A pledge by China's regulators to let fixed-line phone operators enter the faster-growing mobile market could lead to much greater competition in the telecom industry, analysts said Monday.
Vice Minister of Information Industry Xi Guohua used a forum in Beijing over the weekend to announce plans by the government to grant licences to fixed-line telecom operators soon, the Xinhua news agency reported.
"The rapid development of mobile telecom services had lured away subscribers of fixed-line services," Xinhua said, citing Xi. His ministry confirmed the remarks to AFP Monday. Fixed-line operators welcomed the news, but said they needed to know more before popping the champagne.
"We're still looking for a timetable," said Qin Shaojuan, a spokesman for China Netcom, one of the two large fixed-line operators in China. "But if they really are going to give a licence, that's extremely good news for us."
The vice minister's remark followed months of speculation that the government was considering ways to restructure an uneven telecom market, where mobile is as hot and vibrant as fixed-line is stagnant.
"Xi's statement appears to be an acknowledgement that the situation of fixed-line carriers is continually deteriorating relative to that of mobile operators," said Kelvin Ho, an analyst at Nomura International. Kang Zhiyi, a Beijing-based analyst with TX Consulting, said fixed-line operators were facing "immense pressure."
"Whether you look at revenue or profit growth, the difference with the mobile segment is large," he said. China Telecom Corp, the nation's top fixed-line operator, said late last month its net profit for the first nine months was little changed from a year earlier amid continued competition from cellphone providers.
By contrast, China Mobile Ltd, Asia's biggest mobile phone company, said its net profit for the same period grew nearly 30 percent, buoyed by strong subscriber growth and a wider rural reach. The difference in corporate fortunes reflects broader forces at work in the Chinese market.