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China Telecom's Big Numbers

China Telecom's DSL subscriber base has reached 40M, while reports suggest it's planning a major CDMA spending spree

July 21, 2008

3 Min Read
China Telecom's Big Numbers

China Telecom Corp. Ltd. (NYSE: CHA) has reached a landmark in its fixed broadband access growth, and is reportedly planning a massive investment in its CDMA mobile network.

The carrier today announced that at the end of June it had amassed 39.95 million DSL subscribers, having added 4.3 million broadband customers during the first six months of the year. On average, then, the operator is boosting its broadband customer base by more than 710,000 per month, which means it will have broken through the 40 million DSL subscriber mark by now.

That makes it a major contributor to the world's DSL user base. According to the Broadband Forum (formerly the DSL Forum), there were 238 million DSL customers worldwide at the end of March 2008, when China Telecom says it had 37.7 million DSL subscribers, or 15.8 percent of the global total.

The country's other main fixed line carrier, China Netcom Corp. Ltd. (NYSE: CN; Hong Kong: 0906), has added nearly 3.6 million new DSL customers this year to give it a grand total of 23.4 million by the end of June. At the end of March it had 21.7 million DSL customers, giving it 9.1 percent of the world's total.

Together, the two Chinese giant's accounted for 24.9 percent, practically one quarter, of the world's DSL subscribers at the end of the first quarter this year.

But the broadband world isn't just about DSL, though that technology did account for 65 percent of all high-speed fixed line connections at the end of March.

In addition to the DSL users, there were nearly 80 million cable modem customers, 42 million fiber-to-the-something (FTTx) users, and 7.9 million people using "other methods" of broadband Internet access at the end of the first quarter this year, giving a grand global broadband user total of nearly 369 million.

CDMA blow-out?
China Telecom is also reportedly planning to invest up to 30 billion Renminbi ($4.4 billion) in the CDMA mobile network assets it's in the process of acquiring from China Unicom Ltd. (NYSE: CHU), which has more than 43 million CDMA subscribers. (See China Begins $70B Carrier Revamp.)

Unconfirmed reports from China suggest the carrier has issued tenders for core network equipment (accounting for up to half of the planned expenditure), base stations (about a quarter of the spend), and service management and delivery systems (the remaining quarter of the capex).

Vendors believed to be involved in the bidding process include Alcatel-Lucent (NYSE: ALU), Huawei Technologies Co. Ltd. , Motorola Inc. (NYSE: MOT), Nortel Networks Ltd. , and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763).

With Huawei and ZTE the dominant network infrastructure suppliers in their domestic market, news of the massive potential outlay gave ZTE's share price a lift late last week, sending it up 9 percent to HK$36.15 on Friday and up a further HK$0.35, nearly 1 percent, to HK$36.50 Monday on the Hong Kong Stock Exchange.

Huawei and ZTE are also set to benefit from the imminent award of 3G wireless licenses in China, which will kick-start yet another wave of mobile infrastructure spending by the three giant operators that will exist once the country's telecom restructuring process is complete. (See China to Get 3G – At Last!, Huawei Pumps Up Its APAC Biz, and Huawei Reports 2007 Revenues of $12.5B.)

— Ray Le Maistre, International News Editor, Light Reading

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