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The headlines are buzzing today with new of the formal launch of the first virtual mobile network by a Chinese telco outside China, with China Telecom (HKEx: 728; NYSE: CHA) partnering with European mobile carrier Everything Everywhere to offer service in the United Kingdom. (English article; Chinese article) But from my perspective, the much more interesting proposition could be that this move might finally mean that Chinese telcos themselves are open to this kind of deal, potentially paving the way for one of the big foreign telcos to finally enter China as a mobile virtual network operator (MVNO). Such MVNOs let companies quickly enter foreign markets by offering service under their own brand over an existing carrier’s network. Let’s look at the latest news first, which saw the official launch this week of China Telecom’s new service, called CTExcelbiz, following an initial announcement of its plan to become an MVNO in Britain back in January. (previous post) Under that previously announced plan, China Telecom said it would launch service in Britain first, targeting the growing number of Chinese living and traveling to Europe, and then potentially draw on Everything Everywhere’s ties to France and Germany to expand to those markets. From the China perspective, this move by China Telecom, the smallest of China’s 3 mobile carriers, seems to indicate that the company itself might be open to partnering with a foreign telco in its home China market for a similar MVNO. Such a partnership would quickly give China Telecom a potentially big new revenue source from its foreign partner, and would allow it to make better use of its relatively underutilized state-of-the-art 3G network. The Chinese telecoms regulator also said earlier this year it wants to open the market more to infrastructure investment by foreign companies (previous post), so allowing foreign MVNOs into the market would help to meet that aim, and also give China’s telcos access to foreign technology and services that can take advantage of their 3G networks. Britain’s Virigin Mobile (London: 1044Q), one of the world’s most successful MVNO operators, was reportedly in talks to form an MVNO in China in the mid-2000s, but no deal was ever announced. Much has changed since then, most notably a reorganization of China’s mobile sector, the launch of 3G networks, and an increasing openness by Beijing to let foreign investment into the sensitive telecoms infrastructure space. If China Telecom’s move signals an opening of the market to foreign MVNOs, there are certainly a number of operators that would be interested. One of Everything Everywhere’s major stakeholders, France Telecom (Paris: FTE), has shown previous interest in China, as has European giant Vodafone (London: VOD), South Korea’s SK Telecom (Seoul: 017670) and Spain’s Telefonica (Spain: TEF). With all those carriers interested in China and China’s own increasing openness, I wouldn’t be surprised to see an announcement of the first MVNO in China by a foreign telco in the next 18 months, most likely with China Telecom as a launch partner.

Bottom line: China Telecom’s move into Britain means Beijing may soon let foreign telcos enter China as mobile virtual network operators, with a first deal possible in the next 18 months.

Related postings 相关文章:

◙ China Telcos In New Drives at Home, Abroad 中国三大电信运营商海内外发力

◙ Telecoms Infrastructure Prepares to Open 中国电信基建市场或更开放

◙ China 3G: Entering Slow-Growth Phase? 中国3G：进入缓慢增长阶段？