News
Issue #2002 - 47 (December 2002)
(Updated Dec. 22, 2002)

INFRASTRUCTURE, PRODUCTS & SERVICES

Demand for Telecom Infrastructure Equipment Declines in China

December 2002 -- Yankee PR -- According to a new report, "China's Wireless Market Continues to Grow, Although at a Slower Pace," jointly produced by the Yankee Group and BDA China Ltd., there are signs that subscriber growth slowed, particularly in May and June. Even more troubling is that low-end, prepaid users - the main source of growth - are driving down the average revenue per user (ARPU). 

SMS continued to take off in the first half of 2002, particularly at China Mobile with a total of 28.2 billion messages. While SMS remains the dominant mobile data application in China, China Mobile pushed into 2.5G services with its May 2002 launch of GPRS. 

The key distinguishing characteristics of China's wireless market are its sheer size and its phenomenal growth rate over the past several years. With a penetration rate of just 13.03 percent, the market continues to grow at more than 4 million new subscribers per month. 

Shiv Putcha, Wireless/Mobile Asia-Pacific analyst cautions, "The rapid growth comes at a price because mobile operators have been increasingly targeting low-end users, substantially dragging down ARPU. Subscriber growth in China will continue, however, we wonder how profitable it will be to offer service to the next 100 million mobile subscribers in China."

MobileInfo Comments and Advisory: It had to happen. You can not sustain subscriber growth at a fast clip continuously. We should be happy with sheer size of new subscribers because base is so large anyway.

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