China Telecom

Railcom slashes market target

PUBLISHED : Thursday, 25 April, 2002, 12:00am
UPDATED : Thursday, 25 April, 2002, 12:00am


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Newcomer China Railcom, facing stiff competition from dominant domestic fixed-line player China Telecom, has slashed its market-share target.

It now hopes to take between 2 and 3 per cent of the market in domestic services this year, compared with an original target of 5 to 10 per cent.

The new target was announced this week during the company's directors meeting in Beijing, Renmin Youdian Bao, the official newspaper of the Ministry of Information Industry (MII), reported yesterday.

Officially inaugurated as a commercially operated telecommunications carrier in December 2000, China Railcom was formerly a private network of the Ministry of Railways, with lines running between the ministry and residents living near railway lines. Having been granted a fixed-line licence by the MII as an independent telecoms carrier, China Railcom launched commercial services in March last year.

But it had difficulties gaining subscribers in the first year of commercial operation.

It has been reported that China Railcom's Shanghai branch has signed-up only 8,000 fixed-line subscribers in the past four months since it first opened its system to the public, compared with its original target of 100,000.

After a hard first year, Railcom found the original high expectations too optimistic.

China Daily reported yesterday one of the key obstacles China Railcom faced last year was delays in reaching interconnection with the near monopoly fixed-line operator China Telecom.

High existing telephone penetration rates in big cities also made it difficult for China Railcom to find new customers, as most families in cities had already installed a China Telecom fixed-line.

Last year, China Railcom generated a mere 3.27 million yuan (about HK$3.06 million) profit on a 4.31 billion yuan turnover, representing about 1.2 per cent of total telecoms industry revenues of 357.1 billion yuan.

Rival China Telecom generated 181 billion yuan revenue last year, about 42 times more than China Railcom.

China Railcom aims to achieve six billion yuan revenue this year, representing a 39.2 per cent growth rate.

It said it planned to invest 14 billion yuan this year building its network infrastructure and to upgrade capacity.