"China Telecommunications Report Q4 2013" now available at Fast Market Research

From: Fast Market Research, Inc.
Published: Mon Sep 23 2013

BMI View: The Chinese telecommunications industry is the biggest in the world in terms of existing size and growth potential, with the 1.18bn mobile subscriptions representing only a penetration rate of 84.9% at the end of June 2013. There are substantial growth opportunities in rural regions where markets are still untapped, while in higher income urban areas 3G subscription growth is robust. While there are significant opportunities, fulfilling the potential requires significant investment from the private and public sector, a capability that could weaken if the broader economy deteriorates.

Key Data:

* The latest data from MIIT show the mobile market continued to expand in H113, with total subscriptions increasing by 30.8mn to 1.176bn at the end of June 2013.
* The decline in fixed-line subscriptions accelerated in H113, with the total number falling to a low of 272.9mn by the end of June 2013.
* There was an unexpected decline in fixed broadband subscriptions in Q213 according to MIIT. We believe this relates to a cleansing of subscription totals, given the low penetration rate and previous subscription growth momentum.

Full Report Details at
- http://www.fastmr.com/prod/673160_china_telecommunications_report_q4_2013.aspx?afid=302

Key Trends And Developments

The OTT and VAS market has been a key area of competition in China in H113 as mobile operators compete with one another - but also face-up to the challenge from internet firms. In June 2013 Tecent launched a payment service through its WeChat communication platform, while the search engine Baidu has acquired the 91 Wireless Websoft games portal as it diversifies into VAS. This accelerated development of VAS and OTT services is a threat to operators, who risk becoming dumb pipes ie transmitting data for other firms' services without taking a cut of revenues generated. Operators have complained about the threat in the past, but most recently have begun forming partnerships. For instance, in July 2013, China Unicom announced its collaboration with Tencent to jointly-develop an independent data package for WeChat and all of its related services. In our view, this is most sustainable for the operators. About 42% of China Mobile's 2013 capital expenditure budget will be allocated to its mobile network, of which 52%, CNY41.5bn, will be channelled to TD-LTE technology. Meanwhile, China Telecom has revealed it prefers migrating from its 3G CDMA2000 network to FDD-LTE. Similarly, China Unicom favours FDD-LTE technology, which it believes best fit its business strategy and current W-CDMA network. The Chinese Minister for Industry and Information Technology, Miao Wei, announced in early March that licences for 4G services will be issued in 2013, without providing further details.

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