China Telecommunications Report Q3 2013 - New Market Report

Fast Market Research recommends "China Telecommunications Report Q3 2013" from Business Monitor International, now available

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Boston, MA -- (SBWire) -- 07/06/2013 --The Chinese telecommunications industry is the biggest in the world in terms of existing size and growth potential in light of the country's sizeable population. The 1.1bn mobile subscribers represent only a penetration rate of 80%, with a large proportion of consumers in rural regions still untapped.

However, fulfilling the potential requires significant investment from the private and public sector, a capability that could weaken if the broader economy deteriorates. That said, we maintain our view that the prospects for H113 look relatively bright.

Key Data:

- China's 2G sector contracted by 12.0mn in Q113, although the impact was offset by the net addition of 46.8mn 3G subscribers. We expect this 2G-to-3G migration to continue, especially when 3G represents only 25% of the total mobile market.
- The Chinese government should issue 4G licences by end-2013, which would pose a threat to the fixed broadband sector. We forecast 271.5mn fixed broadband subscribers at end-2013, 20% penetration rate.
- While the introduction of value-added services and increasing adoption of 3G and 4G services should provide support for operators' ARPUs, we do not expect them to fully mitigate the effect of competition and rural expansion.

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Risk/Reward Rating

China fell to seventh position in BMI's Asia Pacific Telecoms Risk/Reward Ratings after its Telecoms Rating score decreased from 63.1 to 60.6. China's real GDP growth was 7.7% year-on-year in Q113, versus consensus expectations of 8.0%. Although official GDP figures are no great indicator of the health of China's economy, we take the relatively large 'miss' as a sign that the new leadership is willing to accept a slower headline growth rate

Key Trends And Developments

About 42% of China Mobile's 2013 capital expenditure budget will be allocated to its mobile network, of which 52%, CNY41.5bn, will be channelled to TD-LTE technology. Meanwhile, China Telecom has revealed it prefers migrating from its 3G CDMA2000 network to FDD-LTE. Similarly, China Unicom favours FDD-LTE technology, which it believes best fit its business strategy and current W-CDMA network. The Chinese Minister for Industry and Information Technology, Miao Wei, announced in early March that licences for 4G services will be issued in 2013, without providing further details.

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