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To: Racso who wrote (2168)4/13/1999 6:31:00 AM
From: tero kuittinen of 4169
 
It's hard to gauge the potential of Chinese market for operators until we know just how serious China is about the reforms. They have flashed the possibility of 51% foreign ownership for some telecom companies. Is this a WTO negotiation tactic or something real? Everybody knows that China Telecom is a pretty customer unfriendly outfit - the wild 80% mobile subscriber growth they are still able to create shows just how hot this market could be with savvier marketing and customer service.

If China Telecom really will be broken into four parts, that would be the best opening for western companies. All four units would need massive cash infusions to turn them into succesful stand-alone companies. It would be much easier for AT&T to grab control of one of these babies than wrestle with an intact China Telecom.

About revenue potential - at around 20 million subs China already has more *digital* mobile phone subscribers than USA and the overall mobile subscriber growth seems more robust than in America. The US market is still wrestling with four competing digital standards and the fact that most of the existing mobile phone subs use analog. In China at least 90% of the subs are digital and the growth is concentrated in one digital standard, creating good nationwide coverage.

Adding 200-300 million new customers seems likely during the next 4-5 years. China Telecom has been so dominant that if they show any competence they should be able to grab at least 60-80% of these new subs. If the company gets chopped up, the most succesful Baby Telecom should be able to add more than 50 million new subs during the next five years. I think AT&T is hard pressed to achieve that in its home turf.

Tero
















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