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Investment Opportunities in China Communication Industry, 2007

Published: Dec/2006

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During the period from Jan. to Sept. 2006, China's accumulated communication business was RMB 1113.11 billion, up by 25.1% compared to the same period of last year; the corresponding accumulated business revenue reached RMB 527.85 billion, up by 11.7%, which is a little higher than China's GDP growth rate of 10.7%; and the communication revenue accounted for 3.73% of the GDP.

Statistics on Telecommunication Business Revenue, 2004-2006


 

At the ITU Telecom World Exhibition in Hong Kong on September 3rd 2006, Wang Xudong, Minister of Information Industry of PRC, reassured that China was confident to provide 3G services before the Beijing 2008 Olympics Games. Since TD-SCDMA is undertaking friendly subscriber test with the cycle of about 3 months, China's 3G license is more likely to be issued in the first quarter of 2007.

Along with the gradual lucidity of 3G investment prospect, a new investment peak will definitely appear in communication industry in 2007 and the whole industry prosperity will enter a promoting phase accordingly. The reconstruction of 3G and fixed network as well as IPTV will become the priorities for investment, thus will provide telecom equipment manufacturers with enormous market opportunities. The current penetration rates of telephone and broadband in China’s rural areas are still quite low, so the investment of telecom operators in rural areas will increase largely along with the expansion of socialist new rural reconstruction.

As for the telecom revenue, value-added business with an estimated average annual growth rate of 30% during the Eleventh Five-Year Plan period will become a critical driving factor, which may render the telecom industry keep the development speed higher than that of GDP. Meanwhile, the relevant administrations will control the value-added business more strictly and service providers will probably have a hard time in a short term, but in fact, the market regulations are more favorable to the long term development of value-added business.



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