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Competition heats up

By Sudeshna Sarkar | China Daily | Updated: 2013-07-02 06:18

While Chinese telecom equipment vendors have a stronghold in the Association of Southeast Asian Nations, Chinese operators are still struggling to gain a foothold.

"Operators such as China Mobile, China Unicom and China Telecom are keen to enter new markets worldwide, but many markets are now quite mature and it is difficult for a new entrant to make much of an impression," said Andrew Kitson, Business Monitor International's senior information and communication technology analyst.

"Laos, Cambodia and Vietnam all offer good potential, but too many mobile operators have already been licensed, leading to over-investment in infrastructure and a multiplicity of brands."

It has sparked a bitter price war among operators, slashing profits and forcing some to quit. In Vietnam, for instance, three large foreign investors left since 2005. Sweden's Comvik, the first foreign investor to enter Vietnam's telecom sector as an operator, was the first to pull out, followed gradually by South Korean SK Telecom and VimpelCom, the Amsterdam-based operator in which Russia's Alfa Group holds majority stake.

"We are already seeing casualties in all three markets as operators go out of business," Kitson said. "Besides, state control over the telecom sector is not likely to relax soon. While we expect Chinese companies to court opportunities in Myanmar, we do not see much to interest them in Laos, Cambodia and Vietnam at this time."

Instead of new players, these markets, Kitson said, would profit more from better regulation and an open competition policy.

In developed markets like Indonesia, Malaysia, Thailand and the Philippines, competition is already deeply entrenched. While there is an appetite for Chinese equipment and Chinese IT services/solutions providers, there is little scope for Chinese operators as the market is already well served by local and regional players.

"China Comservice is active in the Asian region - as are the Chinese mobile operators - but they have gained little traction so far," Kitson adds. "As they do not report on progress made outside China, it remains difficult to gauge how well they are doing."

In 2012, China Comservice reported that just 5.5 percent of its revenues came from outside China, down from over 6 percent in 2011.

"Greater transparency and granularity of data in reporting achievements would be desirable, but we do not envisage this happening anytime soon," Kitson added.

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