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Stiff competition, capex may take sheen off 3G

[ 2009-05-15 12:54]     字号 [] [] []  
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The economic downturn, coupled with the dramatic increase in capital expenditure and intensifying competition, means China's telecom industry is now on a downward spiral despite the arrival of the long-anticipated 3G-era, analysts said.

China Unicom, the country's second biggest mobile carrier, is scheduled to launch its 3G trials from May 17, the World Telecommunication Day, signaling the full arrival of China's 3G era. Its two rivals, China Telecom and China Mobile, have already launched 3G trial services in the country.

"The introduction of 3G services (in China) will not give the telecom carriers a big boost, as global experiences show that 3G has not been very helpful in driving business growth," said Wang Jinjin, a telecom industry analyst with UBS.

"The industrial restructuring, in which all of the country's three telecom companies become full service operators, will only worsen the competition," said Wang.

China Mobile, the world's biggest mobile phone operator in terms of subscription number, earlier this year got a license to deploy 3G networks based on TD-SCDMA, a homegrown 3G standard.

China Unicom was granted a 3G license based on WCDMA, while China Telecom got one for the CDMA2000 standard, two widely adopted standards.

The three carriers have all announced huge investment plans to build their networks.

China Mobile has earmarked 375.4 billion yuan for capital spending from 2009 to 2011 as it switches to the more advanced 3G network, up from 136.3 billion in 2008.

"The huge capital expenditure will weigh heavily on the telecom operators and curtail their return on investment," Wang said, predicting that China's telecom carriers' capital expenditure this year is expected to grow by 28 percent.

The relatively high pricing of 3G services may also keep customers away. According to a survey by www.3g.cn, an industry website, 60 percent of its 15,155 respondents said the current pricing "was too high".

One bright spot may exist for the equipment manufacturers who can provide the necessary base station and cell phones, analysts said.

The Ministry of Industry and Information Technology (MIIT), the telecom regulator, had said earlier that China would spend 280 billion yuan on 3G networks in 2008 and 2009.

"The rollout of 3G services will make China the only major economy where investment in the telecom sector is still growing. It will help Huawei and ZTE a lot," Chen Jinqiao, deputy chief engineer from China Academy of Telecommunication Research, said.


1. What are the 3 factors listed that will impact on the Chinese telecommunications industry profit levels?

2. Name the 3 major local players in China’s telecommunications industry?

3. What is one factor that may keep customers away from employing 3G services?


1. Increasing competition, increased expenditure and the bad economy.

2. China Mobile, China Unicom and China Telecom.

3. The high cost.

(英语点津 Helen 编辑)

Stiff competition, capex may take sheen off 3G

Stiff competition, capex may take sheen off 3GBrendan joined The China Daily in 2007 as a language polisher in the Language Tips Department, where he writes a regular column for Chinese English Language learners, reads audio news for listeners and anchors the weekly video news in addition to assisting with on location stories. Elsewhere he writes Op’Ed pieces with a China focus that feature in the Daily’s Website opinion section.

He received his B.A. and Post Grad Dip from Curtin University in 1997 and his Masters in Community Development and Management from Charles Darwin University in 2003. He has taught in Japan, England, Australia and most recently China. His articles have featured in the Bangkok Post, The Taipei Times, The Asia News Network and in-flight magazines.