experience a decline on the back of increasingly popular mobile services.
At the end of 2010, China had 841.963mn mobile subscribers, and previous research fore-casted that the country to remain the world's largest mobile market by the end of 2015 with a total mobile subscriber base of 1.791bn. Much of this growth momentum will be driven by rural expansion and we therefore envisage operators' ARPU to continue to trend downtrends due to a high proportion of low-value prepaid subscriber. However, this research sees an upside risk to our ARPU forecasts beyond the five-year forecast period as mobile penetration rates cross the 100% mark. Market saturation is likely to force operator to seek revenue growth through introducing high-value value-added services compared to subscriber growth.
At the time of writing, China Telecom has yet to release its subscriber figures for March 2011. However, based on the data released by China Mobile, China Unicom and the Ministry of Industry and Information Technology, net additions for the Chinese mobile industry in the quarter ended March 2011 is likely to be one of the best performing quarters in recent years. BMI thinks that the fledgling 3G industry is a key growth driver as operators engage in aggressive market campaigns such as hefty handset subsidies to attract consumers.
According to China Internet Network Information Centre's 27th Statistical Report ‘On Internet Development in China', search engine application had the highest number of users with 374.53mn at the end of 2010. This was followed behind by online music and online news, which had 320.74mn and 307.69mn users respectively. While online communication channels such as email, forum/BBS and instant messaging remain popular, online business transactions in China are growing rapidly due to the government's effort to promote e-commerce. The number of online shopping, banking and payment users reported the highest y-o-y growth at 48.6%, 48.2% and 45.9% respectively. A survey by Chinese mobile phone application service provider 3G.cn showed that 52.2% of mobile phone internet users in the country had used mobile banking services by the end of February 2011. This was an increase from 36.8% in July 2010, and the development is in line with BMI's core view that the fledgling mobile banking industry is one to look out for due to significant growth opportunities arising from the integration between mobile and financial services.
Lastly, China overtook India to reach the eighth position in our latest Business Environment Ratings. China has the second highest industry rewards score in the Asia-Pacific region but we note that there are downside risks to the country's overall Telecoms Ratings score due to the increasing frequency of protests across China over rising fuel prices, which could negatively impact the country's business environment and investor confidence.
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