China Growth Stocks

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China wireless data service market to nearly double by 2013

http://www.digitimes.com/news/a20100105PR200.html

The release of 3G licenses in China is spurring a wireless data boom, with national revenues from such services rising by 18.95% in 2009 and nearly doubling from 2008 to 2013, according to iSuppli.

As the one-year anniversary of the issuance of 3G licenses in China approaches, wireless data revenues, including both messaging and non-messaging service, is set to reach US$19.3 billion in 2009, said iSuppli. By 2013, the revenues will surge to US$31.5 billion, increasing at a CAGR of 14.1% from US$16.3 billion in 2008.

Non-messaging revenues soon will exceed messaging revenue as carriers expand mainstream adoption of 3G services, iSuppli indicated. Non messaging service revenues will reach US$20 billion in 2013, up by a factor of three from US$6.8 billion in 2008.

"The rapid growth of China's data services is being enabled by the monumental spending of the nation's wireless carriers on mobile infrastructure equipment," said Will Kong, analyst covering China research for iSuppli. Kong said the carriers spent about US$6.3 billion on mobile infrastructure equipment last year, up 28% from 2008. This would represent a near-term peak, said Kong, adding that carrier spending will decline over 2010-13 but remain at a high level of more than US$5.5 billion annually.

China Telecom and China Unicom will place greater competitive pressure on China Mobile especially in non-messaging services, according to iSuppli. China Mobile already has lost substantial market share in terms of new subscribers.

Mobile subscribers at China Telecom and China Unicom will exceed 100 million and 200 million, respectively, in 2013, iSuppli forecast. Meanwhile, China Mobile's incremental market share will be stable at around 60% for the next few years.

Some financial institutions have expressed concern about the cash flow of China Telecom and China Unicom, and doubted whether the two will have sufficient capital to support their aggressive handset subsidy policies. However, iSuppli sees the situation differently.

iSuppli believes China Telecom and China Unicom will continue to subsidize mobile phones in order to provide attractive consumer prices. And both carriers will be supported by their parent companies, keeping them solvent.