Analysis Mason predicts the key TMT trends for the next 12 months
China Telecom set for strong mobile growth
China Telecom, the country’s biggest fixed-line operator, demonstrated strong growth in the mobile market in 1H09. The 3G license it was granted early in the year has provided it with an opportunity to enter the mobile market just as fixed-to-mobile substitution is beginning to accelerate its fixed subscriber losses.
Its mobile subscriber numbers are now beginning to grow. It averaged almost 2 million monthly net additions in 1H09, and saw strong growth in its mobile net addition market share. In contrast, the largest mobile operator, China Mobile, is losing its dominant share of net subscriber additions, with a share of 66% in 1H09, down from 85% in 1H08.
We expect China Telecom’s strong mobile growth to continue in the second half of 2009 for two reasons:
China Telecom is leading the way on 3G network deployment. Currently it has the largest coverage of any of the Chinese operators, with 342 cities and more than 2,000 counties covered by its CDMA EV-DO rollout as of July 2009. In contrast, China Unicom has only deployed WCDMA in just over 100 cities, and China Mobile’s TD-SCDMA networks will only cover 238 cities by the end of 2009.
Bundling will help China Telecom continue its strong growth. The bundling of mobile and fixed services is leading to the rapid expansion of its mobile subscriber base. China Telecom announced that in the first half of 2009, the penetration of bundled services among its mobile subscribers was 48%. China Telecom’s dominance in the fixed and broadband markets should promote further growth in the mobile market.
Evidence from July 2009 bears this out, with China Telecom gaining 2.45 million new subscribers – its highest monthly growth to date.
But despite the growth potential, China Telecom needs to address several issues if it is to remain competitive with China Unicom and China Mobile:
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