China Telecom’s decision to launch MVNO services in the UK is a savvy move because the market still has room to grow despite massive penetration, Analysys Mason analyst Cesar Bachelet claims.
The senior analyst says the UK MVNO market is still on the up, with the number of virtual network subscribers growing 60% to almost 11 million in the five years to end-September, despite the fact overall penetration in the country stands at 128%.
China Telecom revealed last week it has signed deals with EverythingEverywhere and its MVNO subsidiary Transatel to launch a UK MVNO targeting Chinese ex-pats and visitors. The network is likely to pave the way for similar set-ups in France and Germany.
Bachelet says the firm’s focus on Chinese nationals gives it an addressable market of around a million subscribers, and a competitive edge over rival MVNO services. “Although the UK has many MVNOs that offer cheap calls to international destinations, none offer services specifically designed for the Chinese.”
However, the research firm notes China Telecom’s expansion is as much to do with growing competition in its domestic market as a bid for global recognition. Analysys Mason cites a 5% fall in fixed line connections in the telco’s home market in the year to end June, and declining domestic fixed line revenues as evidence.
The firm is confident in China Telecom’s overseas strategy, though, noting the MVNO services could help it pick up subscribers returning to China. The research firm believes it is only a matter of time before other Asian telcos follow suit with their own virtual services.