Tag Archives: China Unicom

China Unicom : latest financial, market & economic news and analysis from Doug Young

News Digest: April 6, 2012 报摘： 2012年4月6日

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The following press releases and media reports about Chinese companies were carried on April 6. To view a full article or story, click on the link next to the headline.

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◙ Proview Opposes Import of New iPads to China, Seeking Ways to Stop (Chinese article)

◙ Volvo to Spend $11 Billion Over Coming Years (English article)

◙ China Unicom (HKEx: 762) to Combine Marketing and Sales Departments (English article)

◙ Youku (NYSE: YOKU) Receives GAPP Internet Publication License (PRNewswire)

◙ People’s Daily Website IPO to Price on April 19 (Chinese article)

Nokia Bets on China Telecom 诺基亚联手中国电信

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The arrival of spring in China is bringing in a sudden surge of tech and telecoms VIPs, no doubt salivating over a market with more than a billion mobile subscribers and 500 million Internet users and growing. First came Apple (Nasdaq: AAPL) CEO Tim Cook, whose visit has included courtesy calls on the nation’s 3 telcos as well as his most recent visit with vice premier Li Keqiang, tipped to become the country’s new premier next year. Now he’s being followed by Nokia (Helsinki: NOK1V) CEO Stephen Elop, who has attended a high profile Beijing event to announce the launch of company’s first smartphone in China using Microsoft’s (Nasdaq: MSFT) latest Windows mobile operating system. (English article; Chinese article) But wait — there’s more. Apparently none other than Facebook founder and chief executive Mark Zuckerberg has also been sighted in China, visiting my own city of Shanghai just a month before the company prepares to make its multibillion-dollar IPO. I already talked about Cook’s visit yesterday (previous post), so will focus this time mostly on Elop and Nokia, which used to dominate the China cellphone market but has seen its share drop sharply in the last 2 years, mirroring a global trend. Elop is hoping to reverse the slide by retiring Nokia’s old operating system and betting on Windows new mobile OS.  I found it both interesting and intriguing that Nokia has chosen the smallest of China’s 3 mobile carriers, China Telecom (HKEx: 728; NYSE: CHA), as partner for the launch of its first Windows-based smartphone in China, rolling out a Lumina model that will run on the carrier’s 3G network based on a technology called CDMA EVDO. The gamble on China Telecom looks like a smart move to me, as this telco is clearly the more aggressive and better organized of China’s 2 major carriers that use global technology in their 3G networks. The other company, China Unicom (HKEx: 762; NYSE: CHU), has been plagued by operational and management issues; and China’s third major telco, China Mobile (HKEx: 941; NYSE: CHL) uses a homegrown technology that most major developers have shunned so far. By signing up with China Telecom as its first partner, Nokia can be assured the carrier will give its phones special attention, unlike Apple’s iPhone, which is now offered by both China Telecom and Unicom. China Telecom has said it hopes to add 50 million or more 3G users to its network this year (previous post) as it aggressively chases the market in its drive to steal share from its other 2 rivals. Obviously Lumina phones will account for only a small portion of that, assuming that Chinese consumers like them. Still, that could translate to 3-5 million handset sales if the models prove popular. Meantime, here’s just a quick take on Zuckerman, who was seen shopping with his girlfried in Shanghai’s trendy Tianzfang district. (Englilsh article) The reports say Zuckerberg said he was on vacation, and I believe that’s probably true, since he was in Shanghai and not Beijing and he has much bigger issues at the moment with his company’s upcoming IPO. But he clearly still has his eye on the China market, and I wouldn’t be surprised to see him make another more formal China visit sometime later this year after the IPO.

Bottom line: Nokia’s pairing with China Telecom for its first Windows smartphone launch in China looks like a smart move, with sales of up to 5 million units possible this year.

Related postings 相关文章:

◙ Nokia Looks For Fresh China Start With New Country Chief 诺基亚中国区新官欲扭颓势

◙ China Telecom Turns Up Volume in 3G Drive 中国电信计划一鼓作气 3G市场欲再下一城

◙ Nokia Facing China Backlash After Years of Dominance 诺基亚手机在华“失宠”

Apple CEO Cook Stirs Up Guessing Firestorm 苹果CEO库克低调访华意欲何为？

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I’ve been quite amused by the flood of articles coming out these last few days guessing at the mission behind the low-key visit to China by Tim Cook, who replaced Steve Jobs as Apple’s (Nasdaq: AAPL) CEO shortly before Jobs’ death last year. The trip is Cook’s first to China since he took the helm at the  world’s biggest technology company, and follows another low-profile visit last year when he was still chief operating officer and was spotted at the offices of China Mobile (HKEx: 941; NYSE: CHL). (previous post) So what exactly is Cook up to this time around? Different media are all playing the guessing game to try and figure it out. The few certain facts include his visit to a Beijing Apple store, where Cook was spotted and photographed, as well visits to China’s 3 wireless carriers, China Mobile, China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA). Cook is also paying a visit on Beijing’s mayor, but that’s where the certainty ends. Reuters, my former employer, is saying that Cook is on a mission to try to sort through some of Apple’s recent headaches in China, including labor issues at some of its manufacturing partner and an ongoing trademark dispute over the iPad name. (English article) Bloomberg, meanwhile, is putting a more positive spin on its guess, focusing on Apple’s plans to invest further in China, its second largest market. Bloomberg’s report points out that Apple currently has a relatively modest 5 retail stores in China — far less than it was aiming for by this time in an earlier interview. (English article) Meantime, the Chinese tech website operated by NetEase (Nasdaq: NTES) is covering all the bases, leading off with an investment story and Cook’s many meetings, while also giving smaller play to the trademark dispute. (Chinese article) The rival tech news website operated by Sina (Nasdaq: SINA) also has all the bases covered, though it has kicked off its Cook-fest with speculation that the trademark dispute is the main focus of his trip. Since everyone else is weighing in with their guesses, I don’t mind also getting in my own view, which is that Cook is here to focus on big picture issues such as expansion of the company’s store and distribution networks. That means the smaller things, like the trademark dispute and image problems due to labor issues, are probably very low on his agenda, and are being left for the company’s public relations department to handle. One topic that nobody has mentioned, which should be near the top of Cook’s agenda, is Apple’s desire to sign a deal with China Mobile, the country’s largest mobile carrier with two-thirds of the market and the only one of China’s 3 telcos without a formal iPhone deal. Such a deal has been elusive so far since China Mobile’s 3G network uses a homegrown technology, meaning Apple would have to develop a new  iPhone model just for China Mobile. Still, China Mobile’s 650 million subscribers must look very attractive to Apple and should be worth the investment. And with the retirement last week of China Mobile’s long-serving Chairman Wang Jianzhou (previous post), who was unable to reach an iPhone deal in earlier talks, perhaps Apple and China Mobile could finally reach a deal with the company’s newer, more aggressive leadership.

Bottom line: Apple CEO Tim Cook’s visit to China is focused on big picture issues, including the sealing of an elusive iPhone tie-up with leading mobile carrier China Mobile.

Related postings 相关文章:

◙ China Mobile Nears iPhone Deal, Continues 4G Press 中移动iPhone协议近尾声 加紧4G攻势

◙ Apple’s COO Comes Calling on China Mobile 苹果首席运营官造访中移动

◙ China Telecom iPhone Debut Looks Strong 中国电信iPhone初次发售，势头强劲

Unicom Spends, But Can It Earn? 联通拟增加开支加强3G业务 效果有待观察

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Everyone is looking closely at the latest results from China Unicom (HKEx: 762; NYSE: CHU) for signs that China’s second largest mobile carrier has finally put its house in order and can start to generate some excitement, after a dismal 2011 that saw it plagued by mismanagement issues. The results from last year reflect that turmoil, which saw the company fail to gain market share and post weak growth despite being given a big opportunity by the Chinese government to boost its position against its much bigger rival China Mobile (HKEx: 941; NYSE: CHL). Unicom reported its profit rose 14 percent for the year, while revenue was up 22 percent, both below market consensus, especially the profit figure. (English article; results announcement) In fact, the company should be posting much stronger growth as its numbers are coming off a relatively small base, and its 3G network is far superior to China Mobile’s for technological reasons. But the company has failed to capitalize on that technological advantage, with the result that its market share in 3G remained relatively steady in 2011, even as China Mobile’s share declined due to steady gains by the market’s smallest player, China Telecom (HKEx: 728; NYSE: CHA), which embarked on an aggressive marketing campaign for its own 3G network. Based on all the media reports last year, Unicom seemed to suffer from management turmoil throughout many of its major markets, as it tried to fill top positions and consistently underestimated handset demand for certain 3G models, resulting in shortages and lost sales opportunities. Among all the figures and discussion in the latest results, the most interesting seems to be Unicom’s disclosure that its margins will come under continued pressure this year due to high marketing costs, as it tries to improve its 3G network and sign up more subscribers through aggressive promotions including big handset subsidies. It said it expects its 3G business to become profitable during the year, with handset subsidies rising to about 18 percent of 3G revenue. (Chinese article) I’m not opposed to rising marketing costs, as these are largely a one-time spending item that can produce long-term revenue if Unicom can attract more new subscribers and convince them to use its service for years to come. But big spending doesn’t necessarily translate to big revenue gains, and I’m certainly not convinced that Unicom can improve its market position simply by spending more. The company’s past year of poor management is the current standard that the market expects from this company, and it desperately needs to show it can change that to make its new spending binge produce results. Otherwise, 2012 could become just another lost year for Unicom, with expenses rising but little or no growth on the top and bottom lines.

Bottom line: Unicom’s spending boost to build its 3G business in 2012 has less than a 50 percent chance unless the company can clear up its management problems.

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

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

◙ Sputtering Unicom’s Latest Excuse: Lack of Leadership

China Mobile Starts New Era as Wang Leaves 王建宙退休，中国移动开启新时代

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I have just one word in reaction to the news that Wang Jianzhou will formally step down from China Mobile (HKEx: 941; NYSE: CHL) from the helm of China’s dominant mobile carrier either today or tomorrow: Finally! I hate to sound so negative about Wang, as he has certainly done a lot of good things at China Mobile since taking over as chairman nearly 8 years ago. In fact, he did help the company consolidate its place as China’s dominant telco, at one point grabbing over 70 percent of the mobile market as it used its strong position to trample China Unicom (HKEx: 762; NYSE: CHU), its smaller unfocused rival. But like many chief executives, Wang was guilty of overstaying his welcome at the company he led, causing China Mobile to lose its own focus and become a stumbling giant that has recorded little or no profit growth in the last few years. According to media reports, Wang’s retirement will be formally announced either today or tomorrow, and he will be replaced by Xi Guohua, who last year was named vice chairman of China Mobile’s parent company. (Chinese article; previous post) Of course, now that Wang is finally leaving the tributes will start pouring in commending him for his fine work. One report points out that when he took over at the top of China Mobile, the company’s annual revenue was 192 billion yuan, and its net profit was 42 billion yuan. The revenue figure more than doubled to 528 billion last year, while profit nearly tripled to 125.9 billion yuan. Of course it didn’t hurt that China Mobile, as the nation’s former mobile phone monopoly, was already China’s clear leader when Wang took over, nor that the country’s market was still relatively untapped with just a quarter of the nation’s 1.3 billion people owning mobile phones at that time. Wang took advantage of those factors to aggressively consolidate China Mobile’s position during his first 5 years on the job. But as happens with many corporate leaders, he seemed to lose his focus in his last 3 years, fixating on a global expansion policy that resulted in a number of attempted overseas acquisitions that nearly all ultimately failed. As recently as earlier this month, Wang was still talking about such acquisitions — even though they have contributed nothing to the company during his tenure. (previous post) Furthermore, Wang has lost valuable ground to Unicom and smaller rival China Telecom (HKEx: 728; NYSE: CHA) by dragging his feet in developing China Mobile’s 3G service that will be critical to its future, after being ordered to build its network using an untested China-developed technology. As a result, it now only controls about 40 percent of the 3G market, far less than its two-thirds share for China’s overall mobile market. With Wang finally gone, look for Xi and Li Yue, the company’s other recently installed top leader, to start taking some interesting risks and getting more aggressive with 3G. We’ve already seen what the future could look like, following recent reports of an interesting tie-up between China Mobile and a national cable TV operator now being formed through consolidation of China’s various regional networks. Look for more of that in the year ahead, as these new leaders try and breathe some new life into China Mobile after Wang’s departure.

Bottom line: China Mobile will become a more dynamic, risk-taking company in the year ahead after the imminent departure of long-serving Chairman Wang Jianzhou.

Related postings 相关文章:

◙ Advice to China Mobile: Stay Home 建议中国移动呆在国内

◙ China Mobile Steps Up 4G Drive 中移动4G网络建设提速 年底或推商用试点

◙ China Mobile: Improvement Ahead Under New Leaders 新领导有望助中国移动复苏

Advice to China Mobile: Stay Home 建议中国移动呆在国内

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Two news tidbits out today on China Mobile (HKEx: 941; NYSE: CHL) nicely illustrate why investors are suddenly getting excited about this company after years of shunning its stock, highlighting big potential at its home market under an incoming generation of new top executives. The news also underscores the company’s largely failed global expansion policy, and why long-serving Chairman Wang Jianzhou needs to step down and let a younger generation of new leaders take over. The first news tidbit is some simple data from a government telecoms official saying China now has just 6 million households getting their Internet service over cable TV lines (English article) — a tiny figure compared with the 130 million households that get broadband over phone lines through service offered by China Mobile’s 2 rivals, China Telecom (HKEx: 728; NYSE: CHA) and China Unicom (HKEx: 762; NYSE: CHU). That number is significant because China Mobile is currently in talks to form a partnership with a new national cable TV operator being created through consolidation of China’s hundreds of regional cable TV companies — providing a serious new wire-based broadband competitor for Unicom and China Telecom. (previous post). That initiative, combined with recent strong signals that China Mobile will boost its 3G and 4G development, have excited investors who had largely lost interest in the company and its slow-growth story, sparking a rally that has pushed the stock to levels not seen since 2009. Meantime, the second news bit comes from Chairman Wang, whose exit has been long anticipated but never seems to come, speaking on the tired subject of global expansion. Under Wang’s leadership China Mobile has made several attempts at global expansion, failing in every instance except for one that saw it take over a small Pakistani carrier on the brink of bankruptcy. Now Wang has revealed that China Mobile is bidding for a 3G license for the Pakistani unit, and will also seek other global expansion opportunities with a focus on emerging markets. (English article) Does this strategy sound familiar to anyone? If it does, then that’s because Wang has been discussing such a strategy for the last 5 years even though he has no results to show for all his talk, except for the Pakistani unit that contributes little or nothing to China Mobile’s top or bottom lines. The bottom line for China Mobile in all of this is that the company should stay focused on opportunities in its domestic market for now, where it can achieve real returns for its investors, and stop thinking about overseas opportunities that offer much less potential and are harder to execute. Put differently, Wang needs to finally step down and hand over management of the company to the new leaders waiting to take over.

Bottom line: China Mobile could reap huge returns from domestic opportunities like cable TV consolidation and 4G, and shouldn’t waste its attention on overseas opportunities.

Related postings 相关文章:

◙ China Mobile Eyes New Nat’l Cable Network 中国移动有望携手中国广播电视网络公司

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

◙ China Mobile Tries 4G Back Door in Shenzhen 中国移动试图绕过监管机构于深圳秘密规划4G网络

China Telecom Turns Up Volume in 3G Drive 中国电信计划一鼓作气 3G市场欲再下一城

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An increasingly confident China Telecom (HKEx: 728; NYSE: CHA), armed with a newly signed deal to sell Apple’s (Nasdaq: AAPL) wildly popular iPhones in China, is making some bold predictions about its growth this year, setting the stage for what could easily shape up as a bloody war for 3G subscribers. Chinese media are quoting an executive at the smallest of the nation’s 3 mobile carriers saying the company’s 3G subscriber base could surpass that of its older 2G base by the end of this year. (Chinese article) To me that goal sounds reasonable, admirable and something China Telecom should be aiming for — until I took a look at the numbers. According to its latest data for January, the company had just over 130 million total subscribers, with about 40 million of those using 3G and the remaining 90 million on its older 2G service. So if the 2G number were to remain completely unchanged for the rest of the year, China Telecom would have to add a hefty 50 million 3G subscribers this year to meet the executive’s forecast — a 35 percent increase to its current user base. That growth rate is actually roughly comparable to what China Telecom posted last year, when it began its aggressive campaign to add 3G users. But in terms of actual user numbers, the potential addition of 50 million or more this year would mark a sharp increase from the roughly 36 million subscribers China Telecom added in 2011. China Telecom steadily picked up 3G market share from its 2 larger rivals, China Mobile (HKEx: 941; NYSE: CHL) and China Unicom (HKEx: 762; NYSE: CHU) last year by aggressively courting consumers with a wide range of handsets, price plans and a solid network based on a globally used 3G standard. During that time its share of the market grew from just 19 percent at the start of 2011 to about 28 percent by the end of the year, as it took share away from Unicom and especially China Mobile, which didn’t strongly promote its 3G network based on an untested homegrown technology with numerous problems. China Telecom is clearly looking to focus its efforts in 2012 on 3G, based on the fact that nearly all of its new subscribers in December came from 3G, and all new subscribers in January were also 3G users. The company also made national headlines last week when it officially began selling a version of the iPhone 4S for its 3G network, capping months of talks with Apple in a deal that ended Unicom’s 3-year-old monopoly on iPhone sales in China. Initial sales for the iPhone on China Telecom’s network were reasonably strong, and I expect we’ll hear more about the company’s ambitious plans for both the iPhone and its broader 3G strategy when company executives talk to the media at their press conference on March 20 to discuss 2011 results and their 2012 outlook (earnings calendar). Given its aggressive marketing, solid technology and strong range of products, I wouldn’t be surprised at all to see executives reiterate a goal of adding 50 million 3G subscribers this year, leading to profit erosion in the short term but building a stronger long-term base for the company to pose a serious 3G alternative to its 2 bigger rivals.

Bottom line: Remarks by China Telecom indicate the company plans to turn up its aggressive 3G campaign this year, challenging its 2 rivals for dominance in the space.

Related postings 相关文章:

◙ China Mobile 3G: Where Are the Subscribers? 中国移动3G：订户在哪里？

◙ China Telecoms Faces Power Struggle, Half-Baked 4G 中国电信行业遭遇政府监管权利斗争

◙ China Mobile’s TD 3G Fading Fast 中国移动3G网络前景黯淡

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

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I’ll wrap up this sunny Monday morning in Shanghai with a look at a subject that’s a bit techie but of big interest to me and global telcos, namely the subject of China’s largely closed telecoms infrastructure market where change could be coming soon. Longtime industry watchers will recall that foreign telcos running the range from AT&T (NYSE: T) in the US to Europe’s Vodafone (London: VOD) held out big hopes for the China market after the country officially joined the World Trade Organization (WTO) in 2001. Despite making vague commitments to open the market, China made it extremely difficult and unprofitable for the few foreign ventures it allowed in the space, meaning that today the Chinese telecoms service industry is still dominated by domestic companies, most notably the country’s 3 major telcos, China Mobile (HKEx: 941; NYSE: CHL), China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA). Now Chinese media are reporting that the nation’s top telecoms regulator, the head of the Ministry of Industry and Information Technology (MIIT), said late last week in Beijing that the government has officially made boosting private investment in telecoms infrastructure part of its new policy, and the regulator is now drafting specific details to implement that plan. (English article) It’s obviously still too early to say if this new policy will change anything, but clearly there could be a huge new opportunity for foreign telcos to build or operate networks and related infrastructure like data centers. AT&T was one of the first to enter the market even before China entered the, but its operation — which is now part of French-American company Alcatel Lucent (Paris: ALUA) — was always limited to the Shanghai market and thus was never able to compete very effectively, especially for Chinese customers. Vodafone also held out big hopes for the market about a decade ago when it made a multibillion dollar investment in China Mobile when the country’s top mobile carrier made its landmark public listing in Hong Kong. But again, that investment never helped Vodafone make any inroads into China, with the result that Vodafone finally ended up selling its China Mobile stake in 2010. Many western companies have given up on China in the current climate, but clearly there’s big opportunity for profits from a market that is both the world’s largest by mobile subscribers and Internet users. If this new plan moves forward, which looks likely based on the minister’s comments, look for some new investment guidelines perhaps as soon as the end of the year. If that happens, look for a flurry of new telecoms projects from the likes of globla players like AT&T and Vodafone, as well as regional players like Korea’s SKTelecom (Seoul: 107670), Singapore’s Singtel (Singapore: ST) and Taiwan’s Chunghwa Telecom (Taipei: 2412) starting in 2013.

Bottom line: A proposed opening of China’s telecoms infrastructure market could result in a flurry of deals by regional and global telcos in China as soon as next year.

Related postings 相关文章:

◙ China Mobile Eyes New Nat’l Cable Network 中国移动有望携手中国广播电视网络公司

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

◙ Telecoms: Huawei Quits Iran, Broadband Probe Continues 中国电信业三大热门事件

China Mobile Eyes New Nat’l Cable Network 中国移动有望携手中国广播电视网络公司

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After writing far more negative than positive views about China Mobile (HKEx: 941; NYSE: CHL) I’m happy to say there’s finally a piece of news that I really like in the form of talk that the country’s cash-rich but uninspired dominant mobile carrier may soon take a stake in a national cable TV company now being assembled from a patchwork of regional operators. (English article) According to the reports, which cite a number of unnamed sources, China Mobile has already reached an agreement to partner with the new company, China Radio and Television Network, and the 2 sides are now in discussions about a potential equity investment by China Mobile. This kind of partnership looks like a great idea for both sides, as the new cable company will have a huge need for cash — something that China Mobile has plenty of — once the long-delayed consolidation of China’s cable TV networks into this single new company is complete. At the same time, the big piece missing in China Mobile’s portfolio of products is a good wire-based broadband service, something that rivals China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA) both have from the wired-line phone networks they inherited years ago from China’s former fixed-line phone monopoly. A big cash infusion from China Mobile could help China Radio and Television Network quickly upgrade its numerous regional cable networks, now mostly based on older analog technology, to digital capabilities for broadband and other services like high-definition television and video on demand. China’s regulators would also be likely to welcome this tie-up, as the entry of a strong new player to the broadband market would provide a real alternative to offerings from Unicom and China Telecom, which are now being investigated by the National Development and Reform Commission, China’s state planner, for monopolistic practices in the area. Investors have long complained that China Mobile — which controls two-thirds of the world’s biggest mobile market — has too much cash and should pay a higher dividend, even though the company has failed to raise its dividend pay-out ratio for years. I have always been skeptical of China Mobile’s overseas acquisition strategy, mostly because it has no experience operating outside its highly protected home market. But this kind of equity tie-up would make much more sense, as it would come in China Mobile’s home market and also be highly complementary to its existing business. Of course such a tie-up isn’t completely risk-free, as the new cable company is an untested entity that still has yet to be formally launched. But if things proceed smoothly, I could see this partnership developing rapidly and perhaps even contributing to China Mobile’s stagnant top and bottom lines as soon as the second half of next year.

Bottom line: A new tie-up between China Mobile and China’s new national cable TV operator looks like a smart move, potentially providing China Mobile with a strong cable and digital TV offering.

Related postings 相关文章:

◙ Govt to Nat’l Cable Firm: Be Profitable 政府对国家广电公司的安排：商业化

◙ Cable Consolidation Moves Closer With New Umbrella Company 中国广播电视网络公司有望近期挂牌 有线网络整合步伐加快

◙ Telecoms Investigation Signals Profit Erosion 电信联通遭反垄断调查或侵蚀利润

China Telecom iPhone Debut Looks Strong 中国电信iPhone初次发售，势头强劲

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China Telecom’s (HKEx: 728; NYSE: CHA) newly launched iPhone 4S has been hogging the headlines these last few days, with everyone scrambling to figure out if the debut of the popular smartphones by China’s third largest telco will be a success. The slew of media reports accompanying China Telecom’s iPhone launch on Friday, when it began taking orders for the 4S, seem to point to a modestly successful beginning. The company has offered a number of plans, each of which is priced about 100 yuan less than comparable ones offered by rival China Unicom (HKEx: 762; NYSE: CHU), the only other Chinese carrier with an Apple (Nasdaq: AAPL) tie-up which began selling the 4S in January. (English article) As to actual demand, media are looking at a number of angles, including online sales, store orders and comments from China Telecom itself to judge demand, as the iPhones themselves won’t become available until this Friday. The company itself is saying first-day sales exceeded its own expectations, though it isn’t giving any figures except to say orders in Beijing exceeded 10,000 units. (Chinese article) Meantime, another article is quoting China Telecom saying first-day online orders were strong, but there was no unusual activity at a China Telecom store also taking orders. On the whole, this looks like a relatively strong launch for China Telecom, which shouldn’t come as a surprise as many iPhone lovers are probably excited to finally have an alternative to Unicom, which had a monopoly on official iPhone sales in China since Apple launched the popular smartphones in 2007. I would expect China Telecom iPhones to see brisk sales when they officially become available on Friday, as consumers test the China Telecom service against Unicom’s. Word of mouth will be critical going forward, as I could easily see many iPhone users migrating to one service or the other in the months and years ahead depending on which telco gets the better reputation for iPhone service. Based on my limited knowledge, I wouldn’t be surprised to see China Telecom emerge as the early leader in the comparisons, in what would obviously be a major setback for an already-struggling Unicom. Meantime, China Mobile (HKEx: 941; NYSE: CHL), China’s only telco with no iPhone deal, is coming out with its own iPhone statistics, with Chairman Wang Jianzhou saying it has 15 million iPhone users. (Chinese article) Of course everyone knows that all of those users are unofficial, since China Mobile has no agreement with Apple, and all can only use their iPhones on China Mobile’s slower 2G network, since no iPhone is available to run on the homegrown technology in its 3G network. China Mobile at one point was talking to Apple about developing a 3G iPhone for its network, but those talks seem to have died a few months ago, meaning the company won’t have its own iPhone deal until 4G which is still at least 1 to 2 years off.

Bottom line: China Telecom is likely to emerge the victor in a looming iPhone war with Unicom by offering both better prices and service.

Related postings 相关文章:

◙ Price War Brewing for iPhone in China iPhone价格战料在中国打响

◙ 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

◙ China Mobile: Improvement Ahead Under New Leaders 新领导有望助中国移动复苏

Price War Brewing for iPhone in China iPhone价格战料在中国打响

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I’ll end my postings for this first day of March on a lighter note, looking at an entertaining marketing and price war that looks set to break out between China’s second and third biggest telcos, China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA), as the latter prepares to start selling the iPhone 4S later this month, breaking Unicom’s monopoly on iPhone sales in China since Apple (Nasdaq: AAPL) started selling the popular smartphones in 2007. In a highly anticipated announcement, China Telecom, the smallest of China’s 3 major telcos, said last month it would start taking orders for the iPhone 4S on March 2, and start selling the model for use on its network on March 9. (previous post) That development broke Unicom’s 3-year monopoly on iPhone sales in China, just a couple of months after Unicom itself started selling the 4S. Unicom has been rather lazy during the last 3 years during its monopoly period, failing to aggressively market the iPhone even as sales of the smartphones were one of its few bright spots as it suffered with internal management and operational issues. Now that the honeymoon period is finally finished, Chinese media are reporting that Unicom’s Guangdong unit is preparing a “stealth” attack to try to draw more iPhone buyers to its service even as China Telecom gets set to offer its own aggressive packages. (Chinese article) According to the report from a local publication in southern Guangdong province, Unicom’s Guangdong subsidiary is preparing to offer new incentives in the form of extra memory to new iPhone subscribers who are referred by Unicom’s current iPhone customers. I would expect to see similar moves from Unicom subsidiaries in other provinces in the next few weeks, as they attempt to stop China Telecom from stealing both new and existing iPhone customers. China Telecom is likely to fight back with its own aggressive new packages and other incentives, meaning the next few months could be a very good time for anyone considering an iPhone 4S to sign up for service. On a more serious note, this kind of war could undermine both the top and bottom lines for Unicom and China Telecom. It could also seriously hamper efforts by China Mobile (HKEx: 941; NYSE: CHL), the country’s leading mobile carrier, to bring some momentum to its own laggard 3G network, which suffers from a technological disadvantage as it is based on a homegrown Chinese technology standard with numerous problems. In summary, look for a colorful and also bruising price and marketing war between Unicom and China Telecom in the months ahead, playing to the advantage of 3G cellphone subscribers but bringing a new round of potentially destructive competition to the the telcos.

Bottom line: A new price and marketing war will break out as China Telecom prepares to end Unicom’s monopoly on the iPhone in China, resulting in profit erosion for both.

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◙ China Telecom 3G Drive Set For Boost With iPhone 4S 中国电信3G推出电信版iPhone 4S

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