Two of China's three operators face declines in 2009: BDA

18 Dec 2008

Two of China's newly-restructured carriers may shrink in 2009, according to Beiijing-based research firm BDA.

BDA associate director Fang Meiqin said China Telecom's topline revenue was likely to decline and while 'flat growth' was likely for Unicom, it might also possibly contract.

She predicted market leader China Mobile would cut prices to maintain share against its smaller rivals.

'In 2009, we think the three operators will see some user growth and lower or even negative revenue growth, especially China Telecom and Unicom. We think it will be difficult for China Telecom to maintain its fixed-line and CDMA business growth,' she said.

China Telecom, the biggest fixed-line carrier, has been bleeding customers in the last two years. It has lost 8.5 million local access lines so far in 2008. The CDMA business has seen virtually no subscriber growth this year.

Fang said that while Telecom's upgrade to CDMA EV-DO next year would be a relatively fast one, it faced 'a challenge in handset supply'.

She said that for rival Unicom, growth in 2008 had been limited compared to its dominant rival China Mobile.

Unicom, which has just acquired Netcom's fixed-line business, reported 132 million mobile customers at the end of October, adding 1.2 million users for the month.

By contrast China Mobile has signed up an average 7 million customers a month in 2008. It had 443 million subs on October 31.

Fang expected Unicom's topline growth would be 'flat or negative - most likely flat' in 2009.

Unicom and Telecom could expect aggressive price competition from China Mobile as the new 3G networks rolled out over 2009, Fang said. Mobile's Beijing branch is now offering a package with unlimited calls for five 'family and friends' numbers for just 10 yuan ($1.46) a month.

Fang said that the government's promise to administer 'asymmetric regulation' to rein in China Mobile was unlikely 'to go too far'.

'China Mobile is the only one to operate a TD network,' she said, referring to China's home-grown standard TD-SCDMA, which officials were determined to see succeed.

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