AT&T looks to 20% Growth in China, but India a Bigger Market

Details: Alec Barton; Category: Trends & Forecasts; 17 October 2005; 17429 views

China's phenomenal growth in telecoms has long been praised but some of the early promise expected by investors in the 1990s does not seem to have materialised...

China's phenomenal growth in telecoms has long been praised but some of the early promise expected by investors in the 1990s does not seem to have materialised.

Indeed, despite more rules favourable to overseas investment and their relaxed nature, foreign carriers often feel that they have been marginalised - the build-up has actually been slowed down by regulation. One company which pioneered telecoms investment in China five years ago was AT&T, when it formed a US$25 million telecoms services joint venture in Shanghai, the first of its type.

AT&T's fortunes, according to a recent Reuters report, have been mixed. The company is predicting growth of around 20% in Chinese revenue this year but it feels that both it and its rivals are struggling to gain a foothold in the 'tightly controlled market.'

AT&T's China revenue grew 40% in 2004, with about half coming from the joint venture (called Symphony) and yet, even allowing for the 20% growth, Steve Lowe, president of AT&T's Asia Pacific region has stated: "China is still a very regulated telecoms market...It's a challenging market, which puts a lot of control over what companies can and cannot do."

What is more, AT&T's sales in China still trail those in India, Steve Lowe declared, even though the former's telecoms development is still several years ahead of the latter's. He declined to give specific dollar amounts, which are believed to be relatively modest.

AT&T's investment in Asia reflects its unhappiness with China. Five years since Symphony commenced, operations are still largely confined to Shanghai. The company has invested just over US$5 million in China in the last few years: a tiny fraction of the US$10 billion it has invested in Asia as a whole in the last three years.

Today China is the world's biggest telecoms market by users, with 343 million fixed-line and 373 million mobile subscribers at the end of August, according to state data.