Chinese Telecommunication Companies

2 min read

China Unicom，China Telecom and China Mobile have all listed on both the Hong Kong and New York Stock Exchanges and China Netcom，which has put off its listing on a number of occasions，was expected to follow suit before the end of 2004.China Railcom and China Satcom held only a 1.6%market share between them in 2003 and are not expected to list outside China any time soon.

Restructuring has had an enormous effect on the industry.Between 1995 and 2002 the fixed line penetration rate more than tripled and was expected to grow a further fivefold between 2002 and 2005.Prices for long distance and international services have fallen sharply and are now comparable with prices in Western industrial countries.

The example of the popular Xiaolingtong，or“little smart”，service shows just how much competition exists in the industry.The service is basically a glorified portable phone that only works within a given region of China.It i provided by China’s fixed line providers，China Telecom and China Netcom，who are not officially allowed to invest in current mobile technology.But because th service provides the basic speech functions of a real mobile phone and is so much cheaper，Xiaolingtong already has 58 million users after only two years of operation and has eaten into the profits of real mobile providers China Mobile and China Unicorn.

These mobile companies are hoping that the long-delayed granting of licenses by the government for third generation（3G mobile systems will go ahead in mid-200.and allow them to squeeze out such budget options.Not that they really have much cause for complaint.In 2004，an average of five million people signed up for new mobile subscriptions every month，In 2003，about 200 billion short-text messages（SMS）were sent in China，which translated into approximately RMB 20 billion（US$2.41 billion）in revenues for mobile operators.The number of SMS messages in 2004was expected to rise to over 300 billion and mobile phone usage is likely to grow sixfold over the next five years.

If the case of the Chinese mobile phone handset market is anything to go by then there is good reason to believe that China’s telecom giants will retain the lion’s share of their markets when foreign players gain access in the next few years.