Mainland fixed-line phone companies could see their revenues eroded this year as a result of the government's decision to cut roaming fees charged by mobile operators, industry watchers warn.
The National Development and Reform Commission and the Ministry of Information Industry last week announced that from March 1 the roaming charge levied when mobile-phone users made calls outside their local service area would be cut to 60 fen per minute, and to 40 fen a minute when receiving calls outside their service areas.
That compares with current charges of between 1.30 yuan and 1.50 yuan per minute for roaming services depending on whether users are on a prepaid or monthly subscription. According to industry watchers, this will mean an estimated 539 million mobile subscribers will enjoy price cuts ranging from 54 per cent to 73 per cent from next month.
Mobile users will also no longer need to pay a domestic long-distance tariff on top of the roaming charges, according to last week's announcement, which could lead to further savings on mobile usage charges of about 40 to 60 fen per minute.
The waiving of the long-distance charge and the reduction in roaming charges will further hit the operations of fixed-line business operated by China Telecom and China Netcom Group Corp. Researchers at Merrill Lynch said that in light of the changes, they were reviewing subscriber forecasts for fixed-line players.
'We may further reduce access line forecasts at the two fixed-line operators,' Cynthia Meng, an analyst at Merrill Lynch, wrote in a research note.
Results announcements from both fixed-line operators for the six months to June last year indicated that long-distance calls generated 14 per cent and 11 per cent of their total revenues, respectively. China Telecom booked domestic long-distance revenue of 12.1 billion yuan and China Netcom gained revenue of 4.4 billion yuan in the same period.