Fixed-line duo beats mobile firms in customer growth
China's fixed-line duopoly signed up 7 per cent more users than the cellular carriers last month, with their aggressive promotion of Xiaolingtong services eroding the mobile operators' business.
According to the Ministry of Information Industry's latest figures, 4.73 million fixed-line users were signed up last month by China Telecommunications Corp and China Netcom Group, bringing the mainland's fixed-line users to 237.61 million.
The data shows that fixed-line subscriber growth not only outpaced the growth in wireless users, but also exceeded the pace achieved before the Sars outbreak.
In the first quarter, China's fixed-line market was adding 3.8 million users a month.
In contrast, the country's cellular carriers - China Mobile Communications Corp and China United Telecommunications Corp Group - picked up 4.42 million subscribers last month, 310,000 less than the fixed-line carriers.
During the first quarter, before the Sars outbreak, China's cellular market added an average of 5.16 million users a month.
China's wireless market had long be growing at a faster pace than the fixed-line market, but in May the fixed-line carriers began a nationwide rollout of Xiaolingtong services, citywide mobile services known as Little Smart, to poach cellular business from the mobile pair.
In May, the fixed-line carriers signed up 280,000 more users than the mobile carriers, and the gap further widened last month.
BNP Paribas Peregrine analyst Marvin Lo said he expected the pace of growth in cellular subscribers would not only continue to slow but also be slower than fixed-line market growth in the second half.
'The strong growth in the fixed-line market is likely due to Xiaolingtong, because Xiaolingtong is classified as fixed-line business,' he said. 'The potential users of mobile phones are getting smaller when the penetration rate increases. The majority of the new mobile users are low-end users that require cheap and basic services. Xiaolingtong can suit their needs.'
UTStarcom, a major supplier of Xiaolingtong equipment to China, forecasts Xiaolingtong users to reach 25 million to 30 million by the end of the year.
China Telecom Corp, the Hong Kong listing arm of China Telecom Group, said more than one-third of its subscriber growth in the first five months of this year was contributed by Xiaolingtong services.
