A couple of items from the telecoms space have caught my attention this overcast Monday in Shanghai, one containing the first news I’ve seen on 4G plans of China Unicom (HKEx: 762; NYSE: CHU), China’s second biggest telco, and the other a silly announcement from telecoms equipment giant ZTE (HKEx: 763; Shenzhen: 000063) that seems designed to divert attention from its rapidly shrinking profits. Let’s look first at Unicom, which finally appears to be thinking about the future as it puts a year of management turmoil behind. A report in the English-language Shanghai Daily cites a Unicom official at a press conference with Shanghai’s mayor saying the company will spend $1.3 billion to upgrade its systems in the city over the next few years. (English article) The list of projects contains many familiar items, such as improving broadband speeds and adding wi-fi hotspots. But the one that caught my attention was that some of the money will go to trialing 4G technology, and that Shanghai has been chosen as one of the first batch of cities where trials will take place. In my view this announcement looks quite significant, because up until now only China Mobile (HKEx: 941; NYSE: CHL), the nation’s largest telco, has moved aggressively to develop 4G, with advanced large-scale trials already taking place in a half dozen major cities. For technological reasons, Unicom and smaller rival China Telecom (HKEx: 728; NYSE: CHA) should require far less time to develop their 4G networks, meaning that if Unicom really starts trialing technology this year it could easily commercialize its 4G network around the same time as China Mobile, perhaps as early as late 2013. If the company can get organized and focus on building its business, which it may finally be doing, it could easily find itself in a strong position when the regulator awards 4G licenses. Moving on quickly to ZTE, the company issued a press release that I can only call silly late last week boasting that it achieved the world’s fastest revenue growth of 33 percent in the first three quarters of last year, according to a new report by market research firm Frost and Sullivan. (company announcement) While obviously it’s nice to be cited as a leader in such a report, the truth is that the first 3 quarters of last year are now nearly half a year in the past, meaning that much may have changed since then. But more importantly, it says nothing about ZTE’s profit, which is shrinking as quickly as revenue is growing as the company pursues a risky strategy of rapidly building up its cellphone manufacturing business by selling low-cost models for little or no profit to quickly build market share. (previous post). I’m not saying that ZTE shouldn’t be proud of its rapid revenue growth, which is coming mostly from its cellphone expansion. But if it’s smart, it will keep a careful eye on its bottom line or risk watching its profit continue to erode and possibly even disappear, wiping out any positive effects of fast-growing revenue.
Bottom line: Unicom’s launch of 4G trials means it could quickly catch up to China Mobile, while ZTE needs to pay equal focus to both its top and bottom lines as it builds up its cellphone business.
Related postings 相关文章:
◙ New Developments, Including iPhone Deal, Heat Up 3G, 4G 中国电信iPhone销售和日益升温的3G、4G最新进展
◙ ZTE Faces More Profit Erosion With Latest Low-Cost Moves 中兴通讯以低价机抢占市场恐损及获利
There’s a sudden mini-flood of news coming out of the telco space, with new signs that laggards China Mobile (HKEx: 941; NYSE: CHL) and China Unicom (HKEx: 768; NYSE: CHU) are becoming a bit more aggressive in the important 3G and 4G spaces. But as if to counter those signs, China Telecom (HKEx: 728; NYSE: CHA), the smallest of the country’s 3 telcos which also emerged as its most aggressive player last year, has just announced a long-awaited deal with Apple (Nasdaq: AAPL) that will see it start offering popular iPhones on the company’s 3G network early next month. Let’s start with the latest monthly 3G subscriber numbers, which show that Unicom is finally getting serious about that important part of its business, after losing share last year despite its strong technological advantages. The latest figures show Unicom had just over 32 million subscribers at the end of January, boosting its share of the market to 32 percent from 31 percent just a couple of months earlier. (
After surviving a short seller attack last year, cellphone chip maker Spreadtrum (Nasdaq: SPRD) has taken the latest step in its drive to become a specialist in smartphone chips for use with China’s homegrown 3G standard, TD-SCDMA, by co-developing a second model with global giant Samsung (Seoul: 005930). (
It’s not exactly news at this point, but Chinese media are reporting that China Telecom (HKEx: 728; NYSE: CHA), the most aggressive of China’s 3 mobile carriers in the 3G space, has finally reached a deal to begin selling Apple’s (Nasdaq: AAPL) iPhone 4S on its network, with sales likely to begin sometime in the first quarter, possibly as soon as February. (
China’s 3 telcos are all in the news in this first week of the new year, with China Unicom (HKEx: 762; NYSE: CHU) making a long-awaited iPhone announcement, while an intriguing newly announced chip could give a big boost to China Mobile‘s (HKEx: 941; NYSE: CHL) 3G service. Last but not least, China Telecom (HKEx: 728; NYSE: CHA) has announced an interesting move abroad, with potentially more to come. Let’s start with Unicom, which after months of delay, will finally start selling Apple’s (Nasdaq: AAPL) newest iPhone 4S on January 13. (
The telecoms world was buzzing over the weekend with a number of interesting news bits, including Huawei’s latest bid to win Western approval, a new wrinkle in an ongoing anti-monopoly probe in the broadband space, and the latest rumors of the imminent arrival of Apple’s (Nasdaq: AAPL) iPhone 4S to China. Let’s start with Huawei, China’s telecoms superstar whose efforts to enter the US have been repeatedly thwarted by politicians worried that the company is just a spying arm of Beijing despite its steady stream of efforts to prove otherwise. In the latest of those efforts, Huawei has said it will voluntarily restrict its business in Iran, a regular nemesis of the US and other Western nations that suspect it is trying to develop atomic weapons. (
A leaked memo from China Mobile (HKEx: 941; NYSE: CHL), if it’s true, is providing an embarrassing look at the spectacular failure of the company’s sputtering 3G service. According to the memo, the country’s dominant mobile carrier now has a paltry 3.5 million data card users, representing a tiny portion of its 640 million total users, even though data services are supposed to be a key future growth driver. (
I wrote 3 weeks ago that Apple (Nasdaq: AAPL) had overlooked China in the global roll-out for its newest iPhone, the 4S (
