Unicom steals high-value march
TUESDAY MARCH 12 12:00AM
SOUTH CHINA MORNING POST
China's Hong Kong-listed mobile operators should look for profitable customers
instead of aggressively expanding their subscriber base to a large but loss
-making community, according to consultancy firm Ernst & Young.
With the trend of new business growth for China Mobile beginning to level off, it
was time for the carrier to think of finding additional high-value clients, Catherine
Yen, head of Telecommunication, Communication and Entertainment practices,
said.
"It is no use gathering a large group of loss-making customers," she said of the
mainland's largest mobile operator, which has up to 70.97 million subscribers.
She said it appeared China Unicom, the mainland's No 2 mobile operator with
28.1 million GSM (global system for mobile communications) users, had built its
CDMA (code division multiple access) mobile-phone network to grab high -value
customers from China Mobile.
China Unicom said that 439,000 users had signed up to the new CDMA mobile
network in January.
"The move is also expected to pave the way for a smooth transition to third
-generation services," Ms Yen said.
The lucrative mainland market was always a target for foreign investors but the
telecoms industry was following the global trend towards a new direction, she
added.
"The sector will be opened three years after China's entry into the World Trade
Organisation," she said.
"There are not many viable business opportunities for foreign firms under the
current regulatory regime."
Meanwhile, Ernst & Young associate director Tim Morris said China would lead the
world in outsourcing business.
As foreign firms continued to contract out their manufacturing units, China would
benefit, he said.
The consultancy firm said venture capitalists had been too optimistic about
telecommunications, media and technology projects when they increased their
investment fivefold from US$ 20 billion in 1998 to US$ 100 billion in 2000.
Mr Morris said investors were now looking for smaller projects but faster returns
instead of waiting for a long pay-back period after launching big projects.
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