China Unicom (072.HK), the country’s second-largest carrier, has yet to offer a clear indication of its involvement in a possible investment in Nigeria’s former telecom monopoly, NITEL. The company said that its European division had not entered into any binding agreements, although it had earlier claimed interest in exploring an equity investment in the proposed privatization of NITEL.
While expanding into new markets would indicate stronger global aspirations for Unicom, the move would also place significant stress on the already cash-strapped company. Unicom lacks the resources of China Telecom (0728.HK) and China Mobile (0941.HK) to subsidize new handsets, and an international acquisition – especially in a non-high-growth market like Nigeria – would only place it in a weaker position to compete domestically.
As it stands, Unicom has achieved unexpected success in its domestic market with its W-CDMA cell phone offerings, which include the iPhone, despite being the last Chinese carrier to introduce 3G services. Its 3G user growth has exceeded 2G user growth in each of the past three months. The company added 853,000 new domestic 3G users to reach a total of 3.595 million in January, although competitor China Mobile added more overall customers.
China Unicom has already announced that it expects its profit to fall at least 50% in 2010. Outsized ambitions in Africa could give its competitors the chance to seize new 3G subscribers and weaken its domestic market share.