China operators all increasing 2011 spend

Jane Wang/Ovum
OvumChina’s three major telcos recently published their financial reports for 2010. China Mobile maintained its lead in the mobile market, but to ensure long-term growth it will need to acquire a fixed license so that it can offer a full portfolio of services to compete with its major rivals.
 
With an aggressive long-term 3G strategy, China Unicom was the only telco to experience a profit decline
 
China Telecom recorded a balanced performance across its fixed and mobile services, and it continues to hold the largest market shares in the fixed voice and broadband segments.
 
While all of the operators will increase their capex in 2011, they will focus their investments on different areas. However, all of the operators will concentrate on filling their coverage gaps, which will result in a more even and competitive market that will ultimately benefit consumers.
 
China Mobile: steady growth in mobile services
 
China Mobile continued to record strong growth in 2010. However, unlike in previous years where it experienced double digit growth rates, the company faced increasing market saturation and pressure from competitors.
 
In 2010, the company’s revenues were 485.2 billion yen ($5.99 billion), an increase of 7.3% compared to 2009. Its net profit was 119.6 billion yen, which was an increase of 3.9%.
 
China Mobile’s voice business, which is still the primary source of its revenues, only increased by 1.4% in 2010. As market saturation continues to increase, especially in basic consumer services, China Mobile should look to value-added services and the enterprise market as new sources of revenue.
 
Gaining a fixed license will allow the company to offer a full portfolio of services, and this will be crucial in helping it to drive revenue growth. However, overcoming the regulatory barriers to acquiring a fixed license will be a significant challenge.
 
Most of the company’s growth in 2010 was driven by the promotion of TD-SCDMA data cards and mobile Internet access. However, revenue growth was considerably behind the growth in data traffic, which suggests the increasing commoditization of services. 
 

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