Bottom line: China’s VNO program appears to be gaining momentum heading into its third year, and could reach the 200 million subscriber mark by the end of 2017.
Virtual network operators gain momentum
It’s been more than a year since I last wrote about China’s fledgling attempt to breathe new life into its telecoms services sector by creating virtual network operators (VNO), mostly because the program seemed to be sputtering in its first couple of years. But new data from the telecoms regulator seems to suggest the industry may finally be finding its legs, and could be starting to take some meaningful market share from the nation’s monopoly of 3 big state-run telcos.
The headline figure underpinning my assertion is 43 million, which appears to be the number of VNO subscribers in China at the end of last year. (Chinese article) I need to give a quick disclaimer here, as nowhere in the article is the term VNO or variant MVNO used to describe this sector, which is called the “mobile resale business”. But that term, combined with a description of the program, does seem to indicate that these are VNO subscribers. Read Full Post…
Bottom line: Unicom and China Telecom are likely to strike a major new network sharing agreement next year, and could ultimately merge in 2017 if several pilot programs to liberalize China’s telecoms services market gain momentum.
Unicom studies resource sharing
Wireless carrier Unicom (HKEx: 763; NYSE: CHU) is giving the clearest signal yet of a coming shakeup in China’s telecoms space, with disclosure that it’s exploring a potential pooling of infrastructure resources with other companies. Word of the move comes in a bigger announcement from Unicom trumpeting the launch of its new 4G+ service, as it plays catch-up to archrival China Mobile (HKEx: 941; NYSE: CHL), which has been offering 4G service for nearly 2 years now.
Industry watchers are more likely to focus on Unicom’s network-sharing part of the announcement, which comes towards the end of the carrier’s brief new stock exchange filing. That’s because the disclosure marks the latest signal of a looming reorganization for China’s 3 state-run telcos, following rumors that began in the summer after a leadership shuffle within the trio. Read Full Post…
Bottom line: The MIIT is quite possibly weighing a merger between China Telecom and Unicom, but any final decision might take at least a year due to the regulator’s cautious and slow-moving nature.
Marriage on tap for China Telecom, Unicom?
A new research note is raising the intriguing possibility that a merger could be coming for the smaller of China’s 3 big telcos, saying China Unicom (HKEx: 763; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA) may soon be forced into marriage. The reasons for such a marriage are certainly compelling, and a recent leadership shuffle among the nation’s 3 big telcos could point to such a move.
Some might argue that such a marriage would be anti-competitive, reducing China’s mobile space from 3 carriers to just 2. But the fact of the matter is that China’s telecoms regulator has become quite frustrated with this trio, who constantly fight among each other for market share but do very little to innovate despite controlling the world’s largest mobile market. Rather than focus its efforts on reforming this laggard bunch of state-run behemoths, the regulator has taken a number of other recent steps to bring more innovative, private investment into the sector. Read Full Post…
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…
The following press releases and media reports about Chinese companies were carried on May 9-11. To view a full article or story, click on the link next to the headline.
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Tuniu (Nasdaq: TOUR) Announces $500 Mln Investment From Investor Group (GlobeNewswire)
Bottom line: 2015 will see an acceleration in 4G services, with China Telecom and Unicom winning commercial FDD licenses in the first quarter and 2-4 VNO licensees potentially emerging as real rivals to the big 3 telcos.
4G set to take off in 2015
A number of telecoms stories are in the headlines today, highlighting the huge hopes everyone has for new 4G services that will open up the market to a wide array of new products. Leading the headlines are word that China Telecom (HKEx: 728; NYSE: CHA) and Unicom (HKEx: 763; NYSE: CHU) have gotten the green light to expand their trial 4G networks, as the nation’s 2 smaller mobile carriers play catch-up to industry titan China Mobile (HKEx: 941; NYSE: CHL).
At the same time, another new report is showing the pathetic state of under-utilization for China Mobile’s 3G network, which uses a homegrown technology that has been plagued with problems. Finally there’s a third report saying the telecoms regulator has just issued its fifth and possibly final batch of virtual network operator (VNO) licenses, creating several dozen new carriers that will compete in in 4G by leasing capacity on the networks of the big 3 telcos. 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…
Bottom line: Telefonica’s sell-down of its Unicom stake presages an exit from the investment next year, ending a decade of failed tie-ups by foreign telcos looking to tap the Chinese telecoms services market.
Telefonica halves Unicom stake
Chinese telco shares may look like a good bet for small investors hoping to profit from company stock gains, but they’re a clear dud for foreign carriers hoping to profit from China’s huge but highly protected telecoms market. That’s my latest assessment following word that Spain’s Telefonica (Madrid: TELF) is further selling down its stake in China Unicom (HKEx: 762; NYSE: CHU), in what looks like a prelude to a complete exit from this problematic investment.
If Telefonica does indeed completely dump Unicom, it would mark the end of a decade-long courtship that saw some of the world’s top telcos invest heavily in their Chinese counterparts. All of those investments ended in divorce, with the foreign carriers selling their shares when they failed to get any strategic benefits from the tie-ups. Read Full Post…
Two news stories in the telecoms space reflect the obstructionist role that the country’s big 3 telcos often play when it comes to boosting competition in their tightly regulated sector. The first story involves moves by the regulator to revive its sputtering program to juice up the sector with competitive products offered by dozens of recently licensed virtual network operators (VNOs). The second story involves the glacially slow progress in “number portability” — a years-old initiative that would encourage more competition by allowing consumers to keep their old mobile phone numbers when changing carriers. Read Full Post…
People like myself who were holding out big hopes for a new crop of private firms challenging the 3 big state telcos will be disappointed to learn that the group of virtual network operators (VNOs) are off to a glacially slow start, boding poorly for the program. It’s obviously way too early to call the program a failure, since it’s only 3 months since the first private VNOs were launched. To consumers these VNOs look the same and offer similar services to the 3 existing state-run telcos. But the VNOs don’t actually own any telecoms networks, and instead must lease network capacity from the traditional carriers. Read Full Post…
