3G takes China operators to top of world
The booming third generation (3G) wireless service businesses in China have helped three Chinese telecom operators to lead the world's telecom industry in terms of revenue growth since last year.
China Mobile achieved a quarterly revenue increase of 13.8 percent to $22.7 billion year-on-year in Q4 last year, while more impressive revenue growth had been reported by its two Chinese rivals: China Unicom increased sales by 31 percent to $4.3 billion; China Telecom grew sales by 56 percent to $2.9 billion over the period.
By contrast, many mobile operators who have a strong presence in Europe, including Vodafone Group, Deutsche Telecom Group and Telefonica Group, recorded year-on-year revenue declines.
Matt Ablott, senior editorial analyst at Wireless Intelligence, attributed their revenue drops to some extent to "a consequence of market saturation, fierce price competition and a slowdown in consumer spending due to the eurozone's economic crisis".
Elsewhere, operators in the United States and Japan maintained a steady growth rate because of the rapid development of data businesses as more people surf the Internet through mobile phones and created large traffic volumes. US-based Verizon Wireless posted a year-on-year revenue growth of 6.4 percent to $15.1 billion in Q4, 2011.
In the first half of this year, the 3G momentum continued to enable Chinese telecom carriers to outperform their global counterparts. The first quarter revenue of China Mobile reached 127.4 billion yuan, up 7.8 percent over the same period last year, China Unicom realized a 24.8 percent increase in sales in the first quarter and China Telecom gained 15.7 percent year-on-year.
However, Vodafone, Europe's largest mobile phone company, posted a revenue slump of 7.7 percent in the three months ending June 30, noting that "macroeconomic and competitive pressures in southern Europe have intensified further".
Emeka Obiodu, senior analyst at research firm Ovum, said the contribution from Vodafone's emerging markets is no longer sufficiently rescuing poor performances from Vodafone's European markets.
"Telecoms revenues tend to lag (behind) economic trends. People firstly experience deteriorating personal finances before they start cutting back on telecoms spend(ing). Therefore, as long as the economic headaches persist in southern Europe (and with concerns mounting in the UK, too), the road ahead will be uncertain for Vodafone and other Europe-centric telecom operators," Obiodu wrote in a research note.
Because of limited overseas business, Chinese telecom carriers are relatively safe and are not likely to face pressure from the world's economic turbulence, analysts said.
"China developed its 3G networks a few years later than many developed economies," said Feng Mingyuan, a telecom analyst with Ping An Securities. Chinese telecom operators received 3G licenses in 2009 and started the deployment of 3G networks in the same year.
"Therefore, Chinese carriers are behind other countries' operators in reaping the fruit from 3G services," Feng added. China's 3G development gained momentum last year after more affordable smartphones hit the market.
The number of China's 3G service subscribers is approaching 200 million, out of a total of more than 1 billion mobile accounts in the nation. Joss Gillet, senior analyst at Wireless Intelligence, estimated that a quarter of the Chinese mobile market was running on 3G networks by June.
"It took China only 13 quarters after it launched 3G to achieve this milestone, which was faster than in Europe, where it took 20 quarters after launch," Gillet told China Daily. He also predicted that half of the Chinese mobile market would 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 this year. China Unicom's revenue from 3G services was 40 billion yuan ($6.26 billion) in 2011. The figure is expected to surpass 70 billion yuan this year, Shao said in an interview in May.