China Focus: Mobile Internet access becomes engines of telecom giants
BEIJING, Aug 21, 2013 (Xinhua via COMTEX) --
China's three basic telecom operators
have all released their interim results for the first half of 2013 by
Wednesday, all of which indicate that mobile Internet access became
the engines driving up their performances in the six months.
-- Mobile Internet access weighs most on business performance
In the six months, the three telecom giants, namely China Mobile
(CHL.NYSE; 00941.HK), China Unicom (CHU.NYSE; 00762.HK) and China
Telecom (CHA.NYSE; 00728.HK), made total operating revenues of more
than 600 billion yuan and net profits of 78.5 billion yuan.
China Mobile, as the largest operator in the world by subscriber
number, recorded a year-on-year 10.4 percent growth in operating
revenue, which reached 303.1 billion yuan; while its profit
attributable to equity holders rose 1.5 percent to 63.1 billion yuan.
China Unicom, the second largest one in China, saw its H1 business
revenue up 18.6 percent yaer on year to 148.61 billion yuan, and its
net profit grow 54.3 percent to 5.26 billion yuan.
China Telecom announced on Wednesday that its operating revenue
grew 14.1 percent to 157.5 billion yuan, and its net profit grew 15.9
percent to 10.21 billion yuan.
Comparing their business scale, China Mobile kept the leading
position, as its operating revenue equaled to the sum of China Unicom
and China Telecom, and its net profit was about 12 times as large as
that of China Unicom. However, its net profit growth was the
Analysts attribute China Mobile's slow net profit growth to its
laggard business performance in the mobile Internet access sector.
Currently, China Mobile is the only operator in China running the
homegrown TD-SCDMA 3G network, and its 4G networks has not entered
into formal operation. Thus, though the company's mobile data traffic
surged 129 percent and the proportion of its operating revenue from
the mobile Internet access sector reached 16.6 percent, the
performance in this sector just made up the accelerating slide in the
traditional voice business sector, and could not afford to further
boost China Mobile's overall performance.
Meanwhile, thanks to the advantages in 3G networks, the other two
telecom operators, especially China Unicom, posted better
performances on the mobile Internet access market. China Unicom
reported that 3G business contributed 40.91 billion yuan or 56.2
percent to its total mobile business revenue, while its mobile data
traffic surged 131.3 percent year on year, and its 3G user number
increased 73.9 percent to more than 100 million.
Zhou Jun, analyst from Orient Securities, said 3G business was the
most import engine of China Unicom, and, along with its 3G user
number growth, would further drive up the company's business
China Telecom said that the average monthly data usage of the
company's 3G mobile subscriber exceeded 168M, up 51 percent year on
year, and the total mobile Internet traffic almost tripled. Thanks to
the sharp growth in mobile Internet usage, the company's revenue from
mobile Internet access nearly doubled from the same period of last
year to 9.8 billion yuan. Besides, it added 18.28 million 3G users,
which reached 87.33 million in total. China Telecom also attributed
its sharp net profit growth to its 3G business performance, and
promised to continue focusing on accelerating the scale expansion of
strategic 3G services in the second half.
-- Telecom giants expand investment in 3G and 4G network
China's cabinet recently elevated the "Broadband China" strategy
as a national strategy, which required the telecom operators to
achieve 330 million 3G and 4G users by the end of 2013, with a
penetration in mobile phone users of 25 percent; and more than 450
million 3G and 4G users by 2015, with a penetration of 32.5 percent.
To implement the timetable, the telecom operators need to further
expand the capacity of their existing 3G networks.
On the other hand, due to the competition with Over-The-Top (OTT)
businesses provided by Internet companies, the telecom giants are
also facing pressure of restructuring their business.
Besides, according to the State Council and the Ministry of
Industry and Information Technology, the 4G licenses are expected to
be issued within this year, which require the telecom operators to
accelerate 4G network construction and expand pilot operations.
However, China Mobile, China Unicom and China Telecom respectively
cast capital expenditure of 57 billion yuan, 21.61 billion yuan and
33.1 billion yuan in the first half this year, all of which did not
meet the industry's expectation. Thus, it is expected that their
capital expenditure in the second half would total 230 billion yuan,
and some industry insiders even predict China Telecom and China
Unicom would further expand their 4G investment.
Guotai Junan Securities predicts that China's 4G investment would
post a compound growth rate at 83 percent in the period of 2012-2017,
which would benefit stocks in the optical module block, power source
block, radio frequency block, network planning and reconnaissance
block and antenna block.
-- Cooperation with Internet companies becomes general trend
According to China Mobile, OTT business is showing greater impact
on the traditional telecom industry, as the competition is becoming
more complicated during the macro economic downturn.
Cao Di, an analyst from market researcher iResearch, said the
mobile instant (IM) messenger had become the killer application on
the mobile Internet market. And statistics from Analysys
International showed that Tencent's QQ took 42.5 percent active
customers on China's instant messenger market in the first quarter
this year, while Tencent's Wechat and China Mobile's Fetion
respectively took 23.4 percent and 17.6 percent. But considering the
connection between the two Tencent products and their functions,
WeChat was widely deemed as the largest threat to basic telecom
operators' traditional voice business, short message service business
and the similar mobile IM business.
However, it has been approved that both China Mobile's Fetion and
China Telecom's old Fetion-like IM application were no match for
WeChat. And China Unicom even began cooperation with Tencent to
release a WeChat customized SIM card, WeChat-Wo.
Under such a condition, China Telecom recently established a joint
venture (JV) with Internet company Netease, Inc. (NTES.NASDAQ) to
develop and operate a WeChat-like IM application, namely Yixin.im,
which gradually integrated the relevant services of China Telecom and
the Netease and was expected to compete with WeChat.
It was the first time for a basic telecom operator and an Internet
company to establish JV, which is deemed an ice-breaker in the
competition on mobile IM market. Zhang Yi, CEO of iiMedia Research,
said that the cooperation between telecom giants and Internet giants
represented the general trend.
Through the cooperation, the telecom operators are expected to
boost their revenues from mobile Internet access, which is the basis
and upstream of all mobile Internet services, including IM. (Edited
by Li Xiaoyu, Lixy@xinhua.org)
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