Update: Since writing this post, China Telecom and Unicom have both announced that they will swap chairmen. Wang Xiaochu will resign from China Telecom and become head of Unicom, and Chang Xiaobing will resign from Unicom and become head of China Telecom. (Unicom announcement, China Telecom announcement)
Bottom line: A rumored shake-up in the top ranks of China’s big 3 telcos is long overdue, but will only be effective if Beijing installs experienced, marketing savvy managers rather than the usual government bureaucrats.
Leadership shuffle coming at big 3 telcos?
I was largely dismissive of the first reports to emerge last week of a brewing shake-up for the leadership at China’s big 3 telcos, saying the basis for the speculation didn’t seem too solid. But the chatter continued to gain momentum at the end of last week, leading me to change my view and predict that perhaps much-needed change is on the way and could be announced soon.
The buzz began when media first reported that the telecoms regulator had called a meeting last Friday of top leaders of China’s big 3 state-run telcos, China Mobile (HKEx: 941; NYSE: CHL), China Unicom (HKEx: 763; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA). (previous post) Now media are reporting that the Ministry of Industry and Information Technology (MIIT) has called another meeting for Monday, and some are citing unnamed sources saying that the main topic is a big leadership shuffle. Read Full Post…
Bottom line: China Mobile’s return to profit growth is slightly encouraging but may be short-lived, while the MIIT isn’t likely to make any major new moves when it meets with China’s big 3 telcos on Friday.
Growth returns to China Mobile’s profit
After seeing its profits contract for the last few quarters, leading mobile carrier China Mobile (HKEx: 941; NYSE: CHL) finally wowed investors with an unexpected return to profit growth in its latest reporting quarter. But the euphoria was short-lived for China Mobile’s stock, which rose sharply after the report came out, only to give back all the gains by the end of the trading day. That would seem to show that investors are more worried about China Mobile’s top line revenue, which contracted during the quarter despite the profit growth.
At the same time, change could be coming soon for China Mobile and its 2 big state-run peers, China Telecom (HKEx: 728; NYSE: CHA) and China Unicom (HKEx: 762; NYSE: CHU), which have all been called to a meeting with the telecoms regulator on Friday. There are plenty of things the Ministry of Industry of Information Technology (MIIT) may want to discuss with these 3 slow-moving and bureaucratic telcos, but at least one media is speculating the trio could be getting set for some top management changes. Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 21. To view a full article or story, click on the link next to the headline.
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China Smartphone Sales Fall for First Time: Gartner (English article)
P2P Lending Site Dianrong Raises $200 Mln in C-Series Funding (Chinese article)
China Mobile (HKEx: 941) Announces 2015 Interim Results (HKEx announcement)
MIIT to Convene Meeting of 3 Major Telcos, Leadership Change Possible (Chinese article)
Bottom line: After a slow start, China’s VNO program is showing signs of starting to gain momentum and could start to pose a meaningful challenge to the country’s big 3 mobile carriers by the end of next year.
VNOs move slowly but steadily
China telecoms regulator has just released some new data on the country’s virtual network operator (VNO) program a year after the first service launched, aimed at providing some competition for the country’s big 3 state-run telcos. While some observers are saying they’re disappointed at the data that shows China had 8.2 million VNO subscribers at the end of last month, I would actually take a contrarian view and say I find the figures somewhat encouraging.
Frankly speaking, I wasn’t at all confident that the VNO program would attract many subscribers at all. That’s because the program relied on cooperation from China’s big 3 telcos, which were required to sell capacity on their networks to these virtual operators, who would then sell service under their own brand names. The big and obvious problem lies in conflict of interest, since the big state-run telcos would hardly want to support these private companies that could quickly become major new competitors. Read Full Post…
Bottom line: China’s opening of the electronic payment services market could see PayPal and other foreign providers finally receive long-awaited licenses to operate in the market by year-end.
PayPal may finally get China green light
Foreign financial companies came a step closer to realizing a long-awaited goal last week, when Beijing announced it would allow them to open fully-owned electronic transaction processing ventures for e-commerce services in the year-old Shanghai free trade zone. The move comes after years of lobbying by foreign companies like PayPal, MasterCard (NYSE: MA) and Visa (NYSE: V), which have watched enviously at the rapid growth of a domestic financial system that China committed to open when it joined the World Trade Organization (WTO) in 2001. Read Full Post…
Bottom line: Beijing should be commended for its recent program to open up telecoms services to private investment, and should consider accelerating the program and allowing in foreign participation.
Beijing injects competition into telecoms services
A campaign to bring private money into China’s telecoms sector was in the headlines twice over the last 2 weeks, reflecting a broader Beijing campaign to inject new life into traditional sectors like banking and energy that are now dominated by large and often slow-moving state-run firms.
One headline came late last week, when media reported that 20 million new phone numbers would be injected into a year-old program allowing private companies to sell mobile service. That followed even bigger news a week earlier, when media said the telecoms regulator hoped to allow private investors to build domestic telecoms network infrastructure for the first time. Read Full Post…
Bottom line: New signals indicate Beijing plans to move aggressively to prevent solar panel makers from adding unneeded new capacity to help their local governments meet economic growth targets.
MIIT limits solar panel expansion
A new low-key announcement from Beijing is hinting at a quiet struggle taking place behind the scenes in China’s promising but embattled solar panel sector, with the regulator saying it will stop the building of most new manufacturing capacity. On one side of this struggle are local government officials, who may be encouraging solar panel makers in their areas to add capacity that will benefit their local economy but is the last thing the industry needs. On the other side of the battle is Beijing, which is trying to show the world it doesn’t unfairly subsidize its solar panel sector as it also tries to rationalize a bloated domestic industry that is stifling global development. Read Full Post…
Bottom line: Rumors of a China Telecom-Unicom merger are probably false since they would leave just 2 big players in the market, though the talk could reflect the regulator’s frustration at the continued dominance of China Mobile.
Regulator hangs up on telecoms merger rumors
Everyone else is buzzing today about rumors that the smaller of China’s 3 telcos would merge, so I feel obliged to add my 2 cents to the discussion, even though the deal has been denied by one of the companies and the industry regulator. Of course this kind of denial isn’t very meaningful in China, where companies will vehemently deny a rumor one day and then the next day announce a deal that showed the talk was indeed correct. But in this case, a merger of China Telecom (HKEx: 728; NYSE: CHA) and China Unicom (HKEx: 763; NYSE: CHU) really doesn’t make much sense for a number of reasons. Read Full Post…
Bottom line: New data from the telecoms regulator shows that China Telecom outperformed its rivals last year, and could be set for strong growth as it consolidates around its high-speed wireless data business.
China Telecom outpaces rivals in 2014
Just a month after I expressed disappointment at China Telecom (HKEx: 728; NYSE: CHA) for its lack of focus in the era of data services, newly released year-end financial data are making me re-think my view. That data appears to portray China Telecom as a company that has made the difficult transformation from a traditional fixed-line operator to a more wireless-focused carrier, meaning it could finally be poised for some strong growth this year as it rolls out a new state-of-the-art 4G network. Read Full Post…
Bottom line: China’s plan to allow private competition in the wire-line broadband sector will move forward slowly, but should provide needed competition for Unicom and China Telecom within the next 3-5 years.
China opens broadband to private investment
China’s drive to open up its telecoms services sector to more competition could soon gain some new momentum, with word that the telecoms regulator is crafting a plan that would let private companies offer wire-line broadband services. This particular move looks like an extension of a campaign that launched earlier this year, allowing private companies to offer traditional mobile service through the creation of virtual network operators (VNOs).
This new campaign would also come as China works to break the current monopoly in the wire-line broadband sector held by China Telecom (HKEx: 728; NYSE: CHA) and China Unicom (NYSE: CHU; NYSE: CHA), which previously were probed for monopolistic practices. It would also come as Beijing assembles a new national wire-line broadband company through consolidation of the nation’s dozens of cable TV operators. Read Full Post…
Bottom line: After a slow start, China’s VNO program is picking up momentum, with new operators poised to sign up a collective 50 million in total subscribers as soon as the middle of next year.
VNOs gain momentum
After a decidedly slow start in their first half year of life, China’s young crop of virtual network operators (VNOs) are starting to show some new signs of momentum, including a boost with the new awards of licenses to leading online video site Youku Tudou (NYSE: YOKU) and fast-rising smartphone maker Xiaomi. The VNO program is part of Beijing’s efforts to breathe new life into the telecoms services sector by opening it up to new private operators that can compete with the big 3 state-run telcos. But the program has been plagued with glitches since the first new services launched in the spring, with the result that progress has been slower than expected. Read Full Post…
