At the end of second quarter of 2011, we continue to see another promising result from the mobile telecommunications sector in China: the total number of 2G and 3G subscriptions surpassed 906 million (920 million if including PHS). This figure alone is larger than any other regional market as a whole, and helped to push the Asia-Pacific market to a total of close to 3 billion mobile subscriptions to-date. Despite this amazing feat, the real value behind this massive figure actually lies on the market potential of the mobile users. Especially with India recently reported 30% of its subscribers are inactive; we need to know the actual market value of these 906 million subscribers.
We forecasts the size of the China market to hit 1 billion within a year time, this figure includes the diminishing numbers of PHS. However, we expect more than half of China’s mobile subscriptions are prepaid, and this group of users are able to hold on to their SIM card from 90-180 days and even up to 360 days depending on the value of top-up, which could probably mean a handful of inactive users. The main strategy now operators should consider targeting the acquisition of 3G customers actively, rather than pursuing the overall customers gain and market share.
After more than 2 years of launch, China’s overall 3G subscribers are still less than nine percent of the entire 906 million. Some may wonder if the government’s decision to go ahead with three different standards of 3G technology is one of the factor, after all every upgrade of mobile line service requires a different handset. However, a mobile plan with monthly ARPU which is triple that of 2G may well be deemed as luxury item to the general pool of the average salary drawing employee with lower purchasing power.
The Chinese mobile operators should probably do more to target the growing pool of youths who have strong interests in smartphones and connectivity on the go, especially coupled with the low PC penetration in the region. After all, it’s the 78% increase in 3G mobile data usage that helps to lifts China Telecom’s mobile revenue by 50%.