Summary
The three major Chinese telecom suppliers and 3G license holders( China Mobile , China Telecom and China Unicom ) depict revenue/profitability trends ( based on figures released recently ) indicating a market at a maturity level comparable to Europe,USA,Japan etc. in the late 1990's/early 2000's years.
It implies fierce competition between them re pricing,service and related product/technology offerings and also interplay between fixed line, old mobile and 3G technologies and beyond.
Analysis
1. As depicted by the author, the Chinese market landscape appears very similar to the developed telecom markets in the period 1998-2003.This was characterized by falling revenues/profitability,increased pricing pressure and fierce competition for product/service offerings and market shares.
It also meant entry into the markets from foreign competitors ( eg from various national providers such as T-Mobile ( Deutsche Telekom AG ), Orange Telecom( France Telecom ), O2 ( formerly BT subsidiary ), Vodafone , Telefonica Spa. and other suppliers ) to make takeover bids/mergers/acquisitions across Europe and/or direct entry into other European and USA markets.
The interplay between fixed line suppliers and their revenue decline from their core business and emergence of companies like Vodafone whose core business was mobile technologies and beginnings of product offering based on early 2G technologies to gain competitive advantage and hence market share, characterized the markets..
2. Clearly,the rate of loss of fixed line customers by China Telecom Ltd. ( 14 million in last 9 months ) and the rate of gain by China Mobile Ltd. for new mobile clients ( 51 millions in the same period ) cannot be sustained for long!!
At this rate China Telecom with its local competitors would saturate the mobile market to a 90% penetration level within next few years and both would struggle for growth in a tough market with increasing competition from foreign companies.
3. To reinforce these observations above,please look at my previous analyzes:
a. 'Apple eyes the Chinese market with iPhone dated 09/20/2009
b. "Google's Android's popularity could be its major downfall' dated 10/19/2009
There is no doubt that other companies such as Research In Motion Inc., Google , Sony , Palm Inc. , are eyeing the Chinese market although there are significant technology and market risks as per above.
4. In conclusion, in a mature market one can not expect anything but increased competition,decline in profitability/revenue and pressure to move up value chain with new products/apps to struggle for a better market share and gain trust and custom of increasingly discerning/sophisticated and cost conscious clients.
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