Talking Numbers

China Telecom is the world’s largest fixed lines operator, with the number of fixed lines in China believed to have crossed 150 million. Last year, China added more than 40 million new mobile users. In mobile, China is now globally believed to be the largest market with 120 million mobile phones in July 2001. The Ministry of Information Industry (MII) of China had forecasted 300 million mobile users by 2005 for an expected population of 1.3 billion. Sheer size has become China’s greatest strength. It has converted the economy of scale to its advantage, and emerged as a global telecom giant.

China invested an estimated $25 billion in telecom infrastructure in 2000, with $ 32 billion in total service revenue.

Currently, China has over 300 ISPs. The number of Internet subscribers’ base in China is growing at over 100 percent per annum and is stated to have already crossed the 25 million mark.

By strengthning telecom infrastructure, China is well on its way to becoming the IT superpower. With a sound hardware base already in place, it is acquiring and internalizing competence in high-end IT design and manufacturing, and now also in software and content development.

And the VoIP Boom

Since China legalizing the IP telephony sector in April 1999, growth has continued unabated with estimates for cumulative VoIP traffic being 673 million minutes up to the end of June 2000. By the year 2005, it is expected to be 60 billion voice minutes.

The important side of all this growth is not just the subscriber numbers, but its contribution to the overall economy. During the past five years, CAGR of telecom revenue has maintained a growth of 30 percent, i.e. almost four times the economic growth rate. In 1999, the share of telecom in China’s GDP rose to 2.1 percent and investment up to 4.7 percent.

Investment Scenario

China is the second largest recipient of FDI in the world after the US and the biggest recipient in Asia, with an estimated $ 41.2 billion in 1999 and a cumulative $ 308 billion since 1979.

An established strategy of the Chinese government in introducing foreign investment has been to offer "market share" in lieu of "advanced technology transfer". MII encourages any foreign investment that can turn China into a major producer of IT and telecom equipment, both for domestic needs and exports.

Niraj K Gupta www.telecombyNirajGupta.com