2011: China Unicom’s Lost Year 中国联通失落的一年

By newsdoug on December 13, 2011

Unicom plays the China telecoms clown Early this year I predicted that 2011 would be a breakthrough year for China Unicom (HKEx: 762; NYSE: CHU) (previous post), as it capitalized on its superior 3G technology and status as Apple’s (Nasdaq: AAPL) only official partner in China to take market share from its rivals. But as we head into the new year, history is much more likely to dub 2011 a year of lost opportunities for China’s perennial No 2 mobile carrier. What’s worse, 2012 doesn’t look much better, with Unicom on the cusp of losing its position as China’s second biggest player in the critical 3G market to more aggressive and better organized rival China Telecom (HKEx: 728; CHA). The latest signs of disarray at Unicom crop up almost daily, as the company seems to never have fully recovered from a major merger nearly 3 years ago that led to its current form. Chinese media are now reporting that Unicom is in the midst of its latest shakeup of top management at many of its biggest provincial subsidiaries, though even that process appears to be riddled with problems. (Chinese article) This shakeup has been going on since at least the middle of the year (previous post), and is obviously a huge distraction for the company which instead should have been focused on using its superior technology and Apple relationship to build up its 3G business. As a result of the internal chaos, the company’s 3G market share has held steady at around 30 percent all year, even as industry leader China Mobile (HKEx: 941; NYSE: CHL) has lost steady share in this critical new area to China Telecom, whose share has risen from about 24 early this year to 28 now. At this rate China Telecom will probably pass Unicom as the second biggest 3G carrier by next February or March. Reflecting just how inept Unicom has become, Chinese media are reporting that the company has only just now announced it will offer the latest Apple iPhone, the 4S, by January, months after its global roll-out. (English article) No reason was given for the delay, but previous reports have indicated Unicom was slow to get Apple’s latest hot product tested for compatibility with its system. And in one final show of incompetence to end the year, Chinese media are reporting Unicom won’t even offer the 3G version of the popular iPad 2 tablet PC due to weak sales for the non-3G iPad 2 in China. (Chinese article) This company sorely needs to get itself straightened out, or face a potentially disastrous 2012.

Bottom line: China Unicom has seen a steady stream of lost opportunities in 2011, and its slide is likely to continue next year as it loses the No 2 spot to China Telecom in the important 3G market.

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