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China Telecommunications Report Q4 2011
Business Monitor International, Sep 2011, Pages: 119
Business Monitor Internationals China Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on China's insurance industry.
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, BMI expect 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 after increasingly popular mobile services.
At the end of June 2011, China had a total mobile subscriber base of 906.767mn, and BMI forecast that the country will maintain its lead as the world’s largest mobile market by the end of 2015, with a total of 1.791bn. As noted in previous updates, the majority of this growth will be driven by rural expansion which has been negatively impacting ARPU growth. China is reportedly in busy drafting a plan to introduce a fourth mobile operator in the country. While ordinarily this development would be seen in other countries to be encouraging, indicating the country opening up to further competition, in the case of China BMI remains cautious due to a lack of details about the new entrant's company structure and the extent of the government's involvement in management and operational decisions.
While the government remains in control of the Chinese telecoms market, BMI note that it has been found that the sector is not immune to widespread corruption, perhaps calling into question the need to oversee some of the regulations and policies that govern the sector. Mr. Zhang Chunjiang, former Vice Chairman and Executive Director of China Mobile has been sentenced to death following his conviction for bribery by a Chinese High Court. The passports of several mid-level managers have been confiscated during the investigation. As a result Chinese authorities are currently carrying out a wide-ranging investigation into further allegations of corruption at the country's three state-controlled telecoms networks, China Mobile, China Unicom and China Telecom.
According to China’s regulatory body, MIIT, there were a total of 291.45mn fixed lines by April 2011, revealing a loss of 5.2% in the year from 307.55mn lines in service by April 2010. The decline in the number of fixed lines continues to be the result of the attraction of mobile services provided at highly competitive tariffs, bolstered by the increased affordability of mobile handsets in the market, and spread of broadband services.
In terms of the broadband market, there were a total of 135.92mn subscribers as of April 2011, following net additions of 9.58mn since April 2010. Growth in the number of broadband subscribers is expected to continue to be robust following aggressive network expansion by operators. China Unicom awarded a broadband network contract to Alcatel-Lucent in July 2011. The vendor will deploy its GSM/W-CDMA solution to enable china Unicom to have a cost-effective mobile broadband network with the quality and capacity to address growing demands in China in preparation for the future introduction of LTE. Further to this, Nokia Siemens Networks was also contracted to deploy its 40Gbps optical network cable across seven provinces paving the way for upgrade to 100Gbps.
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