China - BT's hope for the future?

Details: Alec Barton; Category: Trends & Forecasts; 21 September 2006; 12422 views

Britain's BT Group can expect its revenues from China to grow over the next three years as it doubles investment in the market...

Britain's BT Group can expect its revenues from China to grow over the next three years as it doubles investment in the market.

Ever since it lost its monopoly as UK telecoms supplier in a ground-breaking privatisation, BT has long faced a real challenge to its very future as its market share of UK telephony has decreased as a consequence of liberalisation. A recent Reuters report has summarised how BT has dipped its toe into Chinese waters.

BT CEO Ben Verwaayen anticipates annual revenues of US$250 million from China this year, and that the company will double its investment and staff there over the next three years. Key to the expansion are broadband networks and co-operation with China-based clients such as Netcom.

Quite how much has been invested by BT was not revealed to Reuters but loss of revenue from the UK is being balanced out by the emergence of Chinese opportunities. There is still along way to go to make up completely for lost revenue as the above-mentioned sum of US$250 million is less than 1% of BT expected global revenue for 2006-2007.

Fixed-line business is clearly receding from BT's income sources. Indeed it is difficult when looking at China to see how mobile telephony can be sidelined now that mobile subscribers totalled 431.8 million at the end of July as against 366.6 million fixed-line.

BT first went into China in 1995 when it partnered with fixed-line operators such as China Netcom Corporation. It now focuses on big corporate clients in China. Up until now BT's initiatives in China have been on the small scale; there has clearly been a major change of strategy.

Telecoms observers will monitor BT's progress in this challenging but rewarding market.

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