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1、China Mobile Telecom Market Analysis report （Industry Overview Part）,2005.10,Sensky Telecom Consulting for SK Telecom (China),2,Contents,Country Overview Communication Industry Policy Current status of Communication Industry Communication industry overview Operators overview Fixed network industry s
2、ituation Internet industry situation Mobile industry situation Analysis on marketing Since China is still in high-speed growth stage, it is predicted that China will maintain the preferential policies on foreign investments and attract more foreign investors to inject investments in China. After the
3、 entry into WTO, China will accelerate the opening-up of the market for foreign investors in terms of depth and scope.,Source: National Bureau of Statistics of China 2005,Protection before entered WTO,Mid,High,Low,Chemical,Bank,Retail,Network Service,Insurance,Big change,Automobile,Agriculture,Stock
4、,Energy,sources,Electronic,Telecommunication,Consumable,Medicine,Small change,less change,High,Mid,Protection after entered WTO,Mid,High,Low,Chemical,Bank,Retail,Network Service,Insurance,Big change,Automobile,Agriculture,Stock,Energy,sources,Electronic,Telecommunication,Consumable,Medicine,Small ch
5、ange,less change,Mid,LOW,12,The direct investment of Japan and South Korea in China,13,Contents,Country Overview Communication Industry Policy Current status of Communication Industry Communication industry overview Operators overview Fixed network industry situation Internet industry situation Mobi
6、le industry situation Analysis on marketing other governmental departments will divide their work on the basis of duties, implementing corresponding management over telecom industry within their duties. Directly led by MII, the telecom management bureaus in each province, autonomous region and munic
7、ipality, in accordance with Telecom Regulations, carry out management over the telecom industry in local administrative regions.,16,Foreign operators investments in Chinas telecom market,17,Vodafone in the Chinese market,2001/02:Sign strategy agreement with CMCC,2001/11:Establish Subsidiary company
8、in HK. Establish agent in China,2001/2002:Use 800millions US$ Purchase 3.27% share of CMCC,2001/2002:Use 35 millions US$ Purchase 9.9% share of Aspire,Vodafone will inject more investments in China during 3G era.,Initial stage: Establish strategy cooperation Establish agent in China,Capital operatio
9、n stage: Purchase stock,Deepened stage: Penetrate in the value chain,Establish strategy alliance with CMCC, cooperate in the fields of new technique, equipment and terminal,18,The Frequency Layout in China,China 3G frequency allocation solution is stipulated in Notice about 3G Public Mobile Communic
10、ation System Frequency Planning (XBW 2002 No. 479) of Radio Management Administration under MII Among that, reserve TD-SCDMA-specific frequency for the development of national independent IPRs,19,Inter-network connection,Trend of new Telecom Law The monopoly of user access will disappear A fine of R
11、MB5 million Yuan for interconnection breakdown,20,Structure of main tariffs regarding China Telecom,Fixed telephone call tariffs Local telephone call tariff Three fees: installation fee, basic monthly rent fee and call fee. Monthly payment system: installation fee and monthly fixed-value fee. Domest
12、ic long-distance call tariff Calculate the fees according to the distance and traffic (call duration) International long-distance call tariff Collection charge of international call service Total accounting rate: 2 US dollars Division rate: 50%, 50% Settlement rate: 1 US dollar,Internet service tari
13、ffs Service types: Dialing access Private-line access Enterprise email VPN service Internet service is value-added service. In accordance with the regulations of Telecom Regulations, the tariffs should be formulated mainly on the basis of market adjustment. The government should strengthen supervisi
14、ons to prevent illegal competition. Charge calculation of normal dialing service: traffic calculation system and monthly payment system Private-line access service: charge collection based on bandwidth,Mobile phone call tariffs Mobile phone call charge collection ways Calling party one-way charge an
15、d calling Private-line Internet-surfers refer to the users having access to LAN through Ethernet and then having access to Internet through private line; Broadband Internet-surfers refer to the users surfing the Internet with xDSL, Cable Modem and etc.,Internet-surfer base with various surfing ways
16、( June 2005 ),34,Contents,Country Overview Communication Industry Policy Current status of Communication Industry Communication industry overview Operators overview Fixed network industry situation Internet industry situation Mobile industry situation Analysis on marketing & sales of mobile communic
17、ation CMCC marketing & sales analysis CUCC marketing & sales analysis Comparison of marketing & sales between CMCC & CUCC,35,Total size of Chinas mobile communication market,Over the recent years, Chinas mobile communication service saw a robust growth, owning the largest user base in the world. As
18、of June 2005, the mobile phone user base in China amounted to 363 million. Over the recent years, the mobile users always enjoy a higher growth rate than that of fixed-line phone users. In October 2003, the mobile user base exceeded the fixed-line phone user base for the first time. The revenue from
19、 mobile services saw a ceaseless increase of proportion. In late 2003, this proportion was greater than 50%. The revenue from mobile communication services acquired a greater proportion.,The mobile user base was greater than fixed-line phone user base,The revenue from mobile services acquired a shar
20、e of over 50%,Source: MII and data about operators in 2005,36,China Mobile Market competitive status,CMCC and CUCC are the only two operator in the market,Distribution by PHS,CTC and CNC will obtain 3G Licence,Operatorss split and restructure,current influence,Latency influence,The entrance of forei
21、gn operators,at present, there only are two operators CMCC and CUCC in China Mobile market. some important factors influence the competitive status in China mobile market ,include contesting the users by PHS, recombining the operators, the granting of 3G license and the entrance of foreign operators
22、.,37,CMCC and CUCC-development background and overview,China Mobile and China Unicom were established under different backgrounds and policy environments. China Mobile was split up from China Telecom in 1999. China Unicom was a product arising from competition attempts in Chinas communication indust
23、ry.,38,CMCC and CUCC-network operation status,Both China Mobile and China Unicom own GSM network. But China Mobiles GSM network enjoys better performance than China Unicoms GSM network. Since 2002, China Unicom has begun to operate CDMA network and laid emphasis on it. In addition, it upgraded CDMA
24、network around China to CDMA 1X in late 2004. In an effort to promote the development of mobile data services, China Mobile deployed GPRS and even EDGE networks in some developed areas.,China Mobiles GSM network enjoys better profiting capability than China Unicoms GSM network.,China Unicoms CDMA ne
25、twork always suffers losses. The less deployed GSM network is the main profit source for China Unicom.,Source: MII and data about operators in 2005,39,CMCC and CUCC-market performance (user base and business revenue),On the basis of comparisons about the data of user base and main business revenue,
26、we can see that China Unicom suffers weaker overall strength than China Mobile. China Unicom cannot compete against China Mobile in short time.,The ratio of China Mobiles user base to China Unicoms user base is less than the ratio of China Mobiles business revenue to China Unicoms business revenue.
27、This means than low-end users take the majority among China Unicoms users.,40,CMCC and CUCC- market performance (ARPU value),Due to more low-end users, intensified tariff price wars and lower proportion of new services, the users of China Mobile and China Unicom saw a decline of ARPU. Both after-ser
28、vice payment users and prepayment users show this trend. Compared with China Unicom, China Mobile carried out a series of differential marketing activities for different brands, slowing the decline of ARPU value to some degree. Compared with China Unicom, China Mobile enjoys a higher ARPU, with the
29、gap set to become wider. In some degree, compared with China Mobile, China Unicom suffers weaker profiting capability.,For China Unicom, its CDMA ARPU is grater that that of GM, which results from the small CDMA user base. With more general users among CDMA user base, the gap will be narrower.,China
30、 Unicom invests a lot of cell phone subsidies to promote CDMA service. With the decline of cell phone subsidies, CDAM saw a decrease of ARPU value.,China Mobiles contract signing users are the high-end users.,Source: MII and data about operators in 2005,41,CMCC and CUCC- market performance (MOU valu
31、e),China Mobiles traffic maintains a steady growth. Although the MOU value of prepayment users saw a decline in 2002, China Mobile introduced a series of activities for low- and medium-end users like monthly call minute offer, family love number setup, Shenzhou night call and etc, resulting in the r
32、ise of MOU value. The contract signing user base of China Mobile always maintains a growth. The CDMA users of China Unicom saw a decline of traffic. This is because that in the beginning, China Unicom positioned CDMA towards high-end market and attracted many low- and medium-end users under the unfa
33、vorable operation. In addition, the decrease of CDMA cell phone subsidies is the other reason. Through the comparisons, China Mobiles users have more traffic than the users of China Unicom. The gap will be wider.,Source: MII and data about operators in 2005,42,CMCC and CUCC-VAS (service categorizati
34、on）,Under the total brand of MonterNet, China Mobile introduced the mobile value-added services like MMS, WAP, STK-OTA, JAVA downloading and etc. Under the total brand of U-Max, China Unicom introduced the mobile value-added services like color e (MMS), Unicom Message (SMS), STK-OTA, BREW/JAVA-0TA,
35、Interactive Vision (WAP) and etc.,43,CMCC and CUCC-VAS (development status),The value-added service of China Mobile maintains a steady growth, becoming the major driving force for the development of company and operation revenue growth. Currently, China Mobile is introducing new services to achieve
36、the steady and rapid growth of value-added service revenue. Among that, WAP and CRBT services will play a key role.,Despite GSM and CDMA networks, China Unicom steps up efforts on new services for CDMA. Since 2003, China Unicom introduced CDMA1X value-added service brand (U-Max) and developed a seri
37、es of sub-brand services. As of June 2005, CDMA1X data users accounted for a share of nearly 40% among the total CDMA user base. Currently, China Unicom is introducing U-Web and stream media services with greater efforts.,CRBT service is free of terminal restrictions. In addition, it can meet the re
38、quirements of users with affordable prices, therefore, it enjoyed a rapid growth since its release. WAP service suffers terminal restrictions. Since 2004, China Mobile adopted a series of cell phone customization activities to promote the development of data services, resulting in the rapid growth o
39、f WAP service.,Source: MII and data about operators in 2005,44,CMCC and CUCC-development strategies and investment emphases in 2005,45,CMCC and CUCC-overall analysis,China Mobile achieves a market share of over 60%, while China Unicom gains a share of less than 40%,User base,Main business revenue,AR
40、PU value and MOU value,Network status,China Mobile,China Unicom,The main business revenue of China Mobile is 2.5-3.5 times as that of China Unicom,Compared with China Mobile, China Unicom suffers weaker profiting capability and the gap is wider.,China Mobile enjoys better GSM network performance tha
41、n China Unicom. The CDMA service of China Unicom always suffers losses, with troubles arising from two concurrent networks,46,Current status of 3G in China,47,China Mobile, China Telecom and China Netcom respectively get one license to deploy and operate the network China Telecom and China Netcom re
42、spectively deploy nationwide 3G network, which possibly results in huge investment waste China Telecom and China Netcom are likely to rent the current 2G network of China Mobile and China Unicom to carry out roaming services.,China Unicoms CDMA network and GSM network are respectively integrated int
43、o China Netcom and China Telecom China Unicom enjoys huge capital and owns GSM network. 3G upgrade can be achieved with large investments. China Netcom is relatively weak in terms of capital. The CDMA network license acquirement can help achieve 3G with a small amount of funds.,China Mobile and Chin
44、a Unicom respectively get independent 3G license. China Telecom and China Netcom get a combined license to jointly deploy 3G network China Telecom and China Netcom need to resolve a series of troubles arising from joint network deployment, such as cost allotment, interconnection and etc. China Telec
45、om and China Netcom still need to rent 2G network of China Mobile or China Unicom to carry out roaming services.,1,2,3,A series of uncertainties for operators 3G license acquirement,48,China Mobile and China Unicom dominated the mobile market,China Telecom and China Netcom entered mobile market with
46、 Little Smart, with the user base up to 30 million in late 2003,The government will issue 3G license in 2006. Three mainstream operators will compete against one another in the mobile market (if China Unicom can implement restructuring solutions before late 2005),With the operators competition in mo
47、bile market and foreign investment entry, the customer share and revenue share will be changed , with the competition evolved towards total services.,With successfully held Olympics, the telecom operation mode characterized by multimedia and broadband will be rapidly penetrated. Chinas telecom marke
48、t will be prosperous with thorough competition.,With the advantages of transfer network, China Telecom and China Netcom will rapidly deploy 3G mobile network and seize group customers through overall telecom service advantages and group customer relationship advantages.,With network deployment and o
49、ptimization and advent of Olympics, each major operator will race to carry out more applications of telecom value-added services and 3G video so as to secure the market.,2003,2004,2007,2002,2005,2006,2008,Industry integration. The mainstream operators mainly secure the market, considering and implementing strategic transformation,The services of fixed network operators suffered a slowdown. China Unicom witnessed a negative growth. China Mobile sharpened its overall competitiveness, with