TELECOMS: China Telecom Shows Signs of Life Under New Chief

By on

Bottom line: China Telecom’s cancellation of roaming fees and focus on the Internet of Things signal it wants to become a leader and aggressively roll out new services under its new chairman Yang Jie.

China Telecom to end roaming fees

Just days after receiving a vote of confidence by a major global investor, China’s smallest mobile carrier China Telecom (HKEx: 728; NYSE: CHL) is showing new signs of life that make it look a potential company to watch among the nation’s stodgy big 3 teclos. Those signs are coming in one of the first major speeches from China Telecom’s new chief, who says the telco will become China’s first to eliminate domestic roaming fees, a move that was long overdue but has been strongly resisted by the sector. At the same time, Yang Jie is saying China Telecom will place strong emphasis on Internet of Things services, which many believe are the wave of the future.

Yang’s speech comes just 3 months after he was named as the company’s new chairman and chief executive, following the removal of his predecessor due to a corruption probe. Thus these moves appear to be a sign of his new management style, after he took over at the company’s helm in April. (previous post)

Yang received a vote of confidence last week from Singaporean sovereign wealth fund GIC, which disclosed it recently purchased 5 percent of China Telecom’s Hong Kong-traded H-shares. (previous post) The stock has rallied 4 percent over the last 5 trading sessions, probably partly due to GIC’s buying but also perhaps showing that other investors are following the big investor’s lead. GIC may have been partly attracted by China Telecom’s valuation, which was relatively low compared to peers China Mobile (HKEx: 941; NYSE: CHL) and China Unicom (HKEx: 762; NYSE: CHU).

These latest moves aren’t completely unexpected, but they do appear to show that Yang wants to be a leader in China’s telecoms services space. That would continue a trend that has seen China Telecom aggressively expand into high-speed data services, following the launch of its 4G network a year ago.

According to the new reports, China Telecom will gradually eliminate all domestic roaming fees by the end of this year. (Chinese article) At the same time, it will consolidate fees for all services, including text messaging, data and voice service, into a single price plan. Both moves represent a major simplification drive, in a bid to become more transparent about what subscribers are getting for their money. Such pricing contrasts sharply with the current system, where monthly bills are often cluttered with numerous fees for many different things that make them difficult to understand.

New Platform Launch

Separately, Yang also said his company’s Internet of Things platform officially launched on July 1, following previous disclosure of such plans. All 3 telcos are working on similar platforms, which use the wireless and mobile Internet to allow various electronic devices and home appliances to communicate directly with each other and with their owners.

Both the Internet of Things initiative and end of roaming fees aren’t particularly new, though all 3 telcos previously resisted the latter move despite strong pressure from the regulator. (previous post) But the fact that Yang is emphasizing these 2 elements in one of his first major speeches does seem to reflect his priorities going forward, and hints that he wants to be a leader in the field rather than reluctant follower.

The end of roaming fees may look rather inconsequential, since many western countries ended such fees years ago. But the fact that Yang was the first to announce the move seems to show he wants to be ahead of his rivals, even though I suspect China Mobile and Unicom will announce similar moves later this year. The Internet of Things also looks like an important area where China Telecom can quickly find new revenue and gain an edge over its rivals if it creates a good product and aggressively markets the service.

Related posts:

(NOT FOR REPUBLICATION)

(Visited 125 times, 1 visits today)