China: 3G launches set to shake up wireless market

Marc Einstein, Frost & Sullivan
09 Sep 2009
00:00
News
Commentary

It seems like no one bothered to tell China's mobile operators that the world was in the midst of a severe economic recession, as all three operators have continued to amass subscribers well into 2009.

The world's largest mobile operator China Mobile added over 40 million subscribers through July to bring its total to 497 million subscribers while rivals China Telecom and China Unicom added 14 million and eight million respectively to bring their totals to 42 million and 141 million.

The news gets even better for the local operators considering the fact that the aggregate mobile base of 680 million subscribers only equates to a 51% penetration rate, meaning that there are still hundreds of millions of mobile subscribers to be added in the country and China is expected to have a triple-digit penetration rate within the next five years.

Despite the massive growth in the Chinese market, the level of competition in the country is nowhere near the extreme level operators face in other large Asian markets such as India and Indonesia, which each have more than ten wireless carriers. In fact, China Mobile still has the highest market share of any Asian mobile operator, boasting a 73% subscriber market share as of July 2009.

However, with the dust settled from China's massive industry restructuring and 3G licenses issued and China's mobile market set to enter a new phase of development all three operators are gearing up for new product strategies which will likely significantly intensify competition.

All three Chinese carriers seem to agree that 3G uptake has been weak due largely to a lack of enabled devices and as such have been on a mad dash to increase the number of affordable mobile broadband enabled devices. China's smallest operator, China Telecom, recently placed an order for four million 3G handsets, which will retail between 500 and 1,000 yuan ($73 and $146). The operator is confident that its CDMA network will give it a competitive edge in the market and expects to have over five million 3G subscribers by the end of the year and over 130 million by 2012.

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