Bloomberg News

China Telecom Said to Plan U.K. Mobile Services Before Olympics

September 02, 2011

China Telecommunications Corp. (728), the nation’s largest fixed-line phone company, is in talks with U.K. carriers to lease network capacity for selling mobile services in the country, people with knowledge of the matter said.

China Telecom has sought information from companies including Everything Everywhere, the venture between Deutsche Telekom AG (DTE) and France Telecom SA (FTE), and Vodafone Group Plc (VOD)’s wholesale customers, said the people, asking not to be identified because the discussions are private. The Beijing- based carrier aims to agree on a contract to allow services to start in time for the London Olympics next year, one of the people said.

Leasing a network would allow China Telecom to target the half a million Chinese citizens living in the U.K., and the tourists that are set to flock to the London Olympics in June. In China, intensifying competition has led companies such as China United Network Communications Group Co. to slash international roaming fees by as much as 90 percent.

Ou Yan, managing director at China Telecom Europe, didn’t respond to e-mailed requests for comment. The Europe unit is a subsidiary of the state-owned parent company, not Hong Kong- listed China Telecom Corp., said Lisa Lai, a spokeswoman for the publicly traded unit. China Telecom Europe, based in London, was established in 2006 to offer high-speed data services between China and Europe.

Virtual Network

Representatives at London-based Everything Everywhere and Newbury, England-based Vodafone declined to comment.

China Telecom is “trying to address overseas Chinese and capture that market,” said Neil Juggins, a Hong Kong-based analyst with JI Asia Research Ltd. “They are heavy users of international service and also those overseas Chinese go back to China, talk to friends in China, and this improves the feel-good factor with customers in China and helps them grow their domestic user base that way.”

Operators of so-called mobile virtual networks, or MVNO, typically lease bulk network capacity at wholesale prices, allowing them to offer competitive retail rates with reduced operating expenses. Customer service, marketing, distribution, billing can be handled using the company’s existing capabilities.

Setting up an MVNO would help China Telecom, the nation’s third-largest wireless carrier, compete on international roaming rates with China United, Juggins said. China United, the country’s second-largest mobile phone company, in May said it cut international roaming rates in 50 regions.

Telefonica SA (TEF), the Spanish owner of the O2 network in the U.K., holds a 9.8 percent stake in China Unicom Hong Kong Ltd., the publicly traded unit of China United.

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net; Jonathan Browning in London at jbrowning9@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net; Kenneth Wong at kwong11@bloomberg.net


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