Trends and Information of Telecom Market in China
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On June 2 financial details of the restructuring were announced. The CDMA network and subscribers have been valued at approximately RMB 110 billion, or USD 15.7 billion (some adjustments may occur within the two-month due diligence process now underway). China Telecom (the listed vehicle) will pay RMB 43.8 billion to purchase the subscribers and related assets of the CDMA network from China Unicom (the listed vehicle). At the same time its parent company China Telecommunications Corporation will pay RMB 66.2 billion to acquire the CDMA network from China Unicom’s parent.
At a joint press conference held in Hong Kong on June 2, 2008, China Netcom and China Unicom unveiled details of their merger which would see one China Netcom share exchanged for 1.508 shares in China Unicom (and each American Depository Share (ADS) of Netcom exchanged for 3.016 ADS of China Unicom). The deal values China Netcom at HKD 439.17 billion (USD 56.3 billion). After the restructuring, China Unicom will have 258 million customers and China Telecom 297 million, both far behind China Mobile with 425 million.
3G licensing may only be possible at the end of 2008 or even have to wait until 2009, when the restructuring has been completed. BDA believes the government’s high-profile support for indigenous technology that was reiterated in the restructuring announcements indicates that TD-SCDMA is certain to be the one of the three competing 3G technologies that will be awarded a license. However, even with this renewed confirmation of government support, the future of TD-SCDMA remains far from certain.
Operators’ PHS Service Strategies
China Telecom plans to shift the top one third PHS users to its CDMA service
China Telecom confirmed its plan to move the top one third of its PHS users to the CDMA service after it acquires the CDMA business later this year; this was stated by Mr. Wang Xiaochu at the June 2 news conference. China Telecom had 54.75 million PHS subscribers in April 2008, which means that at least 18 million PHS users will transfer to the CDMA service. China Telecom expects that a further one third of PHS subscribers may stay, while the final third will churn.China Telecom also indicated that it would not provide a national roaming service for PHS, since CDMA already offered such a feature. Shandong and Sichuan are two provinces where China Telecom has introduced provincial roaming services for PHS users.
China Telecom sets up a PHS roaming service in Qinghai
In order to attract and retain broadband residential users, China Telecom has launched the “Qin Qing Liang Di Tong” service in Qinghai Province. Users that travel frequently between the capital Xining and one other city, and have signed up for broadband service in both cities, can enjoy video calls and cheap voice tariffs between the two, as well as PHS roaming in both cities.
China Telecom includes PHS in the ‘BizNavigator’ packages for SMEs in Quanzhou, Fujian
China Telecom is aggressively promoting the ‘BizNavigator’ service for SMEs (Small and Medium-sized Enterprises), which includes voice, broadband and IT applications. In particular, clients can enjoy free internal calls between their fixed-line phone and PHS users, a service called VPN (Virtual Private Network). Clients can have a maximum of 15 PHS terminals in the VPN, which costs RMB 3 per month for each PHS.
China Telecom in Shanghai begins citywide PHS VPMN service
China Telecom in Shanghai has launched a ‘Ling Tong VPMN (Virtual Private Mobile Network) Package’ to its post-paid PHS subscribers. Paying only RMB 8 a month, PHS users who register for the service before 30 June 2008 can make free calls to all PHS users in Shanghai, while phone calls to mobiles or fixed-line phones are charged at the standard tariff. Post-paid PHS users can cancel this service at any time. China Telecom hopes to retain PHS post-paid users by offering cheaper voice services.
China Netcom moves into mobile media in Linyi, Shandong Province
China Netcom began a ‘PHS Newspaper’ service in Linyi, Shandong Province, in May 2008 in cooperation with the local Linyi Daily newspaper. By sending the message ‘DLTB’ to the number 106562621, PHS users who subscribe to the service receive two SMS ‘deliveries’, one each in the morning and the afternoon, containing the latest local news and information. The monthly fee for this service is RMB 2. The ‘PHS Newspaper’ is very similar to China Mobile’s ‘Mobile Newspaper’, which is very popular among mobile users.