China Telecom changing focus

[photopress:mobilephoneusercountry.jpg,full,alignright]China Telecom lost some profit margin last year. It fell 2.7% in 2006 mainly because the fixed-line business is pretty static. However, in compensation, total revenue rose on strong demand for Internet connections and other services. Revenue from Internet connections rose 32% whereas local phone revenue dropped 3.5%.

None of this comes as a surprise as the population moves over to mobile and Internet connections.

China Telecom added nearly 13 million connections last year so that its total fixed-line subscribers reached 223 million, while broadband customers increased by 7.3 million to 28.32 million.

Wang Xiaochu, chairman and CEO of China Telecom said in a statement:

‘The informatization process has continued to accelerate in China with rapidly growing demand for information infrastructure, information technology and applications services by the government, enterprises and households. This brings tremendous business development opportunities for us.
‘However, the company also well realizes the irreversible trend of mobile substitution and increasingly intensified competition in the telecommunications industry. The company will continue to progress its strategic transformation and further innovate to improve its systems and mechanisms.’

In other words, hang on to what we have in fixed lines but realize that mobile and the Internet are the way to go. So China Telecom, intelligently, is expanding broadband, Internet-based TV and other new services. But it needs to move quite quickly.

China Mobile, the country’s top mobile carrier, announced last week that its 2006 profit rose 23% which highlights the difference between the old and the new technology.
Yet there is plenty of room to move, to expand, to profit.

China has the world’s biggest telecom market, with 461 million mobile and 368 million fixed-line phones. The number of mobile phones is expected to grow by 60 million this year, while fixed-line phones will rise by 10 million.

There were more than 437 million mobile phone users, or 327 mobile phones per 1,000 people by the end of August 2006, and, mobile phone users sent 273.67 million text messages from January to August in 2006. That is some market. The trick is getting the balance exactly right.
Source: China.com