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Telecom industry on fast track

By Shen Jingting  (Xinhua)

14:26, July 25, 2012

Chinese companies to lead global growth with third-generation boom

The telecom industry will continue to expand after steady growth in the first half of the year, with booming 3G mobile service subscriptions expected to be a strong driver, analysts said.

China hit a milestone with more than 1 billion mobile phone accounts in February, becoming the world's first country to reach that figure, according to the Ministry of Industry and Information Technology.

The country took less than five years to double its mobile phone accounts to 1 billion, adding subscribers at a steady pace of between 8 to 12 million a month in recent years, according to the ministry.

China's three telecom carriers - China Mobile Ltd, China Unicom (Hong Kong) Ltd and China Telecom Corp Ltd - all reported steady growth in terms of newly added mobile subscribers in the first half of the year.

China Mobile, the world's biggest telecom operator by number of users, saw its customer base increase to 683 million in June from 649 million in December. The carrier also boasted the largest number of 3G service subscribers, with 67 million in June, compared with 51 million at the end of last year.

However, China Unicom, China's second-largest telecom operator, had the highest monthly increases in the number of 3G users since October. The company had 57.5 million 3G users in June.

Joss Gillet, senior analyst at Wireless Intelligence, a research branch under the GSM Association, estimated that a quarter of the Chinese mobile market was running on 3G networks in June.

"It took China only 13 quarters after it launched 3G to achieve this milestone, which was faster than in Northern or Southern Europe, where it was 20 quarters after launch," Gillet said in an e-mail.

Chinese telecom operators started the deployment of 3G networks in 2009, when Chinese authorities issued 3G licenses. The 3G business experienced a relatively slow start, but took off since 2010, and especially in 2011, when a slew of low-end smartphones hit the market.

The rapid 3G development was also partially driven by demand for Internet access in a market with low fixed-broadband penetration and an effort by operators to expand 3G network coverage, Gillet added.

The 3G boom in China is expected to continue, with Gillet predicting that half of the Chinese mobile market will be on 3G by 2016.

Shao Guanglu, deputy general manager of China Unicom, said the company hopes to have 90 million 3G users by the end of the year. China Unicom's revenue from 3G services was 40 billion yuan ($6.26 billion) in 2011, and the figure is expected to surpass 70 billion yuan this year, Shao said in an interview in May.

China Telecom, the country's smallest telecom operator, became the second carrier to introduce Apple Inc's iPhone series on contract on the Chinese mainland in March. The enriched mobile phone portfolio allowed China Telecom to attract more high-end 3G users.

Meanwhile, the explosive growth of China's smartphone market is another driver for the telecom industry.

China surpassed the United States to become the world's largest smartphone market in the third quarter of 2011, with a record shipment of 24 million smartphones in the period, according to research firm Strategy Analytics.

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